Innovation, Employment and Growth Policy Issues in the EU and the US

Preface

Contents

List of Figures

1 Structural Change, Innovation and Growth in the Single EU Market

1.1 Introduction

1.2 Theory of Structural Change, Innovation and Growth

1.2.1 Basic Dimensions of Structural Change

1.2.2 Capital Mobility and Other Non-Neoclassical Imperfections

1.2.3 Demand-Side Perspective of Structural Change

1.2.4 A Demand-Side and Supply-Side Growth Perspective

1.2.5 Dynamic Schumpeterian Perspectives

1.3 Empirical Analysis

1.3.1 Selected Innovation Traits and Structural Change

1.3.2 The Bazaar-Effect

1.3.2.1 Motor Vehicles

1.3.2.2 Machinery and Equipment

1.3.2.3 Chemical Products

1.3.2.4 Radio, Television and Communication Equipment

1.3.2.5 Textiles

1.3.2.6 Office Machinery

1.3.3 Net Bazaar Effect

1.3.4 The Current Account and Intermediate Products Plus FDI

1.4 Policy Conclusions

1.5 Annex 1: A Demand-Side and Supply-Side Growth Perspective

1.5 Annex 2: NACE Rev. 1.1. Classification (in Parts)

2 Wage Dispersion in Germany and the US: Is There Compression from Below?

2.1 Introduction

2.2 Theoretical Considerations

2.2.1 Wage Compression Form Below: The Accordion Effect

2.2.2 Actual and Counterfactual Distribution

2.2.3 The Accordion Effect and Inter-Quantile Distances

2.2.4 The US as a Reference Case

2.2.5 Comparing Different Groups of Workers

2.3 Data

2.3.1 Data Sources

2.3.2 Harmonization of Data

2.4 Results

2.4.1 Comparing the Aggregate Wage Distribution Between Germany and the US

2.4.2 Results for Different Skill Groups

2.5 Conclusions

3 The Performance Effects of Unions, Codetermination, and Employee Involvement: Comparing the United States and Germany (with an Addendum on the United Kingdom)*

3.1 Introduction

3.2 Theoretical Conjectures

3.3 US Evidence

3.3.1 Union Effects on Firm Performance

3.3.2 The Employee Involvement/High Performance Work Practice Literature

3.4 German Evidence

3.4.1 Works Councils and Establishment Performance

3.4.2 EI/HPWP, Works Councils and Firm Performance

3.5 Conclusions

3.6 Addendum: The British Evidence on Unionism and Firm Performance

3.6.1 Introduction

3.6.2 Establishment Performance Outcomes

3.6.2.1 Profitability

3.6.2.2 Productivity

3.6.2.3 Investment

3.6.2.4 Employment

3.6.2.5 Plant Closings

3.6.3 Unions, Employee Involvement and Other Workplace Practices

3.6.4 Interpretation

4 Ageing and Pension Reforms: Simulations and Policy Options

4.1 Introduction and Overview

4.2 Some Facts About Population Ageing

4.3 The Overlapping Generations Model

4.4 Results

4.5 Concluding Remarks

5 Ageing and Global Capital Flows

5.1 Ageing and Savings

5.2 Ageing and Investment

5.3 Ageing and Capital Flows: The Case of Germany

6 Effects of the Ageing Population on Capital Markets

6.1 Introduction

6.2 Supply of Savings

6.3 Availability of Investment Vehicles

6.4 Financial Equilibrium of Individual Countries

6.5 Allocation of Savings

6.6 Some Conclusions

7 US Economic Outlook: Beyond the Credit Crunch

7.1 International Background: Globalization

7.2 A Long US Upswing

7.3 From Low Interest Rates to High House Prices

7.4 The US Sub-prime Crisis

7.5 A Major Credit Crunch?

7.6 Cyclical Outlook: Rebound in Late 2008

7.7 Longer-term Outlook: Global Rebalancing

8 Selected Innovation Factors: An International Comparison

8.1 Introduction

8.2 Theoretical and Methodological Background

8.2.1 Innovation at the Technological Frontier: Catch-up States, Growth Stars and Laggards

8.2.2 Conditions for Innovation

8.2.2.1 Human Resources

8.2.2.2 Financing

8.2.2.3 General Framework Conditions

8.2.3 Overall Evaluation of the Drivers of Innovation

8.2.4 Do Growth Stars and Laggards Differ in Terms of Their Innovation Indicators?

8.3 Final Remarks

9 The Innovation Imperative and the Role of SBIR Innovation Awards

9.1 The New Innovation Imperative

9.2 The Importance of Small Business Innovation

9.3 US Strengths in Innovation

9.4 Growing Concerns About US Competitiveness

9.5 Policy Myths and Innovation Realities

9.6 Does Venture Capital Provide the Bridge?

9.7 Bridging the Funding Gap

9.8 The Small Business Innovation Research Program (SBIR)

9.8.1 The National Academies Assessment of SBIR

9.8.2 Some Advantages of the SBIR Concept

9.8.3 Current Limitations of the SBIR Concept

9.9 Our Common Innovation Challenges

10 Trips, Pharmaceutical Innovation and Access to Medicines

10.1 Introduction

10.2 The Economics of Patents

10.3 Patents and the Pharmaceutical Industry

10.4 The Political Economy of Trips and Pharmaceuticals

10.4.1 The WTO and Trade Related Aspects of IPRs

10.4.2 The Political Economy of TRIPS and Pharmaceuticals

10.4.2.1 Compulsory Licensing

10.4.2.2 Parallel Importing

10.5 Concluding Remarks

11 The Knowledge Society

11.1 The Knowledge Society as a Political Subject

11.1.1 UNESCO: Declaration on Science and the Use of Scientific Knowledge

11.1.2 Lisbon European Council (23 and 24 March 2000), Preparing the Transition to a Competitive, Dynamic and Knowledge-Based Economy

