Do business and public sector research and development expenditures contribute to economic growth in central and eastern European countries? A dynamic panel estimation

This paper examines the impact of R&D expenditures in business and private sector on economic growth in Central and Eastern European Countries over the period 1998-2008. Using a Generalised Method of Moments estimator, we find that business R&D has a high and stable contribution to economic growth. Public R&D has no effect on growth but does not crowd out private activity. The paper also finds that part of the business R&D effect is accounted for by human capital. The results remain robust after considering macroeconomic control variables.