Unveiling the determinants of R&D expenditure: insights from southern European regions

This study examines the determinants of research and development (R&D) expenditure across 48 Southern European regions from seven countries over 2010–2021, with particular attention to the role of Quality of Government (QoG), income per capita, and infrastructure density. The results suggest that QoG is positively associated with R&D expenditure, with impartiality emerging as the most relevant component. Furthermore, regional per capita income and human and digital capital show significant relationships with R&D expenditure. In contrast, variables concerning physical infrastructure and air and maritime transport yield inconsistent results. Regarding this institutional factor, spatial models introduce important nuances, revealing that while QoG is directly associated with public R&D expenditure, its relationship with business expenditure manifests as a positive spatial spillover across borders. Cross-country heterogeneity analysis indicates that the association with QoG presents geographical disparities, being predominantly observed in Spanish and Portuguese regions. Finally, dynamic panel models confirm the benchmark findings.