To Be or Not To Be Innovative: An Exercise in Measurement

In this paper, we put forward the idea of an innovation accounting framework and consider two main indicators based on it: expected innovation and innovativeness. The framework is the analogue of the standard framework of economic growth accounting, with innovativeness being a parallel notion to that of (total factor) productivity. We provide an illustration of the idea using data from the European Community Innovation Surveys (CIS1 and CIS2) and measuring innovation by the share of firm innovative sales. We adopt a generalized tobit model of the propensity and intensity of innovation as our accounting framework. We first apply the framework to a comparison of the innovation performance of French manufacturing industries, while also checking the robustness of our estimates to the use of micro- aggregated firm data provided by Eurostat versus the original individual firm data. We also provide an overview of the results of a larger comparison of innovation across seven European countries.