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This paper documents that a process of industrial restructuring has been transforming the developed economies, where large corporations are accounting for less economic activity and small firms are accounting for a greater share of economic activity. Not all countries, however are experiencing the same shift in their industrial structures. Little is known about the cost of resisting this restructuring process. The goal of this paper is to identify whether there is a cost, measured in terms of foregone growth, of an impeded restructuring process. The cost is measured by linking growth rates of European countries to deviations from the 'optimal' industrial structure. The empirical evidence suggests that countries impeding the restructuring process pay a penalty in terms of forgone growth.

We test whether one of the most commonly used measures of patent activity in the U.S. is, in fact, a reliable proxy measure of innovative activity. We introduce a production function for patented inventions based on three types of innovation-inducing inputs: knowledge, firm size, and the ease with which the resulting economic rents can be appropriated. The results are then compared with those from our 1988 paper using a direct measure of innovative activity. The empirical results suggest that patents vary with company R & D, total R & D, and skilled labor in the same manner as does innovative activity. In general, the results support the validity of patent counts as a measure of innovative activity.

Focuses on the reliability of patent measures in technological innovative activities. Relationship between firm size and technological advances; Production of innovative activity; Propensity of residential equipment to patent.