Research and development expenditures' efficiency in Baltic states

Abstract

Research and development (R&D) expenditures play a significant role in companies' and countries' efforts to become innovative and market-competitive. The study aims to attempt to quantitatively describe the impact of R&D expenditures on competitiveness for the selected competitive determinants: turnover, gross value added and labour productivity in selected countries in the manufacturing sector. The study covered the three Baltic countries, Estonia, Lithuania and Latvia and the period 2010 – 2020. Only in the case of Estonia, the statistically significant positive correlation between R&D expenditure and value-added and labour productivity was recorded. The paper shows variations in the size of the outlays as well as their dynamics among the countries analysed. The low level of R&D expenditure's impact on measures of competitiveness, with their low baseline value, is a negative factor. The results indicate the low effectiveness of R&D expenditure in the analysed countries. The source of Estonia's positive results is to be found in corporate tax solutions. In future research, special attention should be paid to organisational solutions and the impact of the business environment on the growth of business competitiveness.