Innovation and the post-WWII World’s Growth Process : Insights on the Mechanisms at Work

Based on the main insights of Schumpeterian growth theory, this paper investigates which R&D-based mechanism is better suited for explaining the pattern of world’s productivity growth. Using post-WWII data for a global sample of 115 countries, we estimate the relationship between productivity growth and the semi- endogenous and fully-endogenous growth components. We show that the semi-endogenous mechanism, based on the assumption of diminishing returns to knowledge, is the prevailing force and accounts for a larger share of world’s productivity growth