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European Productivity Gaps Is R&D the Solution?

  • Christoph Meister
  • Bart Verspagen

This paper investigates the potential impact of increased business R&D efforts in Europe on the total factor productivity gap between European and U.S. industry. The paper addresses Europe’s ambition, expressed 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 Europe formulated at the 2002 Barcelona Summit. Based on existing empirical models from the literature on productivity and R&D expenditures, we provide projections on the expected productivity impacts of increased R&D in manufacturing industries. The results suggest that raising European R&D is not a complete solution to the European productivity backlog relative to the U.S. We also find that the most dramatic impacts may be expected from raising R&D in so-called low-tech sectors.

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Paper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 05-06.

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Date of creation: 2005
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Handle: RePEc:aal:abbswp:05-06
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