European Productivity Gaps Is R&D the Solution

This report investigates the influence of higher business R&D initiatives in European countries on the total factor productivity gap between European and U.S. industry. The report deals with Europe’s mission, indicated at the 2000 Lisbon Summit to become “the most competitive and dynamic knowledge-based economy in the world”, and the 3% R&D intensity target for European countries developed at the 2002 Barcelona Summit. Depending on present empirical models from the literature on productivity and R&D expenditures, we offer forecasts on the predicted productivity influences of increased R&D in manufacturing industries. The outcomes indicate that raising European R&D isn’t a full means to fix the European productivity backlog compared to the U.S. We also discover that probably the most remarkable affect could be expected from raising R&D in so-called low-tech sectors…

Industrialization, and also the association between technological advance and economic growth, brought Europe world economic leadership in the 19th century. However, in the course of the 20th century, European leadership was lost to the United States, and a number of dynamic Asian economies…

Source: Copenhagen Business School

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European Productivity Gaps Is R&D the Solution