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on Innovation |
| By: | Benoit, Florence (European Commission, Directorate-General for Research and Innovation); Di Girolamo, Valentina (European Commission, Directorate-General for Research and Innovation); Diodato, Dario (European Commission, Directorate-General for Research and Innovation); Canton, Erik (European Commission, Directorate-General for Research and Innovation); Ravet, Julien (European Commission, Directorate-General for Research and Innovation) |
| Abstract: | In today’s economy, knowledge represents a critical resource for long-term economic growth (Romer, 1990). Knowledge tends to accumulate in densely populated areas, where geographical proximity facilitates spillovers, rapid idea diffusion, and the recombination of capabilities. This localised concentration can further be enriched by global knowledge flows through collaborations and networks. Through this process, economies can obtain a set of capabilities that form the basis for the development of unique technological assets (Storper & Venables, 2004). These unique assets, which are difficult to replicate, become the cornerstone of a sustainable competitive advantage and contribute significantly to long-term economic development and resilience. |
| JEL: | O32 O52 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:eug:wpaper:ki-01-25-015-en-n |
| By: | Benoit, Florence (European Commission, Directorate-General for Research and Innovation); Karvounaraki, Athina (European Commission, Directorate-General for Research and Innovation); Stevenson, Alexis (European Commission, Directorate-General for Research and Innovation); Ravet, Julien (European Commission, Directorate-General for Research and Innovation) |
| Abstract: | Research and Development (R&D) investment is essential for maintaining the European Union (EU)’s economic growth, enhancing global competitiveness, and securing long-term prosperity. This policy brief aims to offer a deeper understanding of how R&D investments are structured, financed, and leveraged to enhance Europe’s long-term prosperity. It provides a comprehensive overview of the current R&D investment landscape in the EU, highlighting key trends and challenges, as well as the role of both public and private R&D funding in driving innovation. Additionally, the brief explores the EU’s progress toward its 3% R&D investment target, alongside key recommendations from the Draghi and Heitor reports on the future EU budget for Research and Innovation. |
| Keywords: | R&D investment, EU economic growth, global competitiveness, long-term prosperity, innovation, public R&D funding, private R&D funding, 3% R&D target |
| JEL: | O32 O52 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:eug:wpaper:ki-01-25-091-en-n |
| By: | Francesco Molica; Francesco Cappellano; Teemu Makkonen |
| Abstract: | Since a few years, the international economic system has been experiencing growing fragmentation and uncertainty. However, research on Regional Innovation Systems (RIS) has yet to comprehensively engage with this phenomenon, despite its (spatial) significance. The paper contributes to addressing this gap, in particular by exploring the potential implications for RIS arising from the decline and disruptions of international knowledge flows associated with economic de-globalization. The study seeks to define a theoretical approach grounded in evolutionary geography to assess this trend. It applies such perspective to three types of RIS—metropolitan, old industrial, and peripheral—across five analytical dimensions that capture the structural and relational factors shaping RIS exposure and resilience to de-globalization. The discussion highlights that, in the face of knowledge and technological disruptions arising from international instability, metropolitan RIS may leverage their diversified knowledge bases, dense institutional frameworks, and strong global connectivity to successfully reconfigure external linkages; old industrial RIS may follow mixed trajectories, with the risk of deepening economic and policy lock-ins; while peripheral RIS—due to their reliance on external knowledge sources and limited endogenous innovation capacity—emerge as the most vulnerable. |
| Keywords: | De-globalization; Knowledge flows; Regional innovation system; Resilience |
| Date: | 2025–10–22 |
| URL: | https://d.repec.org/n?u=RePEc:ict:wpaper:2013/395461 |
| By: | Dotti, Nicola Francesco (Directorate-General for Research and Innovation, European Commission); Canton, Erik (Directorate-General for Research and Innovation, European Commission); Debree, Gaelle (Directorate-General for Research and Innovation, European Commission); Di Girolamo, Valentina (Directorate-General for Research and Innovation, European Commission); Knobloch, Alina (Directorate-General for Research and Innovation, European Commission); Ravet, Julien (Directorate-General for Research and Innovation, European Commission); Steeman, Jan-Tjibbe (Directorate-General for Research and Innovation, European Commission) |
