How can innovation contribute to economic growth? Focusing on research productivity and the commercialisation process

Abstract: The aim of this thesis is to give a clearer empirical picture of innovations and its connection to economic growth. As a point of departure we use an endogenous growth model, the Romer model, to theoretically develop this connection. This is shown through a modified equation for accumulation of technology. The model was extended with a modified variable for research productivity and a new variable for commercialisation. The variables are represented with indexes constructed from an econometric regression. As dependent variables we have used patent for the productivity index and newly started businesses for the commercialisation index. Using data from 16 European countries we have identified variables that affect our dependent variables. To find empirical measurements for economic variables in theoretical models is important for the models’ utility. With this thesis we want to show that both the political and academic discussion on innovations and economic growth would profit from also focusing on research productivity and commercialisation of innovations.