What is the theoretical conceptual model assessing the economic benefits of research, development and innovation infrastructures?
- What are the potential market and non-market benefits associated with RDI infrastructures?
- Which are the most suitable CBA techniques to evaluate the effects of RDI infrastructures?
- What is the best way to bring out and quantify the long-term effects and the benefit of the future generations?
- How could the risk and uncertainty of RDI effects been dealt with?
The first area of this Research Line is to review the existent literature on the benefits associated with RDI infrastructures in order to develop a theoretical framework for their assessment.
Infrastructures in the RDI sectors are recognised as essential ingredients of excellence, creativity and innovative ideas. They are considered instrumental for the advancement of science and stimulate important innovation, learning and education processes that are highly relevant for society and the economy. Beneficiaries of RDI infrastructures are a large and varied range of actors, including researchers, industries and citizens. Such facilities attract a broad range of expertise, by providing scientists, students and researchers with the opportunity of meeting and interacting. Since activities carried out in these infrastructures often lie at the frontiers of science, they contribute at stimulating the interest of young people and motivate them to embrace scientific careers. Moreover, the construction and maintenance of research infrastructure create relevant supply and demand effects, stimulating industrial impact and interdisciplinary contacts between researchers and industry. The linkages between science and industry are particularly strong where technology clusters of associated industry or so-called technological parks exist. More in general, facilities in the research, development and innovation sector have the ability to bring together people and to contribute to research, education and innovation.
The way how RDI investment, particularly infrastructures, may affect socio-economic development has been recently studied by the RAMIRI project, funded by the European Commission under FP7, which distinguishes between the following impacts:
- Scientific impact, taking the form of new knowledge generated by pioneering scientific research;
- Social and human capital impact, i.e. benefits from the creation of formal and informal social networks as a result