Investments in R&D as a determinant of innovation in the economy

Abstract

Goal – The main aim of this article is to examine investments in R&D in relation to the gross domestic product as the main factor for the development of innovation in each country. Moreover, the article shows the distribution of R&D expenditure between four main sectors in order to find out which sector plays the most important role in terms of the long-term stability of R&D activity. Research methodology – The author uses the results of gross expenditures on R&D prepared by Eurostat. Score – The results of gross domestic expenditure on R&D lead to conclusion that the more funds spent on R&D activity, the greater the level of innovation was achieved in EIS ranking. What is more, there is a regularity in the geographical distribution of the most innovative countries in the north. In the central part there are strong innovative countries. Whereas in the south and in the east, there are moderately innovative countries. Additionally, in most EU countries the structure of expenditure on R&D by institutions/organizations financing this activity is in the following order due to the largest share: business sector, higher education sector, government sector and non-profit sector. Originality/value – The use of Eurostat data to approach unconventional R&D sector and the subject of innovation.