European Union countries have implemented widespread reforms to product markets in order to stimulate competition, innovation and economic growth. We provide empirical evidence that the reforms carried out under the EU Single Market Programme (SMP) were associated with increased product market competition, as measured by a reduction in average profitability, and with a subsequent increase in innovation intensity and productivity growth for manufacturing sectors. In our analysis we exploit exogenous variation in the expected impact of the SMP across countries and industries to identify the effects of reforms on average profitability, and the effects of profitability on innovation and productivity growth.
Authors
CPP Co-Director, IFS Research Director
Rachel is Research Director and Professor at the University of Manchester. She was made a Dame for services to economic policy and education in 2021.
Helen Simpson
Rupert Harrison
Report details
- Publisher
- Centre for Economic Policy Research
Suggested citation
R, Griffith and R, Harrison and H, Simpson. (2006). Product market reform and innovation in the EU. London: Centre for Economic Policy Research. Available at: https://ifs.org.uk/publications/product-market-reform-and-innovation-eu (accessed: 20 May 2024).
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