Illuminating Connections: Exploring the Interplay of Market Capitalization, Research and Development, and Exports for Economic Development in EU Nations

Abstract

This research aims to provide empirical evidence into the nexus between “market capitalization (M CAP), research & development expenditure (RNDE), employees in research and development (RND01), pharmaceutical exports (EXP) and economic development (EG).” The study also takes into consideration patents (PAT) while controlling population and trade openness. To achieve this, the study uses data from 2000 to 2022 for countries in the European Union and estimates a FMOLS (fully modified least squares) model along with robustness check through DOLS (dynamic ordinary least squares) model. The evidence demonstrates that EXP, M CAP and RND01 have a significant impact on EG in the longer run, while PAT and RNDE have an insignificant impact on EG within the context of EU countries. This study also incorporates important theoretical and practical implications, focusing on the promotion of M CAP and RNDE to enhance the economic development of the associated countries. These implications enhance the overall efficiency of this study.