Innovation policy not a quick and easy fix to slow growth, study concludes

February 6, 2006

Brussels, 03 Feb 2006

Innovation policy does not provide the means to solve growth problems swiftly, according to the results of the research project 'policy and regional growth', carried out by BAK Basel Economics in Switzerland.

The paper states that policy in general goes some way towards explaining differences in productivity growth between European regions, and that while innovation policies do support growth, their impact is limited. The 'impact of policies enhancing educational achievements and increasing R&D [research and development] expenditures show a much smaller impact on productivity than expected. Innovation policy is not the quick and easy policy solution to solve growth problems,' the report states. It also notes that quality and efficiency controls are essential to the success of any innovation policy.

The report will no doubt make interesting readers for European policy makers seeking to introduce new policy makers, who have signed up to making Europe's economy the most competitive in the world by 2010.

The study also concluded that fiscal policy has the strongest impact on productivity, with higher tax burdens decreasing productivity growth, and that tightening labour market regulation is 'not a promising policy strategy'.

The research team measured the influence of a set of regional location factors on the long term economic development of 120 regions.

The next stage of the study will see a widening of the regional database to include US regions, and the addition of further explanatory variables, especially on innovation.

Further information on the study

CORDIS RTD-NEWS/© European Communities, 2005
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