Global dynamics, capabilities and the crisis
The financial crisis started in 2007–8, initially in the US, but its consequences have been felt throughout the global economy. However, its effects were far from uniform. While parts of Asia and Africa continued to grow fast, Europe experienced a large set back. This paper emphasizes three important factors: differences across countries in technological development; differences in capacities to exploit the opportunities offered by technology; and differences in the ability to compete in international market. A formal model, based on this approach, is developed and applied to data for 100 countries in the period 1997–2012. Empirical indicators reflecting the various factors are developed, a dataset constructed and econometric estimates of the model performed. The results are used to explore the factors behind the slowdown in economic growth, with a particular emphasis on the continuing stagnation in Europe. A major factor turns out to be the increased financialization of the economy. The negative effect of the growth of finance prior to the crisis is especially pronounced for the countries that suffered most during the crisis.
KeywordsTechnological capabilities social capabilities competitiveness economic growth crisis
JEL ClassificationE11 F43 O30
Financial support from the VINNOVA Core Funding of Centers for Innovation Systems (project 2010–01370 on ‘Transformation and Growth in Innovation Systems: Innovation Policy for Global Competitiveness of SMEs and R&I Milieus’), Czech Science Foundation (project P402/10/2310 on ‘Innovation, productivity and policy: What can we learn from micro data?’) and Czech Academy of Sciences (institutional support RVO 67985998 and agenda ‘Strategie AV21’) are gratefully acknowledged. Earlier versions of the paper were presented at the 15th ISS Conference, 27–30 July, 2014, Jena, Germany, the 2013 Eu-SPRI Forum Conference on Management of Innovation Policies, 10–12 April, 2013, Madrid, Spain and the Joint UNU-MERIT/School of Governance Seminar, 6 June 2013, Maastricht, Netherlands.
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