Scandinavian Working Papers in Economics

Papers in Innovation Studies,
Lund University, CIRCLE - Centre for Innovation Research

No 2015/2: Capabilities, Competitiveness, Nations

Jan Fagerberg () and Martin Srholec ()
Additional contact information
Jan Fagerberg: IKE, University of Aalborg; TIK, University of Oslo; CIRCLE, Lund University
Martin Srholec: CIRCLE, Lund University; CERGE-EI, Charles University and Economics Institute of the Academy of Sciences of the Czech Republic

Abstract: This paper discusses the role of capabilities and competitiveness for the economic growth of nations. The capability concept is commonly used in analyses of firms, however, as this paper shows, it may also be used at the level of nations. Capabilities at the national level may be defined broadly as "social capabilities", as done by the economic historian Moses Abramovitz, or more narrowly as "technological capabilities" as suggested by for instance the development scholar Lin-Su Kim. The paper discusses the relationships between these two dimensions of capabilities and examines recent empirical evidence on this matter for a group of 114 countries worldwide on different levels of development. It also considers the relationship between capabilities and competitiveness, and analyses the effects of capability change and other aspects of competitiveness on economic growth on data for the period 1995-2013. The final section presents the conclusions from the study and raises issues for future research.

Keywords: Technological capabilities; social capabilities; competitiveness; catching-up; development

JEL-codes: E11; F43; O30

31 pages, February 6, 2015

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