EU Capacity to Bolster and Stimulate Research and Innovation: Who is the Leader in Development?

Abstract

This study investigates the role of innovation in attaining economic growth and development in the 27 EU Member States (EU-27). Our analytical approach employs advanced panel data econometric methods, including an autoregressive distributed lag (ARDL) model and data mapping analysis. Additionally, an interactive approach to regulatory quality was introduced to evaluate its influence on economic development. The results suggest that innovation significantly impacts economic development in both the long and short term. Empirical evidence indicates that the quality of regulatory frameworks is a main factor in shaping economic development in both the long and short terms. The main findings imply the need for countries to align their strategies with the effective integration of digital technologies and sustained innovation and further substantially invest resources in R&D capabilities to ensure robust economic progress. Among the countries examined, Sweden, the Netherlands, Finland, and Denmark exhibited the highest levels of innovation. Some nations, with significant economic potential, such as Romania and Bulgaria, tend to underinvest in R&D.