The Influence of Foreign Direct Investment on Research and Development in EU Countries

Ivana Janjić – Innovation Center, University of Niš, Serbia

Marija Jovanović – Innovation Center, University of Niš, Serbia

Tanja Todorović – Faculty of Technical Sciences, University of Novi Sad, Serbia

Aleksandra Pavlović – The Academy of Applied Technical Studies Belgrade, Serbia

Abstract: Over the last few decades, in modern conditions of globalization, the innovation landscape has changed quickly, affecting the world. In de­veloped countries and economies in transition, Foreign Direct Investment (FDI) has become a driver of economic development and modernization. Research and Development (R&D) is widely acknowledged as a critical fac­tor that stimulates innovation and technological advancement to increase productivity and economic growth. FDI promotes rapid economic restruc­turing and facilitates the acquisition of new technologies. FDI, as a crucial conduit of cross-border technology diffusion, is a significant factor influenc­ing R&D activities in an economy. One of the most efficient ways for national economies to overcome the technology gap with their global competitors is to use knowledge spillovers from FDI. In order to improve their technical ca­pacity, countries may encourage companies to invest more in R&D through FDI and absorb technology transfers from it. This paper’s objective is to test the influence of FDI net inflows on the R&D investment in the sample of 27 EU countries for the period 2015-2021. To provide an empirical investigation of the influence of FDI on R&D, regression analyses were performed. The re­sults of the analysis confirm the importance of FDI for R&D in the case of EU countries. This study revealed that FDI has a positive influence on R&D. The evaluation of the obtained results can serve as a foundation for drawing fur­ther conclusions, contributing to the existing literature and FDI strategy of EU economies.

7th International Scientific Conference – EMAN 2023 – Economics and Management: How to Cope With Disrupted Times, Ljubljana, Slovenia, March 23, 2023, SELECTED PAPERS, published by: Association of Economists and Managers of the Balkans, Belgrade, Serbia; ISBN 978-86-80194-70-7, ISSN 2683-4510, DOI: https://doi.org/10.31410/EMAN.S.P.2023

Creative Commons Non Commercial CC BY-NC: This article is distributed under the terms of the Creative Commons Attribution-Non-Commercial 4.0 License (https://creativecommons.org/licenses/by-nc/4.0/) which permits non-commercial use, reproduction and distribution of the work without further permission. 

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