A technology-based countries-interaction dynamic model for the study of European growth and stability: Were there the conditions for convergence?

In this research, we study a methodology for evaluating the dynamics of the European countries' growth. Our focus is on the analysis of the convergence conditions implied by the Lisbon strategy and founded on the interaction among technology diffusion, services for firms and production (the so-called “knowledge-based sustainable growth”). We estimate and analyse a differential equations system representing a disequilibrium model where business services assist the production process for the use of technology. To this aim, we develop a specific panel data estimation-procedure for continuous time nonlinear models. We find the offshoring activity, operated by foreign business services, essential for the countries' convergence to a stable growth path. Then, we perform a sensitivity analysis to assess the possible country's specific efforts necessary to gain stability. Further, we provide an evaluation of the convolution integral of our differential system to determine the initial conditions required to pursue a future target value for the endogenous variables.