Convergence in R&D Intensity across European Countries: A Fractional Integration Approach

Abstract In this paper, the convergence in R&D expenditure across 21 European Union countries is examined by applying fractional integration analysis. Data are annual and cover the period 1990–2010. Results show that there is certain degree of convergence in R&D intensity. However, the speed of the convergence varies across countries. For most of the countries, the speed of convergence is higher in the R&D expenditures of governments than in the R&D expenditures of higher education institutions and businesses. Differences in the speed of convergence could be explained by differences in industry structures, in cultural trajectories, in macroeconomic conditions, or in internationalisation. The more dissimilar countries are in terms of these factors the more likely they are to have divergent paths. Furthermore, differences in R&D convergence by institutional sectors could be due to the different goals of each sector and to the relative weight of each sector in the entire economy