Innovative potential in regional production functions of VES type

The paper develops the econometric analysis of the aggregative regional non-linear production functions of the "flows-flows" type [10] with two examples of the Gorbunov production function with VES, generated by the concave quadratic functions and by generalized Solow functions [7]. The research shows the controversial results of empirical analysis (results of econometric tests), but it generally supports the hypothesis of the weak positive R&D sector's impact on the GRP growth. Therefore, it contributes to our understanding of the Jones' hypothesis [19, 20] on zero R&D sector's impact on economic growth in the country.