Currently, one of the German economy’s main problems is its weak growth performance, which shows up in low growth rates for potential output and for real gross domestic product (GDP) (Sachverständigenrat, 2005). Comparing important economic performance indicators within the EU15 countries, it further becomes apparent that economic development in Germany has lagged behind that of many other European countries since the mid 1990s. For instance, since 1995 Germany has continuously been among the group of the three countries reporting the lowest growth rates in real GDP. Similarly, the average growth rate of labour productivity of about one percent for the period 1995–2004 ranks within the lower third of the EU15 countries. In addition to falling behind other competitors in Europe, Germany — and also Europe as a whole — have been unable to keep pace with the economic development in terms of real GDP growth or labour productivity growth in the US, as can be seen in Fig. 1.1. Fig. 1.2 further shows that the low growth development is accompanied by a steady rise in the rate of unemployment over the last 15 years in Germany, whereas other countries, e.g., the United Kingdom (UK) or Spain, have experienced great success in reducing unemployment. In 2004, the internationally harmonised unemployment rate amounts to 10% in Germany. This is one percentage point above the European average, 4 percentage points higher than in the US and even twice as high as in Japan or the UK (see OECD, 2005a).
KeywordsGross Domestic Product Venture Capital Process Innovation Innovation Activity Real Gross Domestic Product
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- 2.The role of venture capital in fostering innovation was analysed, for instance, by Kortum and Lerner (2000) for US or Engel and Keilbach (2007) for German firms. The impact of financial constraints were investigated, for instance, by Kukuk and Stadler (2001). Rammer, Peters et al. (2005) examined the importance of different barriers to innovation in Germany.Google Scholar
- 3.In 2003, the R&D intensity, i.e., the ratio of R&D expenditure to GDP, amounted to 2.55 in Germany, compared to 1.89 in the UK, 2.19 in France, 3.98 in Sweden, 1.95 in the EU15, 1.94 in Canada, 2.60 in the US, 3.15 in Japan and an OECD average of 2.24 (OECD, 2005c).Google Scholar
- 4.Hauschildt (2004) distinguishes three kinds of success which can be associated with the introduction of new products or processes: Technical success, economic success and other effects, like environmental or social effects. The present study focusses solely on the economic success of innovations. Grupp (1997) subdivides economic success indicators of innovations into direct and indirect measures. Direct success or output indicators are the number of innovations, the share of sales due to new products or innovation rents. On the other hand, indirect success indicators measure the impact of innovation on central performance indicators, like productivity, employment, exports or profits, on the basis of an economic model. This kind of analysis is much more common in empirical innovation research.Google Scholar
- 6.The theoretical model was developed in a joint paper together with Rupert Harrison (Institute for Fiscal Studies and University College, London), Jordi Jaumandreu (Universidad Carlos III de Madrid), and Jacques Mairesse (Crest-INSEE, Paris) (see Harrison, Jaumandreu, Mairesse, and Peters, 2005).Google Scholar
- 7.A related strand of literature investigates the persistence of excess profits. The majority of these studies have found some evidence for profit persistence, e.g., Mueller (1977), Geroski and Jacquemin (1988), or Cefis (2003b).Google Scholar