• Dushko Josheski University GoceDelcev - Stip, R.Macedonia
  • Cane Koteski University GoceDelcev - Stip, R.Macedonia
  • Marija Magdinceva Sopova University GoceDelcev - Stip, R.Macedonia
Keywords: Tobin’s q, R&D, Market value, Replacement value, CESEE countries


In this paper Tobin’s and R&D investment issue has been subject of investigation. Tobin’s q quotient is derived by the ratio of market value (market capitalization of listed companies excluding investment companies and mutual funds) and replacement value of capital used in production (Adjusted savings: consumption of fixed capital). Further, the influence of democracy indices Freedom House political rights and Freedom house civil liberties as proxies for democracy has been investigated along with the some government related variables as well as other macroeconomic variables. The basic idea of this paper is being derived from Arrow paper. ZviGriliches first introduced production function that relates market value of the firms, tangible and intangible assets. This model also can be applied in a small and simple Keynesian framework, where change in capital stock (investment) is a function of the difference between actual q and normal qi.e. normal q = 1, and some natural growth rate (actually fitted values of the output growth), when q = q = 1 investment equals savings, i.e. there exists macroeconomic equilibrium. In the empirical section theories had been tested on a pooled data from sample of 12 CESEE countries.


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