Importance of Research and Development for Economic Growth

Abstract

In economic terms research, development, and innovation encompasses the development and application of scientific and technological achievements that improve products and services or production processes, as well as the organizational conditions in which they are produced. These achievements increase productivity, and thus affect economic growth and development. Lately, innovation and information technology have become an important instrument for advancing and meeting the needs of public interest. Some country’s achievements and potentials in this area are directly related to financial investments, the number of researchers, the results and quality of research, research infrastructure and so on. The most developed countries, such as the US, Japan and China, are also the most innovative, their allocations for research and development lead over the world.

Knowledge-based economies prevail in those countries, with significant allocation by business sector in research and development. Although it lags slightly behind, European Union also seeks to improve these areas. Conversely, Bosnia and Herzegovina has only allocated 0.2% of gross domestic product for research and development over the last five years.

The aim of this article is to research and show the trends of these investments in the EU and in selected countries in the world and region, as well as the comparation of other appropriate indicators. Under an analysis of the achievements of earlier research, point to opportunities to improve the situation in Bosnia and Herzegovina.