Economic growth is one of the most important concepts in the world economy. Although some authors critically believe that the level and rates of economic growth do not necessarily reflect the actual standard of living, it still remains the main way to measure a country's well-being. Different views on the topic of economic growth, as well as the factors that influence it, have been present throughout the history of economic thought from the very beginning. Unlike many theories of economic growth, which believe that in the long run there will be diminishing returns on factors of production such as labor and capital, Paul Romer in his theory of endogenous growth believes that technological progress, through knowledge accumulation, idea creation and innovation, leads to increasing returns, and thus contributes more to long-term economic growth, unlike other factors. In this paper, on the example of economic growth in B&H, the hypothesis that the activities of knowledge-based services contribute more to the gross domestic product, compared to other sectors was tested. To prove the hypothesis, a multiple linear regression model was made based on a time series of 48 consecutive quarterly values of B&H gross domestic product and sectoral gross value added according to the income and production approach. In the model, activities were grouped into those that are predominantly labor-intensive, knowledge-based services, personal and social services, and other activities. The results showed that the average value of gross value added per worker employed in the sectors of knowledge-based services has a 2.5 higher contribution compared to a worker in the labour-intensive sectors and a 2.47 higher contribution compared to one worker in the personal and social services segment. Also, tests of the implemented model show that additional employment in the sectors of knowledge-based services leads to accelerated economic growth in B&H.
Azam M, Ahmed AM. Role of human capital and foreign direct investment in promoting economic growth. International Journal of Social Economics. 2015;
2.
Basile R, Usai S. Analysis of regional endogenous growth. In: Handbook of research methods and applications in economic geography. 2015.
3.
Bond-Smith S, McCann P, Oxley L. A regional model of endogenous growth without scale assumptions. Spatial Economic Analysis. 2018;13(1):5–35.
4.
Boztosun D, Aksoylu S, Şentürk Ulucak Z. The role of human capital in economic growth. Economics World. 2016;4(3):101–10.
5.
Bondarev A, Greiner A. Endogenous growth and structural change through vertical and horizontal innovations. In: Macroeconomic Dynamics. 2017. p. 1–28.
6.
Choi C, Yi MH. The Internet, R&D expenditure and economic growth. Applied Economics Letters. 2018;25(4):264–7.
7.
Collins T. Imitation: A catalyst for innovation and endogenous growth. Economic Modelling. 2015;51:299–307.
8.
Cozzi G. Endogenous growth, semi-endogenous growth... or both? A simple hybrid model. Economics Letters. 2017;154:28–30.
9.
Cvetanović S, Filipović M, Nikolić M, Belović D. Endogenous growth theory and regional development policy. Spatium. 2015;10–7.
10.
Day C. Non‐Scale Endogenous Growth with R&D and Human Capital. Scottish Journal of Political Economy. 2016;63(5):443–67.
11.
De S. Intangible capital and growth in the ‘new economy’: Implications of a multi-sector endogenous growth model. Structural Change and Economic Dynamics. 2014;28:25–42.
12.
Etro F. The Romer Model with Monopolistic Competition and General Technology. rdf) Universita’degli Studi di Firenze, Dipartimento di Scienze per l’Economia e l’Impresa. 2019;(wp2019_08).
13.
Furukawa Y. Innovation through Global Collaboration in an Endogenous Growth Model. 2016;
14.
Ghiglino C, Nishimura K, Venditti A. Non-Balanced Endogenous Growth and Structural Change: When Romer Meets Kaldor and Kuznets. 2018;
15.
Ghio N, Guerini M, Lehmann EE, Rossi-Lamastra C. The emergence of the knowledge spillover theory of entrepreneurship. Small Business Economics. 2015;44(1):1–18.
16.
Gutiérrez PJ. A full test of a Romer’s endogenous growth model. International Journal of Economics and Business Research. 2015;10(4):297–325.
17.
He S. Endogenous Growth: Innovation, Credit Constraints, and Stock Price Bubbles. 2018;
18.
Hori T. Monetary policy, financial frictions, and heterogeneous R&D firms in an endogenous growth model. The Scandinavian Journal of Economics. 2017;
19.
