Measuring innovation and institution: the creative economy index
DOI:
https://doi.org/10.24136/eq.v12i1.3Keywords:
innovations, institutions, creative economy, composite indicator, European UnionAbstract
Research background: A literature review on innovativeness and institutions pointing to their correlation and the possibility of their joint examination.
Purpose of the article: This paper attempts to devise a measurement method for a creative economy, where as a result of feedback between institutions, human capital and technology conditions facilitating the development of creativity are created.
Methods: An empirical meta-analysis of indicators characterising innovativeness and institutional environment was carried out, following the hypothesis that at least in part they contain common information on creative economy.
Findings and Value added: The new synthetic index, a creative economy index (CEI), was constructed. The study was conducted for a group of 34 economies of the European Union and its associated states for the period of 2005?2014.
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References
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Balcerzak, A. P. (2016). Multiple-criteria evaluation of quality of human capital in the European Union countries. Economics & Sociology, 9(2). doi: 10.14254/2071-789X.2016/9-2/1.
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Balcerzak, A. P., & Pietrzak, M.B. (2016). Quality of institutions for knowledge-based economy within new institutional economics framework. Multiple criteria decision analysis for European countries in the years 2000?2013. Economics & Sociology, 9(4). doi: 10.14254/2071-789X.2016/9-4/4.
Carlsson, B., & Jacobsson, S. (2005). Diversity creation and technological systems: a technology policy perspective. In C. Edquist (Ed.). Systems of innovation: technologies, institutions, and organizations. London: Routledge.
Caves, R. E. (2000). Creative industries: contracts between art and commerce. Cambridge, Massachusetts and London: Harvard University Press.
Dutta, S., Lanvin, B., & Wunsh-Vincent, S. (2015). The global innovation index 2015. Retrieved from https://www.globalinnovationindex.org (12.12.2015).
Edquist, C. (Ed.) (2005). Systems of innovation: technologies, institutions and organizations. London: Routledge.
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Hair Jr., J. F., Black, W. C., Babin B. J., & Anderson, R. E. (2009). Multivariate data analysis. New York: Prentice Hall.
Hodgson, G. M. (1998). The approach of institutional economics. Journal of Economics Literature, 36.
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Howkins, J. (2001). The creative economy: how people make money from ideas. London: Penguin Books Limited.
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King, R. G., & Rebelo, S. (1990). Public policy and economic growth: developing neoclassical implications. Journal of Political Economy, 98(5). doi: 10.1086/261727.
Knight, F.H. (1944). Diminishing returns from investment. Journal of Political Economy, 52(1). doi: 10.1086/256134.
Kuznets, S. (1966). Modern economic growth: rate, structure and spread. New Haven and London: Yale University Press.
Kuznets, S. (1972). Innovations and adjustments in economic growth. Swedish Journal of Economics, 74(4). doi: 10.2307/3439284.
Loehlin, J.C. (2011). Latent variable models: an introduction to factor, path, and structural equation analysis. New York: Routledge.
Lucas, R.E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1). doi: 10.1016/0304-3932(88)90168-7.
Machlup, F. (1962). The production and distribution of knowledge in the United States. Princeton: Princeton University Press.
Mankiw, N., Romer D., & Weil, D. N. (1992). A contribution to the empirics of economic growth. Quarterly Journal of Economics, 107(2). doi: 10.2307/2118477.
Nelson, R., & Nelson, K. (2002). Technology, institutions, and innovation systems. Research Policy, 31(2). doi: 10.1016/S0048-7333(01)00140-8.
Nelson, R., & Winter, S. G. (1982). An evolutionary theory of economic change. Cambridge: Harvard University Press.
Nicoletti, G., Scarpetta S., & Boylaud, O. (2000). Summary indicators of product market regulation with an extension to employment protection legislation. ECO Working Paper no. 226. doi: 10.2139/ssrn.201668.
Nordhaus, W. D. (1969). An economic theory of technical change. American Economic Review, 59(2).
North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge: Harvard University Press. doi: 10.1017/CBO9780511808678.
OECD (2008). Handbook on constructing composite indicators. Methodology and user guide. Paris: OECD.
