Estimation of Connection Between R&D Expenditure and GDP in EU Countries

Directions of changes occuring in the world economy in recent years show the transformation of the industrial economy, based on the scale economics, into a knowledge-based economy, using the technological and innovative potential. The process of this transformation points at competitive advantages of states and regions specializing in production of high-tech products. Innovativeness is reckoned to be one of the most important factors determining the rate and quality of economic growth. Consequently the main subject of research conducted in high developed countries is seeking new sources of innovativeness and methods of creating innovative potential. The most vital determinants of the innovativeness of economies are expenditure on the research and development activity and effects of this activity revealed in the form of innovations.

            The aim of the article is to verify the J. Fagerberg theory assuming that the technological potential of an economy, expressed as a relation of R&D expenditure to GDP or as a number of patents per capita, determines positively the rate of GDP growth. In the article the analysis of the R&D expenditure influence on GDP per capita in EU – countries in the years  1999-2008 is conducted. Because of the lack of data  some countries are excluded from the analysis; these are following countries: Luxembourg, Cyprus and Malta. In the research there are used methods of panel models estimation. On the basis of analysis results it must be cocluded that R&D expenditure determine substantially GDP per capita in researched countries.