Can Innovation Explain the Increasing Growth Differences in the 1990s?

The growth in manufacturing output and productivity is related to several indicators of innovation activities: research, human capital, knowledge, capabilities and the use of information and communication technology. Additionally, the need for restructuring forced mature and capital-intensive industries throughout Europe to increase their productivity. The impact of innovation on growth and productivity seems to have been stronger in the USA than in Europe. This is a result of industry patterns and the cumulative nature of causes and effects. Only a small set of European top countries manages to close the gap towards the USA with respect to some innovation indicators and are successfully contesting the USA.