1. Assoc.Prof.Dr. Yılmaz BAYAR 19 June 2015 Bucharest Macroeconomic Determinants of Technological Progress in Selected Eurozone Countries 1 BASIQ 2015 International Conference

2. Introduction Literature Review Data and Method Empirical Application and Major Findings Conclusion Outline 2 BASIQ 2015 International Conference

3. Sustainable economic growth is one of the main goals of all the countries in the world. Therefore, economic policymakers try to determine policies for achieving sustainable economic growth for the welfare of their public. Both neoclassical growth theories and endogenous growth theories assert that technological progress is one of the key factors behind the long run economic growth. See Solow (1956) and Swan (1956); Romer (1986), Lucas (1988), Romer (1990) Introduction 3 BASIQ 2015 International Conference

4. Eurozone consists of major developed countries such as Germany, France, Finland and the Netherlands in the world and second largest economy in the world. We investigate the role of macroeconomic environment in success of their technological progress in selected Eurozone countries (Austria, Belgium, Germany, Finland, France, Ireland, Italy, Netherlands, Portugal and Spain) during the period 1999- 2012. This study will be one of the leading studies on the impact of macroeconomic environment on technological progress in Eurozone and contributes to the literature by filling the gap in this area. Introduction 4 BASIQ 2015 International Conference

5. Literature Review 5 BASIQ 2015 International Conference R&D expenditures had positive impact on technological progress (See Biatour and Kegels (2008), Khan and Roy (2011), Guloglu et al. (2012), Huňady and Orviská (2014)). Openness had positive impact on technological progress (Khan and Roy (2011)). Financial development had positive impact on technological progress (Akanbi (2011), Nwosu et al. (2013)) Human development had positive impact on technological progress (Akanbi (2011)) High technology exports had positive impact on technological progress (Guloglu et al. (2012))

6. Literature Review 6 BASIQ 2015 International Conference Foreign direct investment had positive impact on technological progress (Guloglu et al. (2012)) Macroeconomic instability had negative impact on technological progress (Akanbi (2011)) Interest rate had negative impact on technological progress (Guloglu et al. (2012))

7. Data and Method 7 VariableSource Total patent grants (TPG)WIPO Real GDP per capita groqth (annual, %) (RGGR)World Bank Domestic credi to private sector (% of GDP) (DCP) World Bank Consumer price index (Base year 2005) (CPI)Eurostat Foreign direct investment net inflows (FDI)World Bank Gross domestic savings (GDS)World Bank High technology exports (HTE)World Bank Research and development expenditure (RDE)World Bank Method Fixed effects Poisson regression model Negative Binomial Regression Model BASIQ 2015 International Conference

8. Empirical Application 8 BASIQ 2015 International Conference VariablesCoefficientProbability TPG 3.6650.001 RDE 4.7820.024 HTE 3.2740.015 FDI 4.0710.000 RGGR 4.8260.006 DCP 3.5690.018 GDS 3.4250.013 CPI -4.4210.000

9. Empirical Application 9 Panel Unit Root Test (Hadri and Kuruzomi (2012) ) BASIQ 2015 International Conference Variables Level Values (Constant&Trend) First Level (Constant) TPG -2.631-4.8850.987*0.836* RDE 4.6935.3260.745*0.114* HTE -12.885-14.5681.032*1.642* FDI -2.522-3.4270.641*1.457* RGGR -11.732-10.6741.347*0.886* DCP 2.9444.3211.643*0.902* GDS -11.668-14.5620.447*1.526* CPI -7.342-5.7330.902*1.117* * stationary at 0.05 significance level

10. Empirical Application 10 Fixed Effects Poisson Regression Model BASIQ 2015 International Conference VariablesCoefficient Standar d Error Zp DRDE0.1699210.0545853.1129880.0023* DHTE0.1594080.0494743.2220590.0017* DFDI0.0326630.1060020.3081340.7585 DRGGR0.4408670.0569787.7374590.0000* DDCP0.2246610.0773142.9058110.0046* DGDS0.1627340.0543632.9934480.0034* DCPI-0.2345840.079474-2.9516930.0038* Log Likelihood-82346.21 Wald chi2 (7)514.82 Wald prob.0.0021 * statistically significant at 5%

11. Empirical Application 11 Negative Binomial Regression Model VariablesCoefficientStandard Error ZP DRDE0.2042460.0507794.0222850.0001* DHTE0.1243170.0586232.1206050.0361* DFDI0.0341530.0896910.3807830.7041 DRGGR0.5317320.0927235.7346240.0000* DDCP0.2647930.1223472.1642830.0322* DGDS0.1350620.0594982.2700410.0251* DCPI-0.1170610.805645-0.1453020.8847 Likelihood-ratio test of alpha=0: chibar2(07) 926.03 Log Likelihood -678.93 67.23 * statistically significant at 5% BASIQ 2015 International Conference

12. Conclusion The findings of panel Poisson regression model with fixed effects showed that: Economic growth, financial development, domestic savings, high-technology exports, R&D expenditure had positive impact on technological progress, while macroeconomic instability (inflation) had negative impact on technological progress. On the other hand foreign direct investment variable was found to be statistically insignificant. 12 BASIQ 2015 International Conference

13. Conclusion Our findings are consistent with the findings of few studies in the literature and it verified that macroeconomic stability, development of financial sector, domestic savings and R&D expenditure exhibit importance for the technological progress. Ggovernments should consider these issues in policymaking and also take measures for the development of financial sector and encourage the public to make savings. 13 BASIQ 2015 International Conference

14. Conclusion The findings of panel negative binomial model demonstrated that economic growth, financial development, domestic savings, high-technology exports, R&D expenditure had positive impact on technological progress, while macroeconomic instability (inflation) and foreign direct investment variables were found to be statistically insignificant. Our findings are consistent with the findings of a few studies in the literature and it verified that macroeconomic stability, development of financial sector, domestic savings and R&D expenditure exhibit importance for the technological progress. Therefore, governments should consider these issues in policymaking and also take measures for the development of financial sector and encourage the public to make savings. 14 BASIQ 2015 International Conference

15. 15 Macroeconomic Determinants of Technological Progress in Selected Eurozone Countries BASIQ 2015 International Conference – New Trends in Sustainable Business and Consumption