A new project for growth, welfare, innovation and productivity in Europe

After the success of the ISIGrowth project, the three years H2020-funded GROWINPRO has just been launched. With the goal of delivering a set of policy solutions aimed at restoring sustained and inclusive growth

After the success of the EU-funded ISIGrowth project, a new one has just been launched. The three years H2020-funded GROWINPRO project (Growth, Welfare, Innovation, Productivity) aims at pushing forward the results emerged from the ISIGrowth one, which has been rated ‘excellent’ by the European Commission.

GROWINPRO aims to provide a detailed analysis of the causes of the anaemic productivity and output growth observed in Europe during the last decades and, in particular, after the Great Recession.

The project will extend the scope of the investigation undertaken within the ISIGrowth project, fully addressing the whole thread of the interaction among innovation, productivity, and growth in a world possibly undergoing a ‘IV Industrial Revolution’, wherein globalization exacerbated the diverging patterns of value distribution among countries and social groups, facing the societal challenges of climate change and ageing population. Together, it aims at thoroughly study the effects of monetary, fiscal, innovation and mission-oriented policies in stimulating productivity and output growth.

On the grounds of such analysis, GROWINPRO will deliver a set of policy solutions aimed at restoring sustained and inclusive economic growth.

The project has been officially kicked-off on February 5th and 6th in Pisa, where the Sant’Anna School of Advanced Studies (SSSA), which is the project’s coordinator, is based. ‘The research carried out in ISIGrowth revealed that the European policies suggested since the Great Recession have not been effective, so a new European Deal is need”, said the project coordinator Andrea Roventini from the SSSA.

The project brings together researchers from eleven international academic institutions and three national statistical offices (from Austria, the Netherlands and Italy). The joint interaction between academic institutions and national statistical offices provides GROWINPRO with a focus on new data sources, methods and statistical indicators to address the challenges posed by the call.

‘The objectives of the project are basically to analyse the deep drivers of long term productivity changes and their relation to the EU stagnation and to design policy interventions able to put the EU back on the path of an inclusive and sustainable growth addressing societal challenges such as climate challenge, population ageing and robotization, and taking into account inputs from policy makers and stakeholders’ explains Giovanni Dosi, coordinator of the ISIGrowth project, now deputy coordinator of the new one..

The research agenda

The research agenda of GROWINPRO is ambitious and transformative being, at the same time, rooted into the broad objectives of the Work Programme 2018-2020 (WP 2018-20) and in particular to the topics of the Societal Challenge ‘Europe in a changing world – Inclusive, innovative and reflective societies’.

The main objective of GroWInPro is twofold. On the one hand, it aims at offering an in-depth analysis of the causes underlying the productivity puzzle and the associated economic stagnation in relation to the current phase of globalization. On the other, on the basis of such analysis, it will develop a coherent policy toolkit to escape the low-growth trap, facing at the same time important societal challenges such as climate and demographic changes. In order to deliver a comprehensive diagnostics and coherent set of policy tools, it will undertake the analysis from several, highly complementary, dimensions.

First, it will analyse the ‘deep drivers’ of long-term productivity changes and their relation to the European stagnation. In particular, the project investigates: (i) the possible changes in the relations between science, technology, and its economic exploitation, and the changing role of public mission-oriented programs; (ii) the possible changes in the rates and directions of innovation; and, (iii) the changes in the rates of diffusion of innovation themselves (WP 1, 2, 4, 5).

Second, the project will look at the sectoral dynamics to disentangle that part of the slowdown of average productivity growth which might be explained by the processes of de-industrialization and globalization and the associated shifts in output and employment shares from the manufacturing to the service sector. Equally important is the identification of the contribution to productivity growth and output growth of new emerging sectors and activities (WP 2, 4).

Third, it will study the underlying intra-sectoral microeconomic patterns and their interaction with the average productivity dynamics. Empirical studies have largely documented a persistent and wide productivity heterogeneity across firms. Hence, it will investigate: (i) the patterns of learning and market selection that drive such heterogeneity; (ii) the increasing intra-sectoral divergence between high- productivity and low-productivity firms; and, (iii) the relation between firms’ productivity growth, trade performances and their position on the global value chains (WP 2, 3).

Fourth, it will mobilise the efforts of academic scholars and statistical offices in order to produce a new wave of statistics and higher degrees of integration of existing ones, in particular with reference to: (i) at micro level, the economic performance of the firms, their positions in the global value chains and their strategies; and, (ii) at macro/societal levels, indicators of welfare that go beyond standard GDP measures (WP 2, 3 and 4).

Fifth, building on the foregoing empirical results, the project will develop a new generation of models that will integrate the findings and will provide theoretical explanations of the productivity puzzle, by exploring also the possible co-evolution with insufficient demand levels and increasing inequality (WP 4). The models will also serve as laboratories to test the effectiveness of different demand- and supply-side policies in order to support inclusive and sustainable economic growth (WP 5).

Sixth, it will combine insights from both applied empirical works and the results produced by the models to design new and timely policy interventions able to put the European Union back on a sustainable path of growth fuelled by innovation and technological developments. In particular, such policy interventions will address societal challenges that could hamper the European long-run potential, namely climate change and ageing population. In particular, we will focus on mission-oriented programs able to direct technological development and create markets in order to transform potential threats in growth opportunities, taking into account the inputs from policy makers and relevant stakeholders (WP 5, 6).

A new policy toolkit

The GROWINPRO research project is ground-breaking on several levels — theoretical, methodological, empirical — and in its use of engagement with stakeholders to both gather and disseminate knowledge. The project has two main ambitions. From a diagnostic perspective, it proposes to link three levels of analysis – macro, meso and micro – empirically dissecting the sources of productivity slowdown and the relations between productivity, demand and growth. From a normative perspective, it aims at providing a novel, integrated set of policies to push Europe towards a balanced, innovation-fuelled and inclusive trajectory of development.

A Mission-Oriented Innovation Network (MOIN) will be created within the project. The MOIN will provide a policy framework and platform for public and civil society organisations to engage with the work of the project with a particular focus on grand societal challenges.

‘The network will create and test a new policy making framework able to justify, nurture, policies that actively shape and create market’, said Mariana Mazzucato, director of UCL’s Institute for Innovation and Public Purpose, one of the project’s research units

Beside the MOIN, a network of Civic Society Organizations will be set up in order to create the conditions for systematic and fruitful exchanges between researchers and stakeholders, and to ensure a systematic dissemination of results.