Research and Development and Economic Growth: EU Port Regions

Abstract

Investment in research and development (R&D) creates preconditions for the implementation of more advanced and better technologies. It enables the introduction of new products or production processes which can result in higher earnings and potential economic growth. Even though research and development is a catalyst for the genesis of aggregate economic activity, its importance is not widely researched at regional levels. The European Union has defined strategies which view innovation as an essential element in stimulating growth and job creation. The aim of this paper is to establish and measure the impact of investment in R&D on economic growth of port regions. The data used in this research were panel data of the European Union’s port regions for NUTS 2 classification for the period from 2005 to 2015. The results of the two-step Generalized Method of Moments (GMM) indicate that investment in R&D has a significant impact on the economic growth of the port regions in European Union. However, in order for innovations to be accepted and implemented, it is also necessary for regions to have specific economic structure which was further analyzed in this paper. Regions with high innovation capacity create greater economic benefits and are considered to grow faster than other regions.