Raising EU productivity through innovation

A better overview of which firms are most likely to adopt digital technologies and to innovate, and to turn these investments into productivity growth

Publishing date: 13 June 2022
Authors: Reinhilde Veugelers Frederic Warzynski

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This Working Paper is an output from the MICROPROD project, which received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement no. 822390.

Research and development is seen as a key contributor to growth because it generates knowledge, leading to new or improved products through product innovation, and makes firms more efficient at producing goods through process innovation. Firm level studies generally find evidence of strong positive productivity effects for firms that invest in R&D. In this context, digital systems could be an important driver of productivity growth, particularly in combination with investments in R&D. But there has been little hard evidence of a significant productivity boost from digital technologies.

How the relationship between productivity growth, innovation and digital technology adoption plays out is particularly important for the European Union, where productivity growth has long been weak. Researchers from the MICROPROD project have assessed the effect of technology investment on productivity and performance. Combining recent unique firm-level data and state-of-the art research methodologies, MICROPROD research provides a better overview of which firms are most likely to adopt digital technologies and to innovate, and to turn these investments into productivity growth.

About the authors

Reinhilde Veugelers

Reinhilde Veugelers is a Senior Fellow at Bruegel. She specialises in industrial organisation, innovation and science.

Recently, she has covered novelty in technology development; international technology transfers through multinational enterprises; global innovation value chains; young innovative companies; innovation for climate change; industry-science links and their impact on firms’ innovative productivity; evaluation of research and innovation policy; explaining scientific productivity; researchers’ international mobility and novel scientific research.

She speaks English, Dutch and French.

Reinhilde is also a Professor at KU Leuven at the Department of Management, Strategy and Innovation and a Senior Fellow at the Peterson Institute for International Economics. She is a CEPR Research Fellow and a member of the Royal Flemish Academy of Belgium for Sciences, the Academia Europeana, the Board of Reviewing Editors of the journal Science and a co-PI on the Science of Science Funding Initiative at the National Bureau of Economic Research (NBER). From 2004-2008, she was on academic leave as advisor at the European Commission (Bureau of European Policy Analysis). She served on the European Research Council's (ERC) Scientific Council from 2012-2018 and on the Real-time earthquake risk reduction for a resilient Europe (RISE) Expert Group, advising the commissioner for Research. She holds a PhD in Economics from KU Leuven.

Websites:
https://feb.kuleuven.be/reinhilde.veugelers
https://bruegel.org/author/reinhilde-veugelers/
Frederic Warzynski