Knowledge properties and the creative response in the global economy: European evidence for the years 1990-2016

Globalization and the new understanding of the properties of knowledge, with particular attention to the limits of its appropriability, exhaustibility, transferability, and its accumulation as a result of its recombinant generation, support the revival of the Schumpeterian intuition of innovation as a creative response and its blending with the Lamarckian legacy. Globalization spawns radical changes in product and factor markets that stir a response based on innovations that is actually creative and able to contribute to the increase of productivity when the access to and use of existing knowledge stocks takes place at below equilibrium costs. A three-equations recursive system for 14 European countries from 1990 to 2016 confirms that the level of openness to international trade promotes innovative efforts that, together with knowledge costs and capital intensity, improve labor productivity growth.