| Abstract: | This literature review provides short summaries of recent scientific articles discussing the challenges of Research and Innovation (R&I) skills. This publication is developed by the Team on 'Economics of Research and Innovation' of the Chief Economist Unit in the European Commission’s Directorate General for Research and Innovation. For this edition, the contributors are Nicola Francesco Dotti (review coordinator), Valentina Di Girolamo, Julien Ravet, and Jan-Tjibbe Steeman. This literature review is the first of a series of publications developed by the CEU R&I team, building upon the R&I Skills Report: A European Competence Framework for R&I Professionals published in 2023. In this report, the CEU R&I team analysed the skills and competences required by R&I professionals, to identify the main knowledge, skills, and attitudes necessary to perform a profession related to R&I. |
| Keywords: | Research and Innovation, R&I skills, R&I professionals, R&I activities, R&I policy |
| JEL: | O32 O38 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:eug:wpaper:ki-01-24-048-en-n |
| By: | Guy Gellatly; Wulong Gu |
| Abstract: | This Spotlight is a complement to a new presentation Research to Insights: Challenges and Opportunities in Innovation, Technology Adoption and Productivity, highlighting key findings from the agency’s productivity research program and recent business surveys. It also explores the relationship between competitive intensity and innovation and informs on the pace at which disruptive technologies, such as artificial intelligence, are being integrated into the economy. |
| Keywords: | innovation, technology adoption, productivity |
| JEL: | J23 M21 |
| Date: | 2024–07–24 |
| URL: | https://d.repec.org/n?u=RePEc:stc:stcp8e:202400700002e |
| By: | Pierre-Alexandre BALLAND (European Commission); Valentina DI GIROLAMO (European Commission); Florence BENOIT (European Commission); Julien RAVET (European Commission); Alexandr HOBZA (European Commission) |
| Abstract: | We might be experiencing the most rapid and transformative technological revolution in human history. In this era of global competition, the strength of research and innovation systems (RISs) is the cornerstone of economic success and global influence. Despite its considerable collective resources and talent, Europe faces a unique fragmentation challenge. The Draghi report (2024) highlighted significant internal barriers within the EU, which was reiterated in a recent Financial Times column, noting that they effectively impose a 45% trade tariff on manufacturing goods and 110% on services. In this regard, the Letta report (2024) proposed a "fifth freedom" centred on research, innovation, and education. Meanwhile the European Commission’s new Competitiveness Compass calls for the removal of cross-border barriers to enhance competitiveness and strengthen the Single Market. It is clear that this lack of integration hinders the efficient flow of knowledge and innovation, creating major inefficiencies and missed opportunities for collaboration. It weakens Europe’s ability to compete with innovation leaders like the United States (US), and to address global challenges such as climate change and health crises, where cross-border cooperation is essential. Although European leaders have highlighted fragmentation as a key obstacle, the literature has largely failed to provide robust theoretical frameworks or empirical evidence to explain, measure and monitor R&I fragmentation. |
| Keywords: | Research and Innovation funding, impact assessment, econometric methods, spillover effects, mediation analysis, policy evaluation |
| JEL: | O32 O38 C18 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:eug:wpaper:ki-01-25-083-en-n |
| By: | Dotti, Nicola Francesco (Directorate-General for Research and Innovation, European Commission); Al-Ajlani, Haya (Directorate-General for Research and Innovation, European Commission); Benoit, Florence (Directorate-General for Research and Innovation, European Commission); Cavicchi, Bianca (Directorate-General for Research and Innovation, European Commission); Di Girolamo, Valentina (Directorate-General for Research and Innovation, European Commission); Kuenzel, Robert (Directorate-General for Research and Innovation, European Commission); Ravet, Julien (Directorate-General for Research and Innovation, European Commission) |
| Abstract: | This literature review provides short summaries of recent scientific articles discussing the challenges of public policies for startups, in line with the newly established Task Force for Startups and Scaleups. This publication is developed by the Team on ‘Economics of Research and Innovation’ of the Chief Economist Unit in the European Commission’s Directorate General for Research and Innovation. For this edition, the contributors are Nicola Francesco Dotti (review coordinator), Haya Al-Ajlani, Florence Benoit, Bianca Cavicchi, Valentina Di Girolamo, Robert Kuenzel, and Julien Ravet. |
| Keywords: | startups, public policies, entrepreneurship, innovation, economic growth |
| JEL: | L26 O30 O38 O52 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:eug:wpaper:ki-01-25-095-en-n |
| By: | Jan-Tjibbe Steeman (Directorate-General for Research and Innovation, European Commission); Alexandr Hobza (Directorate-General for Research and Innovation, European Commission); Erik Canton (Directorate-General for Research and Innovation, European Commission); Valentina Di Girolamo (Directorate-General for Research and Innovation, European Commission); Alessio Mitra (Directorate-General for Research and Innovation, European Commission); Océane Peiffer-Smadja (Directorate-General for Research and Innovation, European Commission); Julien Ravet (Directorate-General for Research and Innovation, European Commission) |
