Innovation, Employment and Growth Policy Issues in the EU and the US (eBook)

Preface 5
Contents 16
List of Figures 23
1 Structural Change, Innovation and Growth in the Single EU Market 30
1.1 Introduction 30
1.2 Theory of Structural Change, Innovation and Growth 34
1.2.1 Basic Dimensions of Structural Change 34
1.2.2 Capital Mobility and Other Non-Neoclassical Imperfections 38
1.2.3 Demand-Side Perspective of Structural Change 40
1.2.4 A Demand-Side and Supply-Side Growth Perspective 41
1.2.5 Dynamic Schumpeterian Perspectives 42
1.3 Empirical Analysis 45
1.3.1 Selected Innovation Traits and Structural Change 45
1.3.2 The Bazaar-Effect 53
1.3.2.1 Motor Vehicles 54
1.3.2.2 Machinery and Equipment 56
1.3.2.3 Chemical Products 56
1.3.2.4 Radio, Television and Communication Equipment 57
1.3.2.5 Textiles 58
1.3.2.6 Office Machinery 59
1.3.3 Net Bazaar Effect 60
1.3.4 The Current Account and Intermediate Products Plus FDI 61
1.4 Policy Conclusions 63
1.5 Annex 1: A Demand-Side and Supply-Side Growth Perspective 66
1.5 Annex 2: NACE Rev. 1.1. Classification (in Parts) 67
2 Wage Dispersion in Germany and the US: Is There Compression from Below? 70
2.1 Introduction 70
2.2 Theoretical Considerations 71
2.2.1 Wage Compression Form Below: The Accordion Effect 71
2.2.2 Actual and Counterfactual Distribution 72
2.2.3 The Accordion Effect and Inter-Quantile Distances 74
2.2.4 The US as a Reference Case 75
2.2.5 Comparing Different Groups of Workers 76
2.3 Data 77
2.3.1 Data Sources 77
2.3.2 Harmonization of Data 78
2.4 Results 80
2.4.1 Comparing the Aggregate Wage Distribution Between Germany and the US 80
2.4.2 Results for Different Skill Groups 83
2.5 Conclusions 86
3 The Performance Effects of Unions, Codetermination, and Employee Involvement: Comparing the United States and Germany (with an Addendum on the United Kingdom)* 89
3.1 Introduction 89
3.2 Theoretical Conjectures 90
3.3 US Evidence 95
3.3.1 Union Effects on Firm Performance 95
3.3.2 The Employee Involvement/High Performance Work Practice Literature 98
3.4 German Evidence 111
3.4.1 Works Councils and Establishment Performance 111
3.4.2 EI/HPWP, Works Councils and Firm Performance 120
3.5 Conclusions 131
3.6 Addendum: The British Evidence on Unionism and Firm Performance 132
3.6.1 Introduction 132
3.6.2 Establishment Performance Outcomes 133
3.6.2.1 Profitability 133
3.6.2.2 Productivity 136
3.6.2.3 Investment 136
3.6.2.4 Employment 139
3.6.2.5 Plant Closings 141
3.6.3 Unions, Employee Involvement and Other Workplace Practices 141
3.6.4 Interpretation 143
4 Ageing and Pension Reforms: Simulations and Policy Options 149
4.1 Introduction and Overview 149
4.2 Some Facts About Population Ageing 150
4.3 The Overlapping Generations Model 151
4.4 Results 153
4.5 Concluding Remarks 155
5 Ageing and Global Capital Flows 158
5.1 Ageing and Savings 158
5.2 Ageing and Investment 159
5.3 Ageing and Capital Flows: The Case of Germany 160
6 Effects of the Ageing Population on Capital Markets 164
6.1 Introduction 164
6.2 Supply of Savings 164
6.3 Availability of Investment Vehicles 167
6.4 Financial Equilibrium of Individual Countries 167
6.5 Allocation of Savings 169
6.6 Some Conclusions 169
7 US Economic Outlook: Beyond the Credit Crunch 171
7.1 International Background: Globalization 171
7.2 A Long US Upswing 172
7.3 From Low Interest Rates to High House Prices 173
7.4 The US Sub-prime Crisis 173
7.5 A Major Credit Crunch? 174
7.6 Cyclical Outlook: Rebound in Late 2008 175
7.7 Longer-term Outlook: Global Rebalancing 176
