Endogenous innovations and knowledge spillovers

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The recent development of endogenous growth theories has sparked renewed interest in the sources of productivity growth in advanced industrialized economies. These models explain technological progress as an endogenous factor within the economic framework. A key concept is market-driven innovations, which are recognized as the primary source of technological advancement. Firms innovate to reduce costs and stimulate demand, while knowledge spillovers from these innovations and associated scale economies play a crucial role. External effects create a disparity between private and social returns of innovation, influencing market structure. Each year’s productivity gains hold significant social value, making the analysis of endogenous innovations, scale economies, and knowledge spillovers vital for economic policy. This collection features both theoretical and empirical work on the subject, integrating microeconomic and macroeconomic issues with a strong focus on empirical applications. Considerable effort has gone into sourcing and preparing relevant data, with all models estimated using panel data. The first two chapters provide an aggregate perspective on the growth process.