IDEAS home Printed from https://ideas.repec.org/a/eee/respol/v47y2018i9p1853-1867.html
   My bibliography  Save this article

The economic impact of technological procurement for large-scale research infrastructures: Evidence from the Large Hadron Collider at CERN

Author

Listed:
  • Castelnovo, Paolo
  • Florio, Massimo
  • Forte, Stefano
  • Rossi, Lucio
  • Sirtori, Emanuela

Abstract

The Large Hadron Collider at CERN, the European Organisation for Nuclear Research, is the world’s highest-energy particle accelerator. Its construction (1995–2008) required frontier technologies and close collaboration between CERN scientists and contracting firms. The literature on “Big Science” projects suggests that this collaboration generated economic spillovers, particularly through technological learning. CERN granted us access to its procurement database, including suppliers of LHC from 35 countries for orders over 10,000 Swiss Francs. We gathered balance-sheet data for more than 350 of these companies from 1991 to 2014, which include the years before and after that of the first order received. The study assesses, in quantitative terms, whether becoming a CERN supplier induced greater R&D effort and innovative capacity, thus enhancing productivity and profitability. The findings – which controlled for firms’ observable characteristics, macroeconomic conditions, and unobserved time, country, industry and firm-level fixed effects – indicate a statistically significant correlation between procurement events and company R&D, knowledge creation and economic performance. The correlation is chiefly driven by high-tech orders; for companies receiving non-high-tech orders, it is weaker, or even statistically not significant.

