Scaling up innovation: does research and development have a role to play in economic growth? A case of Hungary.

Abstract

The study investigated the impact of research and development expenditure on economic growth in Hungary using annual time series data ranging between 1996 and 2013. Abundant literature is available which shows that research and development expenditure leads to the improvement in economic growth. However, such studies in the case of Hungary are quite scant. The Johansen and Juselius’ (1990) cointegration test noted that there exists a long run relationship between research and development and economic growth in Hungary. Moreover, economic growth was found to have been Granger caused by research and development expenditure in Hungary both in the short and long run, in support of the literature. The study, therefore, urges the Hungarian policy makers to craft and implement action plans that boost research and development expenditure in order to enhance economic growth in Hungary.