Innovation processes and economic growth in the context of European integration

Abstract

The paper explores the influence of innovations on economic growth in countries, which are candidates to membership in the European Union. For empirical research, we have chosen nine countries such as Albania, Bosnia and Herzegovina, Georgia, Montenegro, North Macedonia, Serbia, Moldova, Turkey, and Ukraine. To investigate the impact of innovation factors on economic performance we have constructed three panel data models with fixed effects. The results of models estimation show ICT service exports (% of total service exports) and number of researchers in R&D (per million people) affect GDP per capita of the countries - candidates for membership in the EU with a lag of one year. Besides this, all control variables are significant except government expenditure on education. Given the ceteris paribus clause, an increase in the ICT service exports by 1% will lead to the rise of GDP per capita by minimum 0.09 and maximum 0.16 percent points. At the same time, an increase in the number of researches in R&D with a lag 1 by 1% - to the rise of GDP per capita by minimum 0.22 and maximum 0.25 percent points. Insignificance of high-technology exports and patent applications of residents and significance of ICT service exports and number of researchers in R&D in countries - candidates for membership in the EU might indicate that these countries are ones with preferably lowprocessed exports but potential for driving the innovations production activities.