The economic impact of increasing public support to ICT R&D : a modelling approach

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 and on economic growth and employment in the EU. It also shows that the strength of this impact can be influenced by policy instruments and financing source. Additional work is needed to gain further insights into the sensitivity of these results to the assumptions and parameter settings used in the model.