How to Increase R&D in Transition Economies? Evidence from Slovenia
Svejnar, Jan; Domadenik, Polona; Prašnikar, Janez
2007-05
Subjects
Transition, R&D Investment, Firms in Transition, Employee Ownership and Control, Institutions, Openness
Abstract
Paper addresses the recent initiatives of EU Lisbon Agenda to increase level of R&D expenses in EU Member States by studying firm-level panel data in most advanced transition economy, Slovenia. Previous empirical literature - mainly cross-sectional - has tested the demand-pull hypothesis and found in overall that R&D expenses may be driven by output. Using a panel of over 150 Slovene firms over the 1996-2000 period, and checking for fixed effects, time, industrial and size dummies and for the path-dependent nature of R&D, we also find a significant role of sales in inducing R&D expenditures. Besides that data also confirm that internal funds and (un)successful bargaining for higher wages present significant variables for higher R&D expenses. However, at the micro level, the demand-pull, internal funds and bargaining effects play a varying role for the different sub-samples of firms. In particular, exporting firms, those which are liquidity-constrained, those not receiving public subsidies and those not heading a business group, seem to be particularly sensitive in deciding their R&D expenditures. R&D behavior at the firm level is modeled as error-correction model and estimated in system GMM specification.Other Identifiers
1078
Other Identifiers
1078
Subject Classification
Business Economics
Types
Working Paper
Metadata
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