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The Economic Impact of Increasing Public Support to ICT R&D: A Modelling Approach

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Abstract

The report provides a quantitative analysis of the economic impacts of national public support to ICT R&D in the European Union, considering a number of policy scenarios covering different amounts of public spending, policy instruments and sources of financing. For this purpose we use a macroeconomic model with ICT and R&D driven endogenous growth. The model accommodates a range of policy instruments that may be used to stimulate R&D activity (ICT or non-ICT) in the economy, and it captures multiple channels through which R&D activity affects the economy. The policy scenarios are simulated with the model. The simulation exercise provides some preliminary evidence that an increase in public expenditure to support ICT R&D might have a significantly positive impact on ICT sector BERD as well as on economic growth and employment in the EU. It also shows that the strength and in some cases the sign of this impact can be influenced by policy instruments and financing source. Additional work is needed to gain further insights on the sensitivity of these results to the assumptions and parameter settings used in the model.

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  • Martin Aarøe Christensen, 2015. "The Economic Impact of Increasing Public Support to ICT R&D: A Modelling Approach," JRC Research Reports JRC97907, Joint Research Centre.
    • Handle: RePEc:ipt:iptwpa:jrc97907
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    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC97907
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    1. Martin Aarøe Christensen, 2015. "A CGE model with ICT and R&D-driven endogenous growth: A detailed model description," JRC Research Reports JRC97908, Joint Research Centre.
    2. Coe, David T. & Helpman, Elhanan & Hoffmaister, Alexander W., 2009. "International R&D spillovers and institutions," European Economic Review, Elsevier, vol. 53(7), pages 723-741, October.
    3. Baxter, Marianne & King, Robert G, 1993. "Fiscal Policy in General Equilibrium," American Economic Review, American Economic Association, vol. 83(3), pages 315-334, June.
    4. Martin Aarøe Christensen, 2015. "A CGE model with ICT and R&D-driven endogenous growth: A general description," JRC Research Reports JRC97902, Joint Research Centre.
    5. Juraj Stancík & Ibrahim Kholilul Rohman, 2014. "Public ICT R&D funding in the European Union," JRC Research Reports JRC92883, Joint Research Centre.
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    More about this item

    Keywords

    Economic Modelling; R&D; ICT; Endogenous Growth;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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