Innovations, technological specialisation and economic growth in the EU

The paper analyses the effects of innovations, technological specialisation and technology diffusion on economic growth and convergence of the EU countries from 1969 to 1998. The empirical analysis is based on a panel data model, which enables us to assess the impacts of these three factors as well as of the usual production factors on long-term economic growth, and to calculate their partial contributions to - and -convergence of labour productivities within the EU. The results show that besides capital accumulation, transferable technical knowledge is a driving force of growth for catching-up EU countries, while it is the level of Ricardian technological specialisation for advanced EU countries.A previous version of the paper was prepared while the author was a Visiting Fellow at the Directorate General for Economic and Financial Affairs, EU Commission. I gratefully acknowledge the stimulating research atmosphere at DG ECFIN and would like to thank Werner Röger and Klaus Wälde for helpful comments. Furthermore, I would like to thank Jürgen Wolters, FU Berlin, for further helpful comments at the workshop for the special issue of this journal in Brussels, February 6–8, 2004.