| Abstract: | This paper provides a rationale on why investing in research and innovation (R&I) matters for Europe. It describes the potential of R&I to strengthen EU's competitiveness, support a green and sustainable future, and build a fair European society. EU's R&I performance is presented, including R&I investments compared to global peers, EU's main strengths and weaknesses, and EU’s added value. The paper also highlights the importance of well-designed R&I policies, integral to the overall policy design, and provides pathways to strengthen current public and private efforts to reap the full potential of R&I. |
| Keywords: | Research and innovation, competitiveness, green economy, fair society, EU policy, public investment, private investment |
| JEL: | O32 O33 Q55 Q56 I28 |
| Date: | 2024–03 |
| URL: | https://d.repec.org/n?u=RePEc:eug:wpaper:ki-bd-24-002-en-n |
| By: | Tiago Cavalcanti; Kamiar Mohaddes; Hongyu Nian; Haitao Yin |
| Abstract: | This paper investigates the pass-through of environmental compliance costs along supply chains. We compile a firm-level dataset linking regulated firms in pollution-intensive industries with their top five clients and suppliers. We find that clients of regulated firms invest less in R&D, employ fewer skilled R&D staff, and produce fewer innovations than clients of less regulated firms, while no comparable effects are observed for suppliers. The pass-through is stronger with larger trade volumes, higher input prices faced by clients, and in markets where regulated firms hold greater market power or clients face intense competition. Policy simulations suggest that green technology incentives for regulated firms and R&D subsidies for their clients can mitigate these adverse effects and raise social welfare by enhancing both innovation and environmental quality. |
| Keywords: | environmental compliance, supply chain, pass-through, R&D, innovation |
| JEL: | O30 Q01 Q55 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2025-55 |
| By: | Colombo, Massimo G.; Füner, Lena; Guerini, Massimiliano; Hottenrott, Hanna; Souza, Daniel |
| Abstract: | This paper replicates and extends the framework of Guzman and Stern (2020) to examine the evolution of entrepreneurial activity in Europe, focusing on France, Germany, and the United Kingdom between 2009 and 2023. Using harmonized national business registry data, we construct measures of both the quantity and quality of entrepreneurship across regions. In particular, we adapt the Entrepreneurial Quality Index (EQI), the Regional Entrepreneurship Cohort Potential Index (RECPI), and the Regional Entrepreneurial Acceleration Index (REAI) to capture the number of new ventures, their ex-ante growth potential, and the extent to which ecosystems translate this potential into realized outcomes. Our findings support the generalizability of this framework in the European context while revealing substantial heterogeneity across countries and regions. Major metropolitan centers such as Paris, London, and Munich combine high rates of entry with high entrepreneurial quality, but smaller knowledge- and research-intensive regions - including Cambridge, Oxford, Bonn, and Heidelberg - also emerge as important hubs. With respect to ecosystem performance, France and the UK initially exceeded expectations but later experienced steady declines, whereas Germany maintained relatively stable performance, with notable overperformance between 2012 and 2016. Moreover, we find a stronger positive correlation between entrepreneurial quantity and quality in Europe, suggesting that ecosystems capable of generating more start-ups are also more likely to produce high-quality firms. This study provides important insights for the comparative analysis of entrepreneurial ecosystems and builds a foundation for designing policies aimed at fostering high-quality, innovation-driven entrepreneurship in Europe. |
| Keywords: | Entrepreneurial Quality, Entrepreneurial Ecosystem, High-Growth Firms, Regional Innovation |
| JEL: | G24 G32 L25 L26 M13 R12 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:330316 |
| By: | Jan-Tjibbe STEEMAN (European Commission, Directorate-General for Research and Innovation); Océane PEIFFER-SMADJA (European Commission, Directorate-General for Research and Innovation); Julien RAVET (European Commission, Directorate-General for Research and Innovation) |
| Abstract: | Research and innovation (R&I) are essential for countries’ competitiveness, prosperity, and societal resilience. Therefore, governments around the globe have established extensive R&I programmes to enhance R&I funding. This paper compares public R&I funding across the EU, US, and China - the world's largest R&I spenders – over recent years and identifies five key findings and their policy implications for the EU. First, all three economies have implemented strong R&I policies to boost investments in strategic areas, maintaining global leadership and safeguarding national interests, urging the EU to keep pursuing a strategic and balanced approach in line with 'promoting, protecting and partnering’. Second, China and the US have surpassed the EU in leveraging public R&D investments into private sector funding, suggesting the EU should reflect on its economic structure and focus more on disruptive innovations and advanced technologies. Third, EU public R&D funding is fragmented, indicating a need for better coordination, simplification, and potential consolidation. Fourth, despite relying more on public funding, the EU allocates less in absolute amounts to public R&D compared to the US, and EU’s Framework Programme (EU FP) budgets lag behind those of the US and Chinese counterparts, emphasising the need for EU R&D budget prioritisation. Fifth, R&D funding distribution varies: the EU emphasises research efforts, while the US and China invest more on later R&D stages, prompting policy reflections on aligning means with objectives. |