OECD (1996). The knowledge?based economy. Paris: OECD.
Rebelo, S. (1999). Long-run policy analysis and long-run growth. Journal of Political Economy, 99(3). doi: 10.1086/261764.
Rivera-Batiz, L. A., & Romer, P. M. (1991). Economic integration and endogenous growth. Quarterly Journal of Economics, 106(2). doi: 10.2307/2937946.
Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, 98(5). doi: 10.1086/261725.
Romer, P. M. (1986). Increasing returns and long?run growth. Journal of Political Economy, 94(5). doi: 10.1086/261420.
Romer, P. M. (1994). The origins of endogenous growth. Journal of Economic Perspectives, 8(1). doi: 10.1257/jep.8.1.3.
Schmookler, J. (1966). Invention and economic growth. Cambridge, Massachusetts: Harvard University Press. doi: 10.4159/harvard.9780674432833.
Schumpeter, J. A. (1934). The theory of economic development: an inquiry into profits, capital, credit, interest rate and the economic cycle. Cambridge, Massachusetts: Harvard University Press.
Schumpeter, J. A. (1939). Business cycles: a theoretical, historical and statistical analysis of the capitalist process. New York, London: McGraw?Hill Book Company.
Solow, R. M. (1957). Technical change and the aggregate production function. The Review of Economics and Statistics, 39(3). doi: 10.2307/1926047.
Strulik, H. (2005). The role of human capital and population growth in R&D-based models of economic growth. Review of International Economics, 13(1). doi: 10.1111/j.1467-9396.2005.00495.x.
Swan, T. W. (1956). Economic growth and capital accumulation. Economic Record, 32(2). doi: 10.1111/j.1475-4932.1956.tb00434.x.
The Heritage Foundation (2015). Index of economic freedom. Retreived from http://www.heritage.org/index/ (13.11.2015).
Uzawa, H. (1965). Optimum technical change in an aggregative model of economic growth. International Economic Review, 6(1). doi: 10.2307/2525621.
Von Neumann, J. (1945). A model of general equilibrium. Review of Economic Studies, 13(1).
Williamson, O. E. (2000). The new institutional economics: taking stock, looking ahead. Journal of Economic Literature, 38(3). doi: 10.1257/jel.38.3.595.
World Bank (2015). Doing business. Retrieved from http://www.doingbusiness .org/data (16.11.2015).
World Bank (2012). Knowledge assessment methodology 2012. Retrieved from http://www.worldbank.org/kam (15.11.2015).
World Economic Forum (2015). Global competitiveness report. Retrieved from http://reports.weforum.org/global-competitiveness-report-2015-2016 (19.12.2015).
Żelazny, R. (2016). Measuring the sustainable information society. In E. Ziemba (Ed.). Towards a Sustainable Information Society: People, Business and Public Administration Perspectives. Newcastle upon Tyne: Cambridge Scholars Publishing.
Acemoglu, D. (2013). The world our grandchildren will inherit. In I. Palacios-Huerta (Ed.). In 100 years leading economists predict the future. Cambridge: MIT Press.
Acemoglu, D., & Robinson, J. (2012). Why nations fail: the origins of power, prosperity, and poverty. New York: Crown Publishers.
Aghion, P., & Howitt, P. (1992). A model of growth through creative destruction. Econometrica, 60(2). doi: 10.2307/2951599.
Arrow, K. J. (1962). The economic implications of learning by doing. Review of Economic Studies, 29(3). doi: 10.2307/2295952.
Bashir, A-H. M., & Darrat A. F. (1994). Human capital, investment and growth: some results from an endogenous growth model. Journal of Economics and Finance, 18(1). doi: 10.1007/BF02920223.
Becker, G. S., Murphy K. M., & Tamura, R. (1990). Human capital, fertility and economic growth. Journal of Political Economy, 98(5). doi: 10.1086/261723.
Balcerzak, A. P. (2016). Multiple-criteria evaluation of quality of human capital in the European Union countries. Economics & Sociology, 9(2). doi: 10.14254/2071-789X.2016/9-2/1.
