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R&D capital and economic growth: The empirical evidence

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  • Mc Morrow, Kieran

    ()
    (European Commission)

  • Röger, Werner

    ()
    (European Commission)

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    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.

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    Bibliographic Info

    Paper provided by European Investment Bank, Economics Department in its series EIB Papers with number 4/2009.

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    Length: 21 pages
    Date of creation: 23 Dec 2009
    Date of revision:
    Handle: RePEc:ris:eibpap:2009_004

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    Related research

    Keywords: Productivity differences; endogenous growth; R&D; DSGE models;

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