R D and economic growth in Slovenia: A dynamic general equilibrium approach with endogenous growth

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 corporate income tax and increas...

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Bibliographic Details
Published inPanoeconomicus Vol. 58; no. 1; pp. 67 - 89
Main Authors Verbič Miroslav, Majcen Boris, Ivanova Olga, Čok Mitja
Format Journal Article
LanguageEnglish
Published Economists' Association of Vojvodina 01.01.2011
Subjects
Endogenous growth
General equilibrium modelling
R&D
Slovenia
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Summary: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 corporate income tax and increase of government spending on R&D turned out to be the most effective suggested policy measures. While the former policy measure is still followed in part by an undesired transfer of the tax relief to dividends, a moderate 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 desired 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.
ISSN:1452-595X
DOI:10.2298/PAN1101067V