engleski

The Effects of R&D and FDI on GDP per Capita Growth in EU and EU Accession Countries

The aim of this paper is to show how gross domestic product per inhabitant (measured in euros) of 30 European countries, including Croatia, depends on the investments in research and development in the country, and on the openness of the economy to the foreign direct investment. Secondly, research try to show which of the investment sectors (enterprises, higher education, government) is the most effective in the gross domestic product per inhabitant boost. Furthermore, this research also try to investigate assumption of strong correlation of research and development ratio in GDP and the ratio of R&D staff in overall employed force. Finally, this paper examine Croatia’s position in the European trends and provide some suggestions how to reach higher levels of per capita income in Croatia. In this research it is used a cross section data on FDI, R&D and GDP for 30 European countries, mainly from EU, which included Croatia. The data are from 2006. The estimates are made using secondary data collected from Eurostat databases. Mathematical, statistical (both inferential and descriptive) and econometrical methods are used. Along with quantitative methods, a short overview of the literature on the matter of FDI and R&D effects on growth was made. Finally, deduction, induction, analysis and synthesis were used in order to reach final conclusions. It is shown that per capita income fiercely positively depends on the levels of foreign direct investment and the ratio of R&D expenditures in GDP of the observed country. Secondly, the regression results show that corporate (business) investments in R&D have the strongest impact on the GDP per capita, among all the other sectors (government, higher education institutions). Final analysis confirmed hypothesis of Croatia not being an outlier, in the analysis conducted up to this point. R&D and FDI could be used as two separate instruments of economic policy for GDP per capita soar, the first being the most effective if conducted by the enterprises. The closing conclusion is that Croatian lower level of GDP per capita is related to the low R&D share in total production, as well as to the unsatisfying levels of foreign direct investment. Hence Croatia should try to move the barriers to the entrance of the foreign direct investments, and to induce higher research and development spending in order to reach a higher level of income per inhabitant.

GDP per capita; FDI; R&D; R&D investors; R&D personal; European countries

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