Integrated Project MICRO-DYN: Growth, employment and competitiveness in the knowledge-based European economy

MICRO-DYN (stands for ‘Micro-Dynamics’) is a project that tackles the issues of growth, employment and competitiveness in the knowledge-based European economy through a micro-founded firm-based approach. The nature of the analysis is ‘bottom-up’ i.e. moving from the micro-entities of economic actions and strategies at the enterprise level to sectoral, regional, national and European levels. The rationale for such an approach is that understanding the microeconomic foundations of innovation, competitiveness and growth at the firm level, as well as the firms’ interactions with the labour market, is key to understanding the nature of these phenomena at a more aggregated (regional, sectoral or macro) level and of the resulting aggregate economic performance. From a policy-perspective, this implies that the impact of corporate, industrial and regional strategies and policies at national and European levels can be best understood only through the changes they induce in individual firm behaviour. Integrated and comparable cross-country firm-level evidence shapes the core of the research effort undertaken within the project.

The analysis uses comprehensive datasets across all European regions and industries. Individual data on firms call for statistical models of individual behaviour allowing for firm heterogeneity. These models have then to be aggregated at sectoral, regional and national levels to recover the behaviour of aggregate variables. At the moment, there are very few such models around as different researchers have concentrated on different levels of aggregation with little exploration of their interdependence. Further development is of paramount importance as sound micro foundations help to highlight the role of key microeconomic and policy parameters whose changes determine the reallocation of resources within and between sectors, within and between regions, within and between countries. The project mobilises a large network of top European researchers specialised in the relevant sub-fields necessary for the successful execution of an ambitious research programme.

The project homepage under www.micro-dyn.eu provides up-to-date and detailed information on the project activities, workshops, publications etc.