The Knowledge-Based Economy, Convergence and Economic Growth: Evidence from the European Union

The aim of this study is to estimate the effect that the knowledge-based economy objective has on economic growth, which is the ultimate objective of the EU's Lisbon Strategy (LS). In particular we are interested in identifying whether policies and investments linked with the transition to a knowledge-based economy are related to higher economic growth. To investigate the above research hypothesis, a dynamic panel data growth model is used, based on Barro & Sala-i-Martin (1995), for the 1990-2003 period. Growth empirics were estimated regarding the full sample, as well as two sub-groups consisting of high and low-income member-states. Results suggest that R&D expenditure originating from abroad affect GDP growth rates significantly and positively, as also do human capital educational characteristics and investments in Information & Communication Technology (ICT).