| Keywords: | Research and Innovation funding, impact assessment, econometric methods, spillover effects, mediation analysis, policy evaluation |
| JEL: | O32 O38 C18 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:eug:wpaper:ki-01-25-090-en-n |
| By: | Pasimeni, Paolo (Directorate-General for Research and Innovation, European Commission); Dotti, Nicola Francesco (Directorate-General for Research and Innovation, European Commission); Al-Ajlani, Haya (Directorate-General for Research and Innovation, European Commission); Benoit, Florence (Directorate-General for Research and Innovation, European Commission); Cavicchi, Bianca (Directorate-General for Research and Innovation, European Commission); Di Girolamo, Valentina (Directorate-General for Research and Innovation, European Commission); Dro, César (Directorate-General for Research and Innovation, European Commission); Steeman, Jan-Tjibbe (Directorate-General for Research and Innovation, European Commission) |
| Abstract: | This literature review provides short summaries of recent scientific articles discussing the challenges of technology monitoring and assessment. This publication is developed by the Team on ‘Economics of Research and Innovation’ of the Chief Economist Unit in the European Commission’s Directorate General for Research and Innovation. For this edition, the contributors are Nicola Francesco Dotti (review coordinator), Haya Al-Ajlani, Florence Benoit, Bianca Cavicchi, Valentina Di Girolamo, César Dro, and Jan-Tjibbe Steeman. |
| Keywords: | technology monitoring, technology assessment, innovation, sustainability, ethical dilemmas |
| JEL: | O32 O38 O39 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:eug:wpaper:ki-01-25-150-en-n |
| By: | Manyane Kpatoumbi Kankpe (Université Jean Monnet, Université Lyon 2, emlyon, GATE, CNRS, 42100, Saint Etienne) |
| Abstract: | Abstract: This study examines the impact of design activities on innovation and identifies the main determinants influencing firms’ investment in design. We use a cross-sectional database built from three sources: the French Community Innovation Survey (CIS) 2018, the Annual Declaration of Social Data (DADS), and the structural business statistics (FARE) for the period 2015–2017. By adopting an instrumental variable (IV) approach that accounts for the endogeneity of design, our results provide clear evidence that integrating design significantly increases the likelihood of innovation. A doubling of the number of designers within a firm more than doubles the probability of innovating in product or process. This impact of design is greater than that of R&D or marketing, indicating its central role in the innovation process. However, failing to consider the endogeneity of design leads to an underestimation of its true effect. Similarly, our results confirm the endogeneity of R&D, as demonstrated by Crépon et al. (1998), and ignoring this dimension also results in an underestimation of its impact on innovation. Regarding the determinants of design, we find that the concentration of designers within a sector and a region, public financial support, and export intensity foster its adoption. By introducing a time lag between innovation activities and their outcomes, certain limitations of cross-sectional studies—particularly simultaneity bias—are overcome, despite the use of the IV approach. |
| Keywords: | Design, Innovation, R&D, Marketing, Endogeneity |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:gat:wpaper:2521 |
| By: | Rodrigo Barra Novoa |
| Abstract: | The study explores the evolution of Chile's industrial policy from 1990 to 2022 through the lens of state capacity, innovation and endogenous development. In a global context where governments are reasserting their role as active agents of innovation, Chile presents a paradox. It is a stable and open economy that has expanded investment in science and technology but still struggles to transform this effort into sustainable capabilities. Drawing on the works of Mazzucato, Aghion, Howitt, Mokyr, Samuelson and Sampedro, the study integrates evolutionary economics, public policy and humanist ethics. Using a longitudinal case study approach and official data, it finds that Chile has improved its innovation institutions but continues to experience weak coordination, regional inequality and a fragile culture of knowledge. The research concludes that achieving inclusive innovation requires adaptive governance and an ethical vision of innovation as a public good. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.20863 |
| By: | Colleen Cunnningham (University of Utah); Florian Ederer (Boston University); Charles Hodgson (Yale University); Zhichun Wang (Yale University) |
