DG RTD publishes “The Economic Rationale for Public R&I Funding and its Impact” Report

This document presents policy-oriented in-house analyses on the economic impact of research and innovation (R&I) investments and reforms.

The study reviews the existing empirical literature using a meta-analysis angle and finds that the role of public R&I funding is particularly important in light of today’s rapidly changing and riskier innovation landscape.

In a nutshell, the study finds that:

• Roughly two thirds of economic growth in Europe can be traced back to innovation, broadly defined.

• The typical returns for private R&I investment range between 10% and 30%. These returns can be twice or three times higher for the economy in general, thanks to the positive spill-over effects that enable other firms to benefit from these investments.

• Public R&I investment helps generate and diffuse new knowledge. It also contributes to developing new skills and creating networks that enable stronger knowledge flows. Overall, the returns on public R&I investment are estimated to be around 20%, with returns on EU-funded R&I estimated to be even higher.

• For public R&I funding to have maximum impact, it should cover the whole cycle of innovation, from fundamental research to market-creating innovation – i.e. solutions or products that completely re-shape markets.

Find here the full report.