Analysis of the Impact of Expenditures on Education and R&D on GDP in Central European Countries

Abstract

The main purpose of this paper is to identify the impact of public spending on education and research and development (R&D) on the formation of gross domestic product (GDP) in nine Central European countries, which are divided into two clusters – "old" and "new" EU members. The study took into account official Eurostat data of both the EU and national statistical organizations for the period 2010–2019. The analysis of this impact was carried out using a system approach, statistics and econometric framework including panel data regression, Wald, Breusch-Pagan, Hausman tests. The main finding of the present study is the identification of additional income in terms of GDP in Euro per capita for selected countries, which is obtained from adequately spent public funds for education and R&D. Our results showed that the strongest influence of these expenditures for the "old" members was in Germany and Austria, and for the "new" – in Slovenia and Czechia. It is proved that this impact is different in individual countries and is determined by the public financial policy of national governments.