R&D Expenditure and Economic Performance: A German Panel Analysis

University essay from Jönköping University/Internationella Handelshögskolan

Abstract: There has been a long line of studies concerning the nexus between R&D expenditure and Economic Performance. However, there has been little research on this nexus on a regional level in Germany. This paper aims to analyse the relationship between R&D expenditure (total, business sector and public sector each) and GDP per capita at a regional level in Germany for the time period 2000-2017. The method of estimation employed in fixed effects panel regression analysis. It is found that total R&D expenditure and regional GDP per capita have an insiginificant relationship, but a negtiavely significant one when a lagged value of R&D expenditure is considered. The relationship between public R&D expenditure and regional GDP per capita is significantly negative, whereas the relationship between business sector R&D expenditure and regional GDP per capita is insignificant. Further scope for research could include analysing the effect of regional innovation clusters and the role of R&D strategy in improving the economic performance of regions in Germany.

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