The productivity of national innovation systems in Europe: Catching up or falling behind?

Abstract

Innovation is one of the main determinants of economic development in modern societies. The extant evidence points to increasing territorial disparities in Europe concerning innovation. Relying on production theory, we examine the nature of these disparities. In particular, we are interested in finding out whether catching up processes are stronger than the shifts of the technology frontier, which would lead to a convergence of national innovation systems, or if, on the contrary, technological change is sounder than catching up, leading to increasing divergence in the performance of innovation systems. To capture these underlying dynamics, we apply the global Malmquist productivity index to the data included in the 2019 edition of the European Innovation Scoreboard, which includes statistical information for the period 2011–2018. The evolution shown by the global Malmquist productivity over time demonstrates that productivity gains as a result of innovation are falling. Our results evidence that innovation activities do not necessarily imply technological improvements. Furthermore, innovation activities do not prompt follower and lagging countries to catch up with more advanced ones. The paper also explores the policy implications of the previous results.