R&D and Economic Growth in Slovenia: A Dynamic General Equilibrium Approach with Endogenous Growth

Verbic, Miroslav and Majcen, Boris and Cok, Mitja (2009): R&D and Economic Growth in Slovenia: A Dynamic General Equilibrium Approach with Endogenous Growth.

Abstract

In the article, we model R&D as a major endogenous growth element in a small open economy general equilibrium framework and consider several R&D policy scenarios for Slovenia. Increase of the share of sectoral investment in R&D that is deductible from the CIT and increase of government spending on R&D turned out to be the most effective policy measures. While the former policy measure is still in part followed by an undesired dividend increase, the increase of government spending on R&D boosts long-run productivity in the economy, thus increasing the future value of firms, which is reflected in a desire dividend increase. The households that would gain more utility from such policy scenarios are those with more skilled and highly skilled labour, but not the very top earners in the economy.

• Item Type: MPRA Paper
• Language: English
• Keywords: endogenous growth; general equilibrium modelling; R&D; Slovenia
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O38 - Government Policy; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D58 - Computable and Other Applied General Equilibrium Models; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General

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