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The purpose of this paper is to investigate whether a country’s innovative capacity increases when the business sector invests more in research and development. The empirical investigation covers Serbia and its three neighboring countries in the European Union – Hungary, Romania, and Bulgaria – for the period from 2011 to 2021. The results indicate that an increase in investment by the business sector at the current level of GDP influences the increase in innovation in the case of Serbia, Hungary, and Bulgaria.

Business Sector Investment in R&D as a Factor for Improving Innovation - Evidence from Hungary, Romania, Bulgaria, and Serbia