Balcerzak, A. P. (2016a). Technological potential of European economy. Proposition of measurement with application of multiple criteria decision analysis. Montenegrin Journal of Economics, 12(3). doi: 10.14254/1800-5845.2016/12-3/1.
Balcerzak, A. P., & Pietrzak, M.B. (2016). Quality of institutions for knowledge-based economy within new institutional economics framework. Multiple criteria decision analysis for European countries in the years 2000?2013. Economics & Sociology, 9(4). doi: 10.14254/2071-789X.2016/9-4/4.
Carlsson, B., & Jacobsson, S. (2005). Diversity creation and technological systems: a technology policy perspective. In C. Edquist (Ed.). Systems of innovation: technologies, institutions, and organizations. London: Routledge.
Caves, R. E. (2000). Creative industries: contracts between art and commerce. Cambridge, Massachusetts and London: Harvard University Press.
Dutta, S., Lanvin, B., & Wunsh-Vincent, S. (2015). The global innovation index 2015. Retrieved from https://www.globalinnovationindex.org (12.12.2015).
Edquist, C. (Ed.) (2005). Systems of innovation: technologies, institutions and organizations. London: Routledge.
Florida, R. L. (2002). The rise of the creative class: and how it?s transforming work, leisure, community and everyday life. New York: Basic Books.
Fraser Institute. (2015). Economic freedom of the world. Retrieved from http://www.freetheworld.com (23.10.2015).
Freedom House (2015). Freedom in the world. Retreived from https://freedomhouse.org/report/freedom-world/freedom-world-2015#.Vvz1yz G8qzE (4.12.2015).
Freire-Seren, M. J. (2001). R&D-expenditure in an endogenous growth model. Journal of Economics, 74(1).
Grossman, H., & Helpman, E. (1991). Quality ladders in the theory of growth. Review of Economic Studies, 58(1). doi: 10.2307/2298044.
Grupp, H., & Schubert, T. (2010). Review and new evidence on composite innovation indicators for evaluating national performance. Research Policy, 39(1). doi: 10.1016/j.respol.2009.10.002.
Hair Jr., J. F., Black, W. C., Babin B. J., & Anderson, R. E. (2009). Multivariate data analysis. New York: Prentice Hall.
Hodgson, G. M. (1998). The approach of institutional economics. Journal of Economics Literature, 36.
Hollanders, H., Es-Sadki N., & Kanerva, M. (2015). Innovation union ccoreboard 2015. Retrieved from http://ec.europa.eu/growth/industry/innovation/facts-figures/scoreboards/files/ius-2015_en.pdf (17.11.2015).
Howitt, P. (1999). Steady endogenous growth with population and R&D inputs growing. Journal of Political Economy, 107(4). doi: 10.1086/250076.
Howkins, J. (2001). The creative economy: how people make money from ideas. London: Penguin Books Limited.
European Commission (2015). Innovation union scoreboard database. Retrieved from http://ec.europa.eu/growth/industry/innovation/facts-figures/scoreboards/ index_en.htm (7.11.2015).
Jones, C. I. (1995). R&D-based models of economic growth. Journal of Political Economy, 103(4). doi: 10.1086/262002.
Kaufmann, D., & Kraay, A. (2015). Worldwide governance indicators. Retreived from http://info.worldbank.org/governance/wgi/index.aspx#home (13.11.2015).
King, R. G., & Rebelo, S. (1990). Public policy and economic growth: developing neoclassical implications. Journal of Political Economy, 98(5). doi: 10.1086/261727.
Knight, F.H. (1944). Diminishing returns from investment. Journal of Political Economy, 52(1). doi: 10.1086/256134.
Kuznets, S. (1966). Modern economic growth: rate, structure and spread. New Haven and London: Yale University Press.
Kuznets, S. (1972). Innovations and adjustments in economic growth. Swedish Journal of Economics, 74(4). doi: 10.2307/3439284.
Loehlin, J.C. (2011). Latent variable models: an introduction to factor, path, and structural equation analysis. New York: Routledge.
Lucas, R.E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1). doi: 10.1016/0304-3932(88)90168-7.
Machlup, F. (1962). The production and distribution of knowledge in the United States. Princeton: Princeton University Press.