8 Selected Innovation Factors: An International Comparison 178
8.1 Introduction 178
8.2 Theoretical and Methodological Background 180
8.2.1 Innovation at the Technological Frontier: Catch-up States, Growth Stars and Laggards 182
8.2.2 Conditions for Innovation 183
8.2.2.1 Human Resources 184
8.2.2.2 Financing 185
8.2.2.3 General Framework Conditions 188
8.2.3 Overall Evaluation of the Drivers of Innovation 190
8.2.4 Do Growth Stars and Laggards Differ in Terms of Their Innovation Indicators? 193
8.3 Final Remarks 194
9 The Innovation Imperative and the Role of SBIR Innovation Awards 197
9.1 The New Innovation Imperative 197
9.2 The Importance of Small Business Innovation 198
9.3 US Strengths in Innovation 199
9.4 Growing Concerns About US Competitiveness 200
9.5 Policy Myths and Innovation Realities 202
9.6 Does Venture Capital Provide the Bridge? 204
9.7 Bridging the Funding Gap 205
9.8 The Small Business Innovation Research Program (SBIR) 206
9.8.1 The National Academies Assessment of SBIR 208
9.8.2 Some Advantages of the SBIR Concept 208
9.8.3 Current Limitations of the SBIR Concept 209
9.9 Our Common Innovation Challenges 211
10 Trips, Pharmaceutical Innovation and Access to Medicines 212
10.1 Introduction 212
10.2 The Economics of Patents 213
10.3 Patents and the Pharmaceutical Industry 216
10.4 The Political Economy of Trips and Pharmaceuticals 219
10.4.1 The WTO and Trade Related Aspects of IPRs 219
10.4.2 The Political Economy of TRIPS and Pharmaceuticals 221
10.4.2.1 Compulsory Licensing 222
10.4.2.2 Parallel Importing 224
10.5 Concluding Remarks 226
11 The Knowledge Society 229
11.1 The Knowledge Society as a Political Subject 229
11.1.1 UNESCO: Declaration on Science and the Use of Scientific Knowledge 230
11.1.2 Lisbon European Council (23 and 24 March 2000), Preparing the Transition to a Competitive, Dynamic and Knowledge-Based Economy 230
11.1.3 Globalization and Knowledge Society 232
11.1.4 What is Missing in the Political Debate on the Knowledge Economy? 233
11.2 What Does the History of Economic Thought Tell Us About the Role of Knowledge? 233
11.2.1 Adam Smith: Division of Labor Creates New Knowledge 233
11.2.2 Schumpeter''s View on the ''Driving Force'' of the Economic Development 234
11.2.3 Hayek: The Division of Knowledge 236
11.3 About the Economics of Knowledge 237
11.3.1 The Starting Point: Knowledge as Good or Process? 237
11.3.2 Knowledge: Created by Competitive Interaction Processes 238
11.3.3 Competition as Search Process 239
11.3.4 The Institutions of Economic Competition 240
11.3.5 The Institutions of Reputation Competition in Scientific Communities 241
11.4 Conclusions for a Science Policy 242
12 Technological and Growth Dynamics in the New Member States of the European Union 246
12.1 Introduction and Overview 246
12.2 Relevance of the Theory of Appropriate Technology 246
12.3 Technology Accumulation, Growth and Development in Stages 249
12.4 Direction of Technical Change 251
12.4.1 Rapid Increases in the Capital Stock and in Capital-Intensity 251
12.4.2 Direction of Technical Change -- A Case for Capital-Saving Technical Progress in the Manufacturing Sector 254
12.4.3 Capital-Saving Technical Change in the Manufacturing Sector 258
12.4.4 What About the New Member States of the European Union? 260
13 Benchmarking Innovation Performance on the Regional Level: Approach and Policy Implications of the European Innovation Scoreboard for Countries and Regions 266
13.1 A Short Introduction 266
13.2 The European Innovation Scoreboard (EIS): Approach and Key Results 2006 266