Suggested Citation

  • Castelnovo, Paolo & Florio, Massimo & Forte, Stefano & Rossi, Lucio & Sirtori, Emanuela, 2018. "The economic impact of technological procurement for large-scale research infrastructures: Evidence from the Large Hadron Collider at CERN," Research Policy, Elsevier, vol. 47(9), pages 1853-1867.
  • Handle: RePEc:eee:respol:v:47:y:2018:i:9:p:1853-1867
    DOI: 10.1016/j.respol.2018.06.018
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S004873331830163X
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bresnahan, Timothy F. & Trajtenberg, M., 1995. "General purpose technologies 'Engines of growth'?," Journal of Econometrics, Elsevier, vol. 65(1), pages 83-108, January.
    2. Hall, Bronwyn H. & Mairesse, Jacques & Mohnen, Pierre, 2010. "Measuring the Returns to R&D," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 1033-1082, Elsevier.
    3. Pisano, Gary P., 1996. "Learning-before-doing in the development of new process technology," Research Policy, Elsevier, vol. 25(7), pages 1097-1119, October.
    4. Bajari, Patrick & Tadelis, Steven, 2001. "Incentives versus Transaction Costs: A Theory of Procurement Contracts," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 387-407, Autumn.
    5. Philippe Aghion & John Van Reenen & Luigi Zingales, 2013. "Innovation and Institutional Ownership," American Economic Review, American Economic Association, vol. 103(1), pages 277-304, February.
    6. Bronwyn H. Hall & Vania Sena, 2017. "Appropriability mechanisms, innovation, and productivity: evidence from the UK," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(1-2), pages 42-62, February.
    7. Stokey, Nancy L, 1988. "Learning by Doing and the Introduction of New Goods," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 701-717, August.
    8. Crepon, B. & Duguet, E. & Mairesse, J., 1998. "Research Investment, Innovation and Productivity: An Econometric Analysis at the Firm Level," Papiers d'Economie Mathématique et Applications 98.15, Université Panthéon-Sorbonne (Paris 1).
    9. repec:wly:econjl:v:127:y:2017:i:604:p:2006-2040 is not listed on IDEAS
    10. Jakob Edler & Max Rolfstam & Lena Tsipouri & Elvira Uyarra, 2015. "Risk management in public procurement of innovation: a conceptualization," Chapters, in: Charles Edquist & Nicholas S Vonortas & Jon M Zabala-Iturriagagoitia & Jakob Edler (ed.), Public Procurement for Innovation, chapter 4, pages 87-109, Edward Elgar Publishing.
    11. Frederic Scherer, 1984. "Using Linked Patent and R&D Data to Measure Interindustry Technology Flows," NBER Chapters, in: R&D, Patents, and Productivity, pages 417-464, National Bureau of Economic Research, Inc.
    12. Nestor Terleckyj, 1980. "Direct and Indirect Effects of Industrial Research and Development on the Productivity Growth of Industries," NBER Chapters, in: New Developments in Productivity Measurement, pages 357-386, National Bureau of Economic Research, Inc.
    13. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 17-45, National Bureau of Economic Research, Inc.
    14. Salter, Ammon J. & Martin, Ben R., 2001. "The economic benefits of publicly funded basic research: a critical review," Research Policy, Elsevier, vol. 30(3), pages 509-532, March.
    15. Battistoni, Giuseppe & Genco, Mario & Marsilio, Marta & Pancotti, Chiara & Rossi, Sandro & Vignetti, Silvia, 2016. "Cost–benefit analysis of applied research infrastructure. Evidence from health care," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 79-91.
    16. Rosenberg, Nathan & Nelson, Richard R., 1994. "American universities and technical advance in industry," Research Policy, Elsevier, vol. 23(3), pages 323-348, May.
    17. Mansfield, Edwin, 1998. "Academic research and industrial innovation: An update of empirical findings1," Research Policy, Elsevier, vol. 26(7-8), pages 773-776, April.
    18. Mansfield, Edwin, 1991. "Academic research and industrial innovation," Research Policy, Elsevier, vol. 20(1), pages 1-12, February.
    19. Jovanovic, Boyan & Rousseau, Peter L., 2005. "General Purpose Technologies," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 18, pages 1181-1224, Elsevier.
    20. Edler, Jakob & Georghiou, Luke, 2007. "Public procurement and innovation--Resurrecting the demand side," Research Policy, Elsevier, vol. 36(7), pages 949-963, September.
    21. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    22. Anna Giunta & Massimo Florio & Francesco Giffoni & Emanuela Sirtori, 2017. "Big Science, Learning And Innovation: Evidence From Cern Procurement," Departmental Working Papers of Economics - University 'Roma Tre' 0225, Department of Economics - University Roma Tre.
    23. Rong, Zhao & Wu, Xiaokai & Boeing, Philipp, 2017. "The effect of institutional ownership on firm innovation: Evidence from Chinese listed firms," Research Policy, Elsevier, vol. 46(9), pages 1533-1551.
    24. Scherer, F M, 1982. "Inter-Industry Technology Flows and Productivity Growth," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 627-634, November.
    25. Raymond, Wladimir & Mairesse, Jacques & Mohnen, Pierre & Palm, Franz, 2015. "Dynamic models of R & D, innovation and productivity: Panel data evidence for Dutch and French manufacturing," European Economic Review, Elsevier, vol. 78(C), pages 285-306.
    26. Marin, Giovanni, 2014. "Do eco-innovations harm productivity growth through crowding out? Results of an extended CDM model for Italy," Research Policy, Elsevier, vol. 43(2), pages 301-317.
    27. Autio, Erkko & Hameri, Ari-Pekka & Vuola, Olli, 2004. "A framework of industrial knowledge spillovers in big-science centers," Research Policy, Elsevier, vol. 33(1), pages 107-126, January.
    28. George van Leeuwen & Pierre Mohnen, 2017. "Revisiting the Porter hypothesis: an empirical analysis of Green innovation for the Netherlands," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(1-2), pages 63-77, February.
    29. Jeffrey I. Bernstein, 1988. "Costs of Production, Intra- and Interindustry R&D Spillovers: Canadian Evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 21(2), pages 324-347, May.
    30. Kenneth J. Arrow, 1962. "The Economic Implications of Learning by Doing," Review of Economic Studies, Oxford University Press, vol. 29(3), pages 155-173.
