Is There a More Promising Sector for Growth in (Less)-Innovative Economy?

Abstract

The paper aims to find, which sectors mostly affect growth at different stages of innovative development and if these sectors differ for each stage. The authors contributes to the scientific and practical debates using the case study of the European Union and paying attention to different phases of innovative development, i.e. result (level of innovative development) and process (growth rates of innovative development) as well as to sectors’ technological intensity. Employing of nonlinear regression log-log model and linear regression model provides evaluation of relationship between tested variables. The authors have found that sectors’ impact on growth mostly differs between phases (i.e., between result and process of innovative development), rather than within them (i.e., across different stages of innovative development). Manufacturing significantly affects growth during the process of innovative development, especially, when economies are experiencing fast catching-up. However, economies boost specialization in all sectors of economic activity, even in low-tech and less knowledge-intensive, during the fastest improvements of level of innovative development as well. Services, in turn, affect growth at the phase of result mostly, especially, when economies are experiencing high level of innovative development. In general, authors have concluded that services affect growth in bigger extent in both phases of innovative development (result and process) and their technological intensity matters.

DOI: 10.5901/mjss.2016.v7n3p171