Innovativity : A Comparison Across Seven European Countries

This paper proposes a framework to account for innovation similar to the usual accounting framework inproduction analysis and a measure of "innovativity" comparable to that of total factor productivity. Thisinnovation accounting framework is illustrated using micro-aggregated firm data from the first CommunityInnovation Surveys (CIS1) for seven European countries: Belgium, Denmark, Ireland, Germany, theNetherlands, Norway and Italy for the year 1992. Based on the estimation of a generalized Tobit model andmeasuring innovation as the share of total sales due to improved or new products, it compares thepropensity to innovate, and the innovation intensity conditional and unconditional on being innovative,across the seven countries and low- and high-tech manufacturing sectors. Even with relatively fewexplanatory variables our innovation framework already accounts for sizeable differences in countryinnovation intensity. It also shows that differences in innovativity across countries can be nonetheless verylarge.