Title: The role of innovations in fostering economic growth: an empirical analysis for selected CEE countries

Authors: Darko Lazarov; Goce Petreski

Addresses: Faculty of Economics, University Goce Delcev, Shtip, Republic of Macedonia ' Faculty of Economics, University Ss. Cyril and Methodius, Skopje, Republic of Macedonia

Abstract: The main aim of the paper is to investigate whether the innovation performance is a driving force to economic growth in selected CEE countries. To fulfil this goal, we use dynamic panel regression approach (system GMM), for the period 2002-2014. The innovation performance is derivate from several indicators (general expenditure on R&D, number of patents, journal articles and scientific publications, as well as royalty payments) by using principle component factor analysis. The estimated results suggest that innovation performance has positive and significant influence on economic growth, indicating that those countries with more efficient innovation system have experienced higher economic growth. Moreover, the paper found the higher magnitude in the impact of innovation performance on economic growth in new EU member state economies, compare to less developed non-EU countries. This indicates that innovations become more important growth determent how the countries are catching-up to developed countries.

Keywords: economic growth; innovation capacity; GMM method; CEE countries.

DOI: 10.1504/IJBG.2019.100252

International Journal of Business and Globalisation, 2019 Vol.22 No.4, pp.716 - 728

Available online: 17 Jun 2019 *

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