Mankiw, N., Romer D., & Weil, D. N. (1992). A contribution to the empirics of economic growth. Quarterly Journal of Economics, 107(2). doi: 10.2307/2118477.
Nelson, R., & Nelson, K. (2002). Technology, institutions, and innovation systems. Research Policy, 31(2). doi: 10.1016/S0048-7333(01)00140-8.
Nelson, R., & Winter, S. G. (1982). An evolutionary theory of economic change. Cambridge: Harvard University Press.
Nicoletti, G., Scarpetta S., & Boylaud, O. (2000). Summary indicators of product market regulation with an extension to employment protection legislation. ECO Working Paper no. 226. doi: 10.2139/ssrn.201668.
Nordhaus, W. D. (1969). An economic theory of technical change. American Economic Review, 59(2).
North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge: Harvard University Press. doi: 10.1017/CBO9780511808678.
OECD (2008). Handbook on constructing composite indicators. Methodology and user guide. Paris: OECD.
OECD (1996). The knowledge?based economy. Paris: OECD.
Rebelo, S. (1999). Long-run policy analysis and long-run growth. Journal of Political Economy, 99(3). doi: 10.1086/261764.
Rivera-Batiz, L. A., & Romer, P. M. (1991). Economic integration and endogenous growth. Quarterly Journal of Economics, 106(2). doi: 10.2307/2937946.
Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, 98(5). doi: 10.1086/261725.
Romer, P. M. (1986). Increasing returns and long?run growth. Journal of Political Economy, 94(5). doi: 10.1086/261420.
Romer, P. M. (1994). The origins of endogenous growth. Journal of Economic Perspectives, 8(1). doi: 10.1257/jep.8.1.3.
Schmookler, J. (1966). Invention and economic growth. Cambridge, Massachusetts: Harvard University Press. doi: 10.4159/harvard.9780674432833.
Schumpeter, J. A. (1934). The theory of economic development: an inquiry into profits, capital, credit, interest rate and the economic cycle. Cambridge, Massachusetts: Harvard University Press.
Schumpeter, J. A. (1939). Business cycles: a theoretical, historical and statistical analysis of the capitalist process. New York, London: McGraw?Hill Book Company.
Solow, R. M. (1957). Technical change and the aggregate production function. The Review of Economics and Statistics, 39(3). doi: 10.2307/1926047.
Strulik, H. (2005). The role of human capital and population growth in R&D-based models of economic growth. Review of International Economics, 13(1). doi: 10.1111/j.1467-9396.2005.00495.x.
Swan, T. W. (1956). Economic growth and capital accumulation. Economic Record, 32(2). doi: 10.1111/j.1475-4932.1956.tb00434.x.
The Heritage Foundation (2015). Index of economic freedom. Retreived from http://www.heritage.org/index/ (13.11.2015).
Uzawa, H. (1965). Optimum technical change in an aggregative model of economic growth. International Economic Review, 6(1). doi: 10.2307/2525621.
Von Neumann, J. (1945). A model of general equilibrium. Review of Economic Studies, 13(1).
Williamson, O. E. (2000). The new institutional economics: taking stock, looking ahead. Journal of Economic Literature, 38(3). doi: 10.1257/jel.38.3.595.
World Bank (2015). Doing business. Retrieved from http://www.doingbusiness .org/data (16.11.2015).
World Bank (2012). Knowledge assessment methodology 2012. Retrieved from http://www.worldbank.org/kam (15.11.2015).
World Economic Forum (2015). Global competitiveness report. Retrieved from http://reports.weforum.org/global-competitiveness-report-2015-2016 (19.12.2015).
Żelazny, R. (2016). Measuring the sustainable information society. In E. Ziemba (Ed.). Towards a Sustainable Information Society: People, Business and Public Administration Perspectives. Newcastle upon Tyne: Cambridge Scholars Publishing.
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Published
2017-03-31
How to Cite
Żelazny, R., & Pietrucha, J. (2017). Measuring innovation and institution: the creative economy index. Equilibrium. Quarterly Journal of Economics and Economic Policy, 12(1), 43–62. https://doi.org/10.24136/eq.v12i1.3
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Section
Regional convergence and growth based on innovations
