Product variety, product quality, and evidence of endogenous growth

Using US manufacturing industry data, we re-examine evidence of first- and second-generation models of R&D-based endogenous growth focusing on innovation (patent) quality. We show that Schumpeterian growth theories perform better than semi-endogenous growth models.

► Innovation (patent) counts support first-generation Schumpeterian growth theory. ► Quality-adjusted innovation data support second-generation Schumpeterian theory. ► Findings are robust to alternative patent quality indicators.