Productivity and Economic Growth in the European Union: Impact of Investment in Research and Development

Abstract

This paper focuses on investment in research and development as a factor of
labour productivity and economic growth. Our analysis confirms the link between
expenditure for research and development (expressed in % of GDP) and labour
productivity (expressed in the number of hours worked) based on selected data
for EU Member States in the period 1995-2013. A causal link between variables
of the concave parabola was confirmed, and the value of expenditure for research
and development (2.85% of EU GDP) maximising productivity (per hour of work)
was determined based on the examined data. In accordance with these findings,
EU’s target of reaching 3% of GDP spent on research and development to be
achieved by 2020 seems in support of reaching maximum productivity in the EU.