DETERMINANTS OF R&D EXPENDITURE: AN EMPIRICAL EVIDENCE OF BULGARIA

Abstract

Small and medium-sized enterprises (SMEs) place importance on the development of the global economy. Over 90% of the enterprises in the territory of the EU and in Bulgaria are of the SMEs type. The activity of SMEs is essential for the development of the economy of each country. The report aims to analyze the relationship between innovation expenditures of small and medium-sized enterprises (R&D_EXP_SMEs), real economic growth (R_GDP), index of economic freedom (IND_ECO_FRI) and corruption perceptions index (COR_PER_IND) for economy of Bulgaria. Annual data for the period 2000–2020 with 21 observations included were used. An econometric method Ordinary Least Squares (OLS) was applied. The results of the empirical research show that the positive coefficient of the corruption index, index of economic freedom and real economic growth leads to an increase in the expenditure for R&D of SMEs in Bulgaria. It can be concluded that the corruption perceptions index, index of economic freedom and real economic growth has an important role for the increase of the R&D expenditure of SMEs in Bulgaria. If the government wants to stimulate R&D expenditure of SMEs, it should implement policies to increase economic growth and decrease of the corruption in Bulgaria.