IDEAS home Printed from https://ideas.repec.org/a/spr/epolin/v52y2025i3d10.1007_s40812-025-00365-0.html
   My bibliography  Save this article

The EU investment gap is really an R&D gap

Author

Listed:
  • Daniel Gros

    (Bocconi University)

  • Philipp-Leo Mengel

    (Bocconi University)

  • Giorgio Presidente

    (Bocconi University)

Abstract

This paper examines the prevalent notion of an “investment gap” in Europe. By using data from different sources, we come to three conclusion. First, as a share of GDP, overall investment is higher in Europe than in the US. Second, where Europe significantly lags is in intangible investments, especially in R&D and software. Third, this is due mainly to a composition effect, since European industry is concentrated in mid-tech sectors with low research intensity. We conclude that the current public financing initiatives at the national and EU level that focus mainly on tangible low-risk and thus low-return projects do not foster high-tech industries and innovation, and thus ultimately do little to increase long-term growth in Europe.

Suggested Citation

  • Daniel Gros & Philipp-Leo Mengel & Giorgio Presidente, 2025. "The EU investment gap is really an R&D gap," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 52(3), pages 667-682, September.
    • Handle: RePEc:spr:epolin:v:52:y:2025:i:3:d:10.1007_s40812-025-00365-0
    DOI: 10.1007/s40812-025-00365-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40812-025-00365-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s40812-025-00365-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Gros, Daniel, 2014. "Investment as the key to recovery in the euro area?," CEPS Papers 9821, Centre for European Policy Studies.
    2. Francesco Caselli & James Feyrer, 2007. "The Marginal Product of Capital," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(2), pages 535-568.
    3. Francesco Zezza & Dario Guarascio, 2024. "Fiscal policy, public investment and structural change: a P-SVAR analysis on Italian regions," Regional Studies, Taylor & Francis Journals, vol. 58(6), pages 1356-1373, June.
    4. Giovanna Ciaffi & Matteo Deleidi & Mariana Mazzucato, 2024. "Measuring the macroeconomic responses to public investment in innovation: evidence from OECD countries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(2), pages 363-382.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dario Guarascio & Mario Holzner & Donato Iacobucci & Valentina Meliciani, 2025. "European competitiveness in the new global context: structural constraints, strategic dependencies and the role of the new industrial policy," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 52(3), pages 525-533, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Reljic, Jelena & Zezza, Francesco, 2025. "Breaking the divide: Can public spending on social infrastructure boost female employment in Italy?," Economic Modelling, Elsevier, vol. 143(C).
    2. Luca Marchiori & I-Ling Shen & Frédéric Docquier, 2013. "Brain Drain In Globalization: A General Equilibrium Analysis From The Sending Countries' Perspective," Economic Inquiry, Western Economic Association International, vol. 51(2), pages 1582-1602, April.
    3. Blanco, Luisa & Grier, Robin, 2012. "Natural resource dependence and the accumulation of physical and human capital in Latin America," Resources Policy, Elsevier, vol. 37(3), pages 281-295.
    4. Mika Nieminen, 2017. "Patterns of international capital flows and their implications for developing countries," WIDER Working Paper Series wp-2017-171, World Institute for Development Economic Research (UNU-WIDER).
    5. Newbold, Stephen & Griffiths, Charles & Moore, Chris & Wolverton, Ann & Kopits. Elizabeth, 2010. "The “Social Cost of Carbon” Made Simple," National Center for Environmental Economics-NCEE Working Papers 280887, United States Environmental Protection Agency (EPA).
    6. Mike Waugh & David Lagakos & Doug Gollin, 2011. "The Agricultural Productivity Gap in Developing Countries," 2011 Meeting Papers 1397, Society for Economic Dynamics.
    7. Kevin S. Nell & A.P. Thirlwall, 2017. "Why does the productivity of investment vary across countries?," PSL Quarterly Review, Economia civile, vol. 70(282), pages 213-245.
    8. Gente, Karine & León-Ledesma, Miguel A. & Nourry, Carine, 2015. "External constraints and endogenous growth: Why didn't some countries benefit from capital flows?," Journal of International Money and Finance, Elsevier, vol. 56(C), pages 223-249.
    9. Julia, Knolle, 2014. "An Empirical Comparison of Interest and Growth Rates," MPRA Paper 59520, University Library of Munich, Germany.
    10. Oleg Badunenko & Daniel Henderson & Romain Houssa, 2014. "Significant drivers of growth in Africa," Journal of Productivity Analysis, Springer, vol. 42(3), pages 339-354, December.
    11. Temple, Jonathan & Ying, Huikang, 2014. "Life During Structural Transformation," CEPR Discussion Papers 10297, C.E.P.R. Discussion Papers.
    12. Carolina Arteaga Cabrales, 2011. "Human Capital Externalities and Growth," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 29(66), pages 12-47, December.
    13. Herrmann, Sabine & Kleinert, Jörn, 2014. "Lucas paradox and allocation puzzle: Is the euro area different?," Discussion Papers 06/2014, Deutsche Bundesbank.
    14. Maya Eden, 2019. "International Liquidity Rents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 147-159, January.
    15. Heathcote, Jonathan & Perri, Fabrizio, 2014. "Assessing International Efficiency," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 523-584, Elsevier.
    16. Maya Eden & Paul Gaggl, 2018. "On the Welfare Implications of Automation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 29, pages 15-43, July.
    17. Sposi, Michael, 2022. "Demographics and the evolution of global imbalances," Journal of Monetary Economics, Elsevier, vol. 126(C), pages 1-14.
    18. repec:dgr:rugggd:gd-120 is not listed on IDEAS
    19. Clemens, Michael A. & Pritchett, Lant, 2019. "The new economic case for migration restrictions: An assessment," Journal of Development Economics, Elsevier, vol. 138(C), pages 153-164.
    20. Miguel Leon-Ledesma & Alessio Moro, 2016. "The rise of the service economy and the real return on capital," Studies in Economics 1604, School of Economics, University of Kent.
    21. Garita, Gus, 2009. "How Does Financial Openness Affect Economic Growth and its Components?," MPRA Paper 20099, University Library of Munich, Germany.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:epolin:v:52:y:2025:i:3:d:10.1007_s40812-025-00365-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.