Macroeconomic Modelling of Public Expenditures on Research and Development in Information and Communication Technologies

Wojciech Szewczyk () and Anna Sabadash ()
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Wojciech Szewczyk: European Commission JRC, https://joint-research-centre.ec.europa.eu/index_en

No JRC82943, JRC Research Reports from Joint Research Centre

Abstract: Since the 1990s, information and communication technology (ICT) has been an essential driver of economic growth. Between 1995 and 2010, the ICT sectors have accounted for over 20% of EU15 growth, even though they only constitute 5% of EU15 GDP. The high growth resulting from the ever-increasing pace of ICT-related innovation requires high levels of R&D to be sustained. Indeed, the European ICT sector accounts for over a quarter of overall business expenditure on R&D, which makes it the largest R&D investing sector. A set of EU policy initiatives emphasise the importance of ICT and the underlying R&D for boosting European performance and competiveness. In order to ensure that public policies create the right conditions for sustaining and increasing the support for R&D, an appropriate measuring framework based on the thorough review of the best available methodologies need to be devised. Such framework will serve as a tool for choosing the investment strategies of public spending that create a favourable climate for an increase of private spendings on ICT R&D, and to turn investments into economic growth and employment through innovation. This report aims to provide an overview of subjects and topics relevant for constructing a coherent framework for macroeconomic analysis of the impact of public spending on ICT R&D, and to set specific modelling requirements for such a framework. The overview is structured to resemble the sequential multistage causal process which links R&D policy intervention with the resulting economy-wide effects, and covers the following issues: relationship between public and private R&D expenditure, innovation and the R&D process, and diffusion and impact of ICT. Further, building on the theory reviewed and empirical evidence presented, the report identifies the general requirements for a modelling framework to be used for ICT R&D analysis. Since there are existing models which can be used as a base framework, the guidelines focus on the specific requirements for the development of an R&D module. This add-in module is called to provide specific initial solutions to account for economics of ICT R&D, and need to be fully integrated with the base CGE model.

Keywords: ICT; R&D; public and private investment; innovation; CGE (search for similar items in EconPapers)
JEL-codes: C54 C68 E17 E65 O30 (search for similar items in EconPapers)
Date: 2013-08
New Economics Papers: this item is included in nep-cmp, nep-ict, nep-ino, nep-knm and nep-sbm
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