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European Innovation Dynamics and US Economic Impact: Theory and Empirical Analysis

Paul Welfens and Tony Irawan ()

No 8507, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The role of product innovations is growing in the world economy, and the EU and the US are key players here. The analysis presented herein explains product innovations in the EU25 for the period 2006-2012, namely through lagged R&D (relative to GDP), cumulated FDI inflows (relative to the host country capital stock) and cumulated FDI inflows (relative to the host country capital stock), joint internet intensity, broadband intensity and potential competition. For the first time we can offer a broad analysis of product innovation dynamics in Europe which should be the basis for not only better supply-side policy in EU countries and growth policy, respectively, but it also suggests a strong role for international digital communication in relation to product innovation dynamics. Moreover, the approach provides new important arguments in favor of the TTIP negotiations between the US and the EU and it suggests a broader analytical link between trade, FDI, innovation, employment and output growth.

Keywords: innovation; foreign direct investment; TTIP negotiation (search for similar items in EconPapers)
JEL-codes: F15 F21 O31 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2014-09
New Economics Papers: this item is included in nep-cse, nep-ict, nep-ino, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: European Innovations Dynamics and US Economic Impact: Theory and Empirical Analysis (2015) Downloads
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