Teory of Company

Innovation, technology and the global knowledge economy: Challenges for future growth.

By Jan Fagerberg, University of Oslo *

Paper prepared for “Green roads to growth” project and conference,
Copenhagen March 1-2, 2006

Abstract
This paper discusses the role of knowledge, technology and innovation in economic growth within the context of the “Green roads to growth” project. It summarizes the current state of the art in this area, illustrates this with selected graphs and tables based on published statistics and raises issues for discussion. The main focus is on the big shift of our understanding of economic growth that has taken place in recent decades, exemplified by emergence of terms such as “the knowledge based economy”, “the ICT revolution” and “innovation”, which although not an entirely new issue – did not get much attention a few decades ago. Particular emphasis is placed on reviewing the new micro-evidence on innovation and the knowledgebased economy that has emerged in recent years. However, since extensive micro-evidence on innovation and knowledge-based growth is available only for a limited number of developed economies, we also consider other types of indicators (that are available for a larger set of countries), and present a synthetic overview of the differences in performance across different parts of the globe. Finally we summarize the main trends and discuss the challenges posed by these for future growth, sustainability and policy.
(*) I am indebted to Martin Srholec for assistance in producing many of the empirical illustrations used in this paper and to Mario Pianta and Jørgen Rosted for useful comments and suggestions. Remaining errors and omissions are my own responsibility. Address for correspondence is [e-mail] (P.O. Box 1108 Blindern, N-0317 Oslo, Norway).

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Introduction
It is difficult to find an issue that is more central to policy makers’ agenda than how to achieve economic growth. Indeed, it is generally

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