The Influence of Innovation and Standardisation on the Macroeconomic Development in Germany

For the competitiveness of an advanced economy like Germany, both the successful production of innovations and their efficient diffusion into the market by technical standards among others are decisive. Therefore, in contrast to most other empirical studies, an aggregate production function for Germany from 1960 until 1996 is estimated, integrating these two aspects. We distinguish between technical progress which is a result of own national R&D activities, and the import of technological know-how through licence agreements, approximated by the indicator variables stock of patents and real expenditures for licences. In addition, the diffusion of technology throughout the economy by official technical standards is integrated in the long-term production function, approximated by the stock of effective technical standards. This superior long-term production function, including the usual production factors capital and labour as well as the three indicator variables, is then used to assess the effects of the different sources on economic growth from 1961 until 1996.