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European Innovation Dynamics and US Economic Impact: Theory and Empirical Analysis

Author

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  • Welfens, Paul J. J.

    (University of Wuppertal)

  • Irawan, Tony

    (University of Wuppertal)

Abstract

The role of product innovations is growing in the world economy, and the EU and the US are key players here. The analysis presented herein explains product innovations in the EU25 for the period 2006-2012, namely through lagged R&D (relative to GDP), cumulated FDI inflows (relative to the host country capital stock) and cumulated FDI inflows (relative to the host country capital stock), joint internet intensity, broadband intensity and potential competition. For the first time we can offer a broad analysis of product innovation dynamics in Europe which should be the basis for not only better supply-side policy in EU countries and growth policy, respectively, but it also suggests a strong role for international digital communication in relation to product innovation dynamics. Moreover, the approach provides new important arguments in favor of the TTIP negotiations between the US and the EU and it suggests a broader analytical link between trade, FDI, innovation, employment and output growth.

Suggested Citation

  • Welfens, Paul J. J. & Irawan, Tony, 2014. "European Innovation Dynamics and US Economic Impact: Theory and Empirical Analysis," IZA Discussion Papers 8507, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8507
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    1. Bertschek, Irene, 1995. "Product and Process Innovation as a Response to Increasing Import and Foreign Direct Investment," Journal of Industrial Economics, Wiley Blackwell, vol. 43(4), pages 341-357, December.
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    Cited by:

    1. Paul Welfens, 2014. "Issues of modern macroeconomics: new post-crisis perspectives on the world economy," International Economics and Economic Policy, Springer, vol. 11(4), pages 481-527, December.
    2. Paul Welfens, 2015. "Innovation, inequality and a golden rule for growth in an economy with Cobb-Douglas function and an R&D sector," International Economics and Economic Policy, Springer, vol. 12(4), pages 469-496, October.
    3. Paul J.J. Welfens, 2015. "Transatlantisches Freihandelsabkommen EU-USA: Befunde zu den TTIP-Vorteilen und Anmerkungen zur TTIP-Debatte," EIIW Discussion paper disbei209, Universitätsbibliothek Wuppertal, University Library.

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    More about this item

    Keywords

    innovation; foreign direct investment; TTIP negotiation;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F15 - International Economics - - Trade - - - Economic Integration
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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