Endogenous Growth Factors and Economic Development: An In-depth Analysis of the Impact of Investments in R&D and Human Capital on Total Factor Productivity and Export Dynamics

Investments in research and development (R&D) and human capital affect economic growth by influencing total factor productivity (TFP) and competitiveness (exports). The determinants of this influence were analysed on a cointegrated panel of seven large countries and separately on five medium-sized or small countries. The results show that TFP and exports per unit of R&D or per unit of human capital mainly depend on the interconnection of these two factors, but also on capital per employee, the control of inflation, the foreign trade share in GDP, oil prices, digitalisation, electrification, the concentration of development activity related to the share of military expenditures in GDP, energy efficiency and ecological protection in the national economy. In medium-sized or small countries, the influence of regulation is greater, while the effect of development activities related to military expenditures is much smaller than in the large countries.