13.2.1 Overall Country Trends 267
13.2.2 Results for Germany 271
13.2.3 Conclusions 273
13.3 The Regionalised Innovation Scoreboard (RegIS): Approach and Key Results 2006 274
13.3.1 The German Federal Lands in Focus 275
13.3.1.1 Key Results for North Rhine Westphalia, Bavaria and Baden-Württemberg 275
13.3.1.2 Strengths and Weaknesses Compared to European Average 287
13.3.1.3 Conclusions for the Federal Lands North Rhine Westphalia, Bavaria and Baden Württemberg 289
13.4 Recommendations 290
14 Energy Technology Policy in Europe 293
14.1 Introduction 293
14.2 A Changed Energy and Policy Context 294
14.3 The EUs Energy Technology Policies 296
14.3.1 The EU''s Double Approach of ''Technology Push'' and ''Market Pull'' 296
14.3.2 Technology Push in the EU 300
14.3.3 Market Pull 302
14.3.4 Carbon Capture and Storage 305
14.3.5 Energy Efficiency 305
14.4 Assessment 305
14.4.1 Costs 306
14.4.2 Limitations to Cost Reductions and Benefits 309
14.4.2.1 Availability of the Renewable Resource 310
14.4.2.2 Energy and Carbon Balance 310
14.4.3 Risk of Slowing Cost Reduction 311
14.4.4 Long-term Potential of Renewable Energy 311
14.5 Conclusion 312
15 US Climate Change Emissions Mitigation Policy: Energy Technology Push and Other US Policies 314
15.1 Introduction 314
15.2 Background 317
15.2.1 EU Lisbon Strategy 317
15.2.2 EU Climate Policy 317
15.3 US National Policy 321
15.3.1 US CO 2 Emission Trends 321
15.3.2 US Goals for Emission Reductions 321
15.3.3 US Draft Strategic Plan for the Climate Change Technology Program (CCTP) 323
15.3.4 Critique of the Draft CCTP Strategic Plan 325
15.3.5 CCTP Programs and Funding History 325
15.3.6 US International Programs and Activities 326
15.3.7 G8 Gleneagles Plan of Action 327
15.3.8 Asia Pacific Partnership on Clean Development and Climate (APP) 328
15.3.9 Energy Policy Act of 2005 (EPACT, P.L. 109-58) 328
15.3.10 Funding in 2006 for Climate-Related Energy Programs 329
15.3.11 Climate Legislation and Policy Debates in the 109th Congress 330
15.4 US Regional and State Policies 331
15.4.1 California's Climate Policies 331
15.4.2 California's Current Programs and Emission Reduction Targets 332
15.4.3 California's Draft Strategic Plan: Climate Action Team (CAT) Report 333
15.4.4 California's Options for a Cap and Trade System 334
15.4.5 Regional and Multi-State Climate Policies 335
15.4.5.1 New England (RGGI) Cap and Trade Initiative 335
15.4.5.2 Additional State Climate Plans and Policies 336
15.4.5.3 Other State (and Canadian Province) Programs that Mitigate Emissions 337
15.5 Policy Design Issues 338
15.5.1 Energy Efficiency Technology in a Cap and Trade System 338
15.5.2 Energy Efficiency as a Resource Inside the Cap 338
15.5.3 Energy Efficiency as an Offset Outside the Cap 339
15.5.4 Strategies for Multilateral Action 340
15.6 Conclusion: Some Possible Areas for Transatlantic Cooperation 341
15.6.1 Technology Push and Competitiveness 341
15.6.2 Market Pull Through Technology Deployment and Trading Systems 342
15.6.3 Technology Push Interaction with Market Pull 343
15.7 Appendix: US Federal Climate Change Funding for CO 2 Mitigation 343
16 EU-US International Relations: A Political Science Perspective 347
16.1 Research Programs in Political Science Analysis of International Relations (IR) 347
16.2 A Realist Perspective 348
16.3 An Institutionalist Perspective 350
16.4 A Constructivist Perspective 352
16.5 A Critical Perspective 355
16.6 Conclusions 357
17 Policy Issues and Fields of Cooperation 363
17.1 Introduction 363
17.2 EU-US Perspectives 365