Huggins R, Thompson P. Entrepreneurship, innovation and regional growth: a network theory. Small Business Economics. 2015;45(1):103–28.
20.
Inekwe JN. The contribution of R&D expenditure to economic growth in developing economies. Social indicators research. 2015;124(3):727–45.
21.
Jerbashian V. Knowledge licensing in a model of R&D-driven endogenous growth. The BE Journal of Macroeconomics. 2016;16(2):555–79.
22.
Paul Romer: Ideas, nonrivalry, and endogenous growth. The Scandinavian Journal of Economics. 2019;121(3):859–83.
23.
Kaldor N. The relation of economic growth and cyclical fluctuations. The Economic Journal. 1954;64(253):53–71.
24.
Kaldor N. Alternative theories of distribution. The review of economic studies. 1955;23(2):83–100.
25.
Kaldor N. A model of economic growth. The economic journal. 1957;67(268):591–624.
26.
Kaldor N, Mirrlees JA. A new model of economic growth. The Review of Economic Studies. 1962;29(3):174–92.
27.
Kanđija V, Lovrić L. Ekonomski rast tranzicijskih zemalja u procesu globalizacije. Research gate. 2007;
28.
Kuwahara S. Multiplicity and stagnation under the Romer model with increasing returns of R&D. Economic Modelling. 2019;79:86–97.
29.
Knowledge growth and the allocation of time. Journal of Political Economy. 2014;122(1):1–51.
30.
McDonnell T. Innovation and Growth: Concepts and Policy Implications. 2018;
31.
Moore D, Vamvakidis A. Ekonomski rast u Hrvatskoj: mogućnosti i ograničenja. Financijska teorija i praksa. 2008;32(1):1–28.
32.
Parente S. The failure of endogenous growth. Knowledge, technology & policy. 2001;13(4):49–58.
33.
Pece AM, Simona OEO, Salisteanu F. Innovation and economic growth: An empirical analysis for CEE countries. Procedia Economics and Finance. 2015;26:461–7.
34.
Pradhan RP, Arvin MB, Hall JH, Nair M. Innovation, financial development and economic growth in Eurozone countries. Applied Economics Letters. 2016;23(16):1141–4.
35.
Qian T. A note on the effect of patents in endogenous growth models. Applied Economics Letters. 2018;25(3):158–61.
36.
Romer PM. Increasing returns and long-run growth. Journal of political economy. 1986;94(5):1002–37.
37.
Romer PM. The origins of endogenous growth. Journal of Economic perspectives. 1994;8(1):3–22.
38.
Romer PM. Human capital and growth: theory and evidence. 1989.
39.
Romer PM. Mathiness in the theory of economic growth. American Economic Review. 2015;105(5):89–93.
40.
Sokolov-Mladenović S, Cvetanović S, Mladenović I. R&D expenditure and economic growth: EU28 evidence for the period 2002–2012. Economic research-Ekonomska istraživanja. 2016;29(1):1005–20.
41.
Sredojević D, Cvetanović S, Bošković G. Technological changes in economic growth theory: Neoclassical, endogenous, and evolutionary-institutional approach. Economic Themes. 2016;54(2):177–94.
42.
Stevanović S. Model ekonomskog rasta u Bosni i Hercegovini u periodu 2007-2017 godine - Mogućnosti za umanjenje budućih rizika. Research gate. 2019;
43.
Swan TW. Economic growth and capital accumulation. Economic record. 1956;32(2):334–61.
44.
Wang F, Liu M, February. Analysis on the Contribution of R&D Input to Economic Growth in Western China. In: 2nd International Forum on Management, Education and Information Technology Application (IFMEITA 2017. 2018.
45.
Zhao R. Technology and economic growth: From Robert Solow to Paul Romer. Human Behavior and Emerging Technologies. 2019;1(1):62–5.
46.
Zhong L. Innovation as Determinants of Economic Growth in US Counties. Journal of Applied Business and Economics. 2017;19(4).
Citation
Copyright
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
The statements, opinions and data contained in the journal are solely those of the individual authors and contributors and not of the publisher and the editor(s). We stay neutral with regard to jurisdictional claims in published maps and institutional affiliations.
