Innovation and invention in the EU business sector: the role of the R&D expenditures

Abstract

The article deals with the problems of business innovation and inventions in the EU countries with a focus on the potential effects of business R&D expenditure. Since the business is considered an essential sector concerning innovation, business R&D expenditure can play a significant role in their creation. However, several obstacles hinder the successful transformation of R&D expenditures into invention or innovation. R&D expenditures as any other type of business investments are associated with a certain risk. In this case, the risk of failure can be even higher due to their long-term nature and complexity. The article aims at an examination of the short-run and long-run relationship between business R&D expenditure, on one hand, an invention, and innovation on the other. To achieve this, the tests of Granger causalities and panel cointegrated regression has been applied on macro-level data. Furthermore, the structure of R&D expenditure in EU countries has been also examined. The results suggest a positive correlation between business R&D expenditure and innovation activities as well as the positive causal effect of business R&D expenditure on patenting in the long run.

Assessment of Research and Development Financing Based on the Strategies in EU: Case of Sweden, Slovakia and Romania

“…In accordance with the results obtained in this article, several studies by authors Goschin, Sandu, Goschin; Rus; Diaconu, and Hu ňady have pointed to the low convergence of the Romanian R&D system with the European one [37][38][39][40]. The competent authorities of these countries must seriously address this situation in the coming years so they would not just become assembly factories with cheap labor force for the world's advanced economies.…”

“…This successful model can be found in Scandinavia [14]. The system of innovation support in Sweden is considered as one of the best in Europe and together with Germany, Austria and Finland experienced the highest R&D expenditure in the business enterprise sector in the EU [40].…”

In search of key determinants of innovativeness in the regions of the Visegrad group countries

“…The literature review, as well as the authors' own empirical analyses, indicate that one of the main determinants of innovativeness (both before and during the pandemic) are expenditures of the business sector on R&D (e.g. Huňady & Pisár, 2021;Firlej, 2019) as well as education expressed through participation in lifelong learning and the percentage of people with tertiary education (e.g. Denkowska et al, 2020).…”

“…Research shows that investments in and expenditures on research and development are important for the creation of inventions and innovations (see Huňady & Pisár, 2021) and are statistically significant as far as the economic growth in the EU countries is concerned (see Freimane & Bāliņa, 2016). For many years, investing in R&D has been among the priorities of the European Commission's policy for sustainable socio-economic development in the European Union.…”

“…Regarding the abovepresented theoretical considerations, it is worth emphasizing that innovativeness cannot be equated with and perceived only in the context of R&D. However, it seems that this sector is one of the most important determinants of the innovativeness of an economy. Research shows (Huňady & Pisár, 2021) that business R&D expenditure on GDP has a positive effect on the invention expressed by patents, especially in the long run.…”