| Abstract: | Policies that mandate disclosure of innovative project outcomes aim to increase innovation by limiting wasteful duplicative innovation. Yet, such policies change not only the ex-post information environment but also firms' ex-ante innovation incentives. Firms may slow down their own innovation efforts in anticipation of increased disclosure by others. We examine the innovation-related impacts of the 2017 FDA Final Rule amendment, which mandates disclosure of clinical trial results for pharmaceutical firms. We show that the policy hastened and increased disclosure of results for clinical trials post-completion, but also increased the time to completion of clinical trials, the time between early phases of clinical trials, and delays in development-related investments. We provide evidence consistent with mandated disclosure leading firms to wait to learn from their competitors. Our results suggest that mandating disclosure may slow innovation when there is value to waiting. |
| Date: | 2025–10–08 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2465 |
| By: | \v{S}imon Trlifaj |
| Abstract: | Does government transparency affect innovation? I evaluate the launch of a government database with detailed technical information on the universe of wireless-enabled products on the U.S. market (N 347 thousand). The results show the launch approximately doubled the use of new technologies in the following ten years, an indicator of follow-on innovation. The increase affected both products in the same and new product classes, suggesting novelty; waned over several years, potentially due to an increase in secrecy and patenting; and boosted foreign more than U.S. domestic competitors. These results highlight the importance of information for private sector innovation. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.19377 |
| By: | KOIKE-MORI, Yasutaka; OKUMURA, Koki |
| Abstract: | This paper investigates how production networks shape firms’ R&D decisions and the resulting aggregate inefficiencies. We develop a dynamic model in which firms form supply chains through a persistent matching process and rely on those links to trade both existing products and newly developed products from R&D. The model features two sources of misallocation: market-power distortions and a network-formation externality. The second novel externality leads firms to fail to internalize that their R&D makes them more attractive to potential partners. We estimate the model using Japanese firm-to-firm transaction and patent data and show that the first-best allocation lies close to the decentralized outcome. Market-power corrections raise R&D incentives for older firms by relieving double marginalization along their long supply chains. Instead, internalizing the network-formation externality tilts R&D toward younger firms that expand their supply chains rapidly. These opposing forces largely offset each other, leaving the planner’s allocation near the decentralized one. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:hit:tdbcdp:e-2025-01 |
| By: | Haya AL-AJLANI (European Commission, Directorate-General for Research and Innovation); Alessio MITRA (European Commission, Directorate-General for Research and Innovation); Maximilian KASY (University of Oxford); Konstantinos NIAKAROS (Columbia University) |
| Abstract: | This paper discusses the challenges in empirically assessing the impact of large-scale Research and Innovation (R&I) funding programmes, particularly those under the European Union. It explores key methodological issues such as identifying aggregate effects and spillovers, estimating long-term results and impacts, mediation analysis challenges, heterogeneity within funding programmes, and pitfalls of established econometric methods. The paper also provides potential remedies to address these challenges and presents an ideal empirical analysis framework. |
| Keywords: | Research and Innovation funding, impact assessment, econometric methods, spillover effects, mediation analysis, policy evaluation |
| JEL: | O32 O38 C18 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:eug:wpaper:ki-01-25-145-en-n |
| By: | Dotti, Nicola Francesco (Directorate-General for Research and Innovation, European Commission); Canton, Erik (Directorate-General for Research and Innovation, European Commission); Benoit, Florence (Directorate-General for Research and Innovation, European Commission); Cavicchi, Bianca (Directorate-General for Research and Innovation, European Commission); Di Girolamo, Valentina (Directorate-General for Research and Innovation, European Commission); Ravet, Julien (Directorate-General for Research and Innovation, European Commission); Steeman, Jan-Tjibbe (Directorate-General for Research and Innovation, European Commission) |
| Abstract: | The allocation of public funding for research and innovation (R&I) projects is a fundamental element for every R&I policy, at the EU level and elsewhere. While the mainstream approach is based on peer review and merit-based funding where the proposals with the highest scores receive funding, several alternative models have been proposed, among which the so-called ‘funding-by-lottery’ has received particular attention. Despite few empirical experimentations, the discussion on these alternative models for R&I funding distribution seems relevant because it questions the fundamental elements and values of peer review-based systems. This literature review aims to explore alternative R&I funding models to investigate the arguments in favour or against these models that question the mainstream approach based on the peer review and merit-based funding. |
| Keywords: | research funding, funding-by-lottery, peer review, merit-based funding, research and innovation |
| JEL: | O32 O38 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:eug:wpaper:ki-01-24-045-en-n |