11.1.3 Globalization and Knowledge Society

11.1.4 What is Missing in the Political Debate on the Knowledge Economy?

11.2 What Does the History of Economic Thought Tell Us About the Role of Knowledge?

11.2.1 Adam Smith: Division of Labor Creates New Knowledge

11.2.2 Schumpeter''s View on the ''Driving Force'' of the Economic Development

11.2.3 Hayek: The Division of Knowledge

11.3 About the Economics of Knowledge

11.3.1 The Starting Point: Knowledge as Good or Process?

11.3.2 Knowledge: Created by Competitive Interaction Processes

11.3.3 Competition as Search Process

11.3.4 The Institutions of Economic Competition

11.3.5 The Institutions of Reputation Competition in Scientific Communities

11.4 Conclusions for a Science Policy

12 Technological and Growth Dynamics in the New Member States of the European Union

12.1 Introduction and Overview

12.2 Relevance of the Theory of Appropriate Technology

12.3 Technology Accumulation, Growth and Development in Stages

12.4 Direction of Technical Change

12.4.1 Rapid Increases in the Capital Stock and in Capital-Intensity

12.4.2 Direction of Technical Change -- A Case for Capital-Saving Technical Progress in the Manufacturing Sector

12.4.3 Capital-Saving Technical Change in the Manufacturing Sector

12.4.4 What About the New Member States of the European Union?

13 Benchmarking Innovation Performance on the Regional Level: Approach and Policy Implications of the European Innovation Scoreboard for Countries and Regions

13.1 A Short Introduction

13.2 The European Innovation Scoreboard (EIS): Approach and Key Results 2006

13.2.1 Overall Country Trends

13.2.2 Results for Germany

13.2.3 Conclusions

13.3 The Regionalised Innovation Scoreboard (RegIS): Approach and Key Results 2006

13.3.1 The German Federal Lands in Focus

13.3.1.1 Key Results for North Rhine Westphalia, Bavaria and Baden-Württemberg

13.3.1.2 Strengths and Weaknesses Compared to European Average

13.3.1.3 Conclusions for the Federal Lands North Rhine Westphalia, Bavaria and Baden Württemberg

13.4 Recommendations

14 Energy Technology Policy in Europe

14.1 Introduction

14.2 A Changed Energy and Policy Context

14.3 The EUs Energy Technology Policies

14.3.1 The EU''s Double Approach of ''Technology Push'' and ''Market Pull''

14.3.2 Technology Push in the EU

14.3.3 Market Pull

14.3.4 Carbon Capture and Storage

14.3.5 Energy Efficiency

14.4 Assessment

14.4.1 Costs

14.4.2 Limitations to Cost Reductions and Benefits

14.4.2.1 Availability of the Renewable Resource

14.4.2.2 Energy and Carbon Balance

14.4.3 Risk of Slowing Cost Reduction

14.4.4 Long-term Potential of Renewable Energy

14.5 Conclusion

15 US Climate Change Emissions Mitigation Policy: Energy Technology Push and Other US Policies

15.1 Introduction

15.2 Background

15.2.1 EU Lisbon Strategy

15.2.2 EU Climate Policy

15.3 US National Policy

15.3.1 US CO 2 Emission Trends

15.3.2 US Goals for Emission Reductions

15.3.3 US Draft Strategic Plan for the Climate Change Technology Program (CCTP)

15.3.4 Critique of the Draft CCTP Strategic Plan

15.3.5 CCTP Programs and Funding History

15.3.6 US International Programs and Activities

15.3.7 G8 Gleneagles Plan of Action

15.3.8 Asia Pacific Partnership on Clean Development and Climate (APP)

15.3.9 Energy Policy Act of 2005 (EPACT, P.L. 109-58)

15.3.10 Funding in 2006 for Climate-Related Energy Programs

15.3.11 Climate Legislation and Policy Debates in the 109th Congress

15.4 US Regional and State Policies

15.4.1 California's Climate Policies

15.4.2 California's Current Programs and Emission Reduction Targets

15.4.3 California's Draft Strategic Plan: Climate Action Team (CAT) Report

15.4.4 California's Options for a Cap and Trade System

15.4.5 Regional and Multi-State Climate Policies

15.4.5.1 New England (RGGI) Cap and Trade Initiative

15.4.5.2 Additional State Climate Plans and Policies

15.4.5.3 Other State (and Canadian Province) Programs that Mitigate Emissions

15.5 Policy Design Issues

15.5.1 Energy Efficiency Technology in a Cap and Trade System

15.5.2 Energy Efficiency as a Resource Inside the Cap

15.5.3 Energy Efficiency as an Offset Outside the Cap

15.5.4 Strategies for Multilateral Action

15.6 Conclusion: Some Possible Areas for Transatlantic Cooperation

15.6.1 Technology Push and Competitiveness

15.6.2 Market Pull Through Technology Deployment and Trading Systems

15.6.3 Technology Push Interaction with Market Pull

15.7 Appendix: US Federal Climate Change Funding for CO 2 Mitigation

16 EU-US International Relations: A Political Science Perspective

16.1 Research Programs in Political Science Analysis of International Relations (IR)

16.2 A Realist Perspective

16.3 An Institutionalist Perspective

16.4 A Constructivist Perspective

16.5 A Critical Perspective

16.6 Conclusions

17 Policy Issues and Fields of Cooperation

17.1 Introduction

17.2 EU-US Perspectives