    31. Charles Edquist & Nicholas S Vonortas & Jon M Zabala-Iturriagagoitia & Jakob Edler (ed.), 2015. "Public Procurement for Innovation," Books, Edward Elgar Publishing, number 15642, April.
    32. Christopher F. Baum & Hans Lööf & Pardis Nabavi & Andreas Stephan, 2017. "A new approach to estimation of the R&D–innovation–productivity relationship," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(1-2), pages 121-133, February.
    33. Florio, Massimo & Forte, Stefano & Sirtori, Emanuela, 2016. "Forecasting the socio-economic impact of the Large Hadron Collider: A cost–benefit analysis to 2025 and beyond," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 38-53.
    34. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    35. Lutz Bornmann, 2013. "What is societal impact of research and how can it be assessed? a literature survey," Journal of the American Society for Information Science and Technology, Association for Information Science & Technology, vol. 64(2), pages 217-233, February.
    36. Hausman, Jerry & Hall, Bronwyn H & Griliches, Zvi, 1984. "Econometric Models for Count Data with an Application to the Patents-R&D Relationship," Econometrica, Econometric Society, vol. 52(4), pages 909-938, July.
    37. Anselin, Luc & Varga, Attila & Acs, Zoltan, 1997. "Local Geographic Spillovers between University Research and High Technology Innovations," Journal of Urban Economics, Elsevier, vol. 42(3), pages 422-448, November.
    38. Stephan, Paula E., 2010. "The Economics of Science," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 217-273, Elsevier.
    39. Jaffe, Adam B, 1989. "Real Effects of Academic Research," American Economic Review, American Economic Association, vol. 79(5), pages 957-970, December.
    40. Mariana Mazzucato, 2016. "From market fixing to market-creating: a new framework for innovation policy," Industry and Innovation, Taylor & Francis Journals, vol. 23(2), pages 140-156, February.
    41. Guerzoni, Marco & Raiteri, Emilio, 2015. "Demand-side vs. supply-side technology policies: Hidden treatment and new empirical evidence on the policy mix," Research Policy, Elsevier, vol. 44(3), pages 726-747.
    42. Aschhoff, Birgit & Sofka, Wolfgang, 2009. "Innovation on demand--Can public procurement drive market success of innovations?," Research Policy, Elsevier, vol. 38(8), pages 1235-1247, October.
    43. Martin, Ben R. & Irvine, John, 1984. "CERN: Past performance and future prospects : III. CERN and the future of world high-energy physics," Research Policy, Elsevier, vol. 13(6), pages 311-342, December.
    44. Edquist, Charles & Zabala-Iturriagagoitia, Jon Mikel, 2012. "Public Procurement for Innovation as mission-oriented innovation policy," Research Policy, Elsevier, vol. 41(10), pages 1757-1769.
    45. Bruno Crepon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation And Productivity: An Econometric Analysis At The Firm Level," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 7(2), pages 115-158.
    46. Li, Xibao, 2012. "Behind the recent surge of Chinese patenting: An institutional view," Research Policy, Elsevier, vol. 41(1), pages 236-249.
    47. Christian Helmers & Henry G. Overman, 2017. "My Precious! The Location and Diffusion of Scientific Research: Evidence from the Synchrotron Diamond Light Source," Economic Journal, Royal Economic Society, vol. 127(604), pages 2006-2040, September.
    48. Irwin, Douglas A & Klenow, Peter J, 1994. "Learning-by-Doing Spillovers in the Semiconductor Industry," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1200-1227, December.
    49. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
    50. Nilsen, Vetle & Anelli, Giovanni, 2016. "Knowledge transfer at CERN," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 113-120.
    51. Irvine, John & Martin, Ben R., 1984. "CERN: Past performance and future prospects : II. The scientific performance of the CERN accelerators," Research Policy, Elsevier, vol. 13(5), pages 247-284, October.
    52. Gregory F. Nemet, 2012. "Subsidies for New Technologies and Knowledge Spillovers from Learning by Doing," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 31(3), pages 601-622, June.
    53. Richard Blundell & Rachel Griffith & John van Reenen, 1999. "Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms," Review of Economic Studies, Oxford University Press, vol. 66(3), pages 529-554.
    54. Mansfield, Edwin & Lee, Jeong-Yeon, 1996. "The modern university: contributor to industrial innovation and recipient of industrial R&D support," Research Policy, Elsevier, vol. 25(7), pages 1047-1058, October.
    55. Martin, Ben R. & Irvine, John, 1984. "CERN: Past performance and future prospects : I. CERN's position in world high-energy physics," Research Policy, Elsevier, vol. 13(4), pages 183-210, August.
    56. Martin, Fernand, 1998. "The economic impact of Canadian university R&D," Research Policy, Elsevier, vol. 27(7), pages 677-687, November.
    57. Gunnar Eliasson, 2011. "Advanced purchasing, spillovers and innovative discovery," Journal of Evolutionary Economics, Springer, vol. 21(1), pages 121-139, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Massimo FLORIO & Francesco GIFFONI, 2019. "L’impatto sociale della produzione di scienza su larga scala: come governarlo?," Departmental Working Papers 2019-05, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    2. Sofia Patsali, 2019. "Opening the black box of university-suppliers' co-invention: some field study evidence," Working Papers of BETA 2019-46, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    3. Andrea, Bastianin & Chiara F., Del Bo, 2019. "Procurement in Big Science Centres: politics or technology? Evidence from CERN," Working Papers 410, University of Milano-Bicocca, Department of Economics, revised 21 May 2019.

    More about this item

    Keywords

    Public procurement; CERN; Large hadron collider; Technological spillovers;

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:respol:v:47:y:2018:i:9:p:1853-1867. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/respol .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.