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Caspari, Volker; Rubart, Jens; Rehme, Günther; Stierle-von Schutz, Ulrike --- "Education, Research, and Economic Growth – Some Tests for the US and Germany" [2006] ELECD 122; in Mundschenk, Susanne; Stierle, H. Michael; Stierle-von Schütz, Ulrike; Traistaru-Siedschlag, Iulia (eds), "Competitiveness and Growth in Europe" (Edward Elgar Publishing, 2006)

Book Title: Competitiveness and Growth in Europe

Editor(s): Mundschenk, Susanne; Stierle, H. Michael; Stierle-von Schütz, Ulrike; Traistaru-Siedschlag, Iulia

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781845426620

Section: Chapter 10

Section Title: Education, Research, and Economic Growth – Some Tests for the US and Germany

Author(s): Caspari, Volker; Rubart, Jens; Rehme, Günther; Stierle-von Schutz, Ulrike

Number of pages: 26

Extract:

10. Education, Research, and Economic
Growth ­ Some Tests for the US and
Germany
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 (1980­90:
2.31%, 1991­2002: 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 ...