Determinants of Economic Growth across the European Union: A Panel Data Analysis on Small and Medium Enterprises

Across the European Union, small and medium enterprises (SMEs) are major contributors to the increase of the regional gross domestic product. The present study investigates the relationship between economic growth, imports and exports regarding the activity of small and medium enterprises within the European Union (EU-28). A panel generalized method of moments (GMM) analysis and a panel two-stage least squares (2SLS) analysis were carried out for the period 2005-2020. Empirical results indicated that online imports and exports together with extra-EU imports and exports had a significant impact on economic growth, proxied by value added, venture capital investments and turnover from e-commerce. In the light of these results, regional and national authorities are called to support business endeavors of small and medium enterprises due to their relevance on the market and contribution to the financing of national budgets.