Innovation and growth: supply and demand factors in the US expansion

Annamaria Simonazzi

No 53, Working Papers in Public Economics from Department of Economics and Law, Sapienza University of Roma

Abstract: It is widely held that the social-economic context of the United States, characterised by labour market flexibility and deregulation of product and capital markets, lies at the basis of the innovative capacity displayed by the country’s productive system in the ‘90s, thus accounting for the growth differential with Europe. Starting from a different interpretative model of innovation and growth, the paper focuses on both supply (institutional and technological) and demand factors. It is argued that, when their interaction is duly taken into account, there is no strong evidence that more deregulated labor and product markets are among the factors allowing for US growth. In accordance with the view that there is no single road to innovation and growth, this leaves room for exploration and implementation of policies that might reconcile innovation and growth with the safeguard of fundamental features of Europe’s social institutions.

Keywords: innovation; growth; deregulation; macroeconomic policies. (search for similar items in EconPapers)
JEL-codes: E2 L50 O3 (search for similar items in EconPapers)
Pages: 31
Date: 2002-02
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