Abstract
For the last 15 years the question about increasing research and development investment level to 3% of the European Union GDP has been included in its highest planning documents, such as Lisbon Strategy and Strategy of Europe 2020, and has been defined as necessary input for further development of countries. But as research and development investment is an input measure not an output measure the real question is whether private entrepreneurs also see increase of research and development expenditures as factor that would influence companies’ profits positively. The aim of this paper is to research and display the impact of research and development investments on the companies’ profits by using econometric methods. The hypothesis that research and development expenditures increase companies’ profits has been approved by the results of panel data analysis, and, moreover, it has showed the influence of research and development expenditures on profit of enterprise in research and development intensive industries (pharmacy/biomedicine and information technologies/computer technologies) of European Union member states and Latvia.
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