, Volume 37, Issue 3, pp 311–328 | Cite as

Why do growth rates differ? Evidence from cross-country data on private sector production

  • Juha KilponenEmail author
  • Matti Viren
Original Paper


We estimate standard production functions with a new cross-country data set on business sector production, wages and R&D investment for a selection of 14 OECD countries including the US. The data sample covers years the 1960–2004. The data suggest that growth differences can largely be explained by capital deepening and the ability to produce new technology in the form of new patents. We also find strong evidence of complementarity between patents and openness of the economy, but little evidence of increasing elasticity of substitution over time.


Growth R&D Production function Patents 

JEL Classification

O40 E10 O43 



We are grateful to Jouko Vilmunen and two anonymous referees for many useful comments and Tarja Yrjölä for helping us with the data. Viren also thanks the OP Bank Group Research Foundation and the Turku PCRC for financial support. The views are those of the authors and do not necessarily reflect the views of the Bank of Finland.


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Copyright information

© Springer Science+Business Media, LLC. 2009

Authors and Affiliations

  1. 1.Monetary Policy and Research DepartmentBank of FinlandHelsinkiFinland

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