Competitiveness and Growth in Europe
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Competitiveness and Growth in Europe

Lessons and Policy Implications for the Lisbon Strategy

Edited by Susanne Mundschenk, Michael H. Stierle, Ulrike Stierle-von Schütz and Iulia Traistaru-Siedschlag

This book contributes fresh theoretical and empirical evidence on competitiveness and growth in connection with the commitment made by European leaders at the Lisbon Summit in 2000 to ‘render the European Union the most competitive and dynamic knowledge based economy in the world by 2010, capable of sustainable economic growth, with more and better jobs and greater social cohesion’.
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Chapter 10: Education, Research, and Economic Growth – Some Tests for the US and Germany

Volker Caspari, Jens Rubart, Günther Rehme and Ulrike Stierle-von Schutz


Volker Caspari, Jens Rubart and Günther Rehme 10.1 INTRODUCTION The importance of knowledge and human capital for long run economic growth has been known for a long time. For example, Young (1928) has pointed out that the productivity differences between US and UK industries at that time might by explained by different levels of inventive activities and better organizational structures of American industry. The statement of Young (1928) can be regarded as an early description of the importance of human capital and technological change for economic growth. The importance of higher education which fosters the diffusion of new technologies and therefore drives economic growth was pointed out by Nelson and Phelps (1966). In recent times, at least since Lucas (1988) or Romer (1990), the importance of knowledge and human capital has become a subject of political and politico-economical discussion. Taking the role of human capital and innovations as given and comparing the economic development of Germany with that of the US economy during the last two decades, we find a strong decline in the growth trend (1980–90: 2.31%, 1991–2002: 1.4%), whereas the US growth trend remained constant at 3.2%.1 Of course, one has to point out that the German economy had to overcome the burden of the reunification in 1991, but other reasons, which are pointed out by economists and also various political parties, are deficiencies of the German educational system and the system of inventive activities, particularly research and development activities. At least, since the so-called...

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