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R&D capital and economic growth: The empirical evidence

Author

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  • Mc Morrow, Kieran

    (European Commission)

  • Röger, Werner

    (European Commission)

Abstract

This paper reviews the empirical literature on rates of return on R&D and interprets the economic significance of these estimates using a semi-endogenous growth model with a calibrated knowledge production sector. We analyse how R&D subsidies, a reduction of entry barriers for start-ups and increasing high-skilled labour would contribute towards raising productivity and knowledge investment in the EU. The simulation results show that substantial efforts will have to be made if Europe wants to come close to achieving the Lisbon productivity and knowledge-investment targets. Achieving US standards in all three areas would reduce the productivity gap by about 50 percent. Improving the quality of tertiary education and increasing competition in non-manufacturing sectors would also help the EU to get to the productivity frontier.

Suggested Citation

  • Mc Morrow, Kieran & Röger, Werner, 2009. "R&D capital and economic growth: The empirical evidence," EIB Papers 4/2009, European Investment Bank, Economics Department.
    • Handle: RePEc:ris:eibpap:2009_004
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    References listed on IDEAS

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    More about this item

    Keywords

    Productivity differences; endogenous growth; R&D; DSGE models;
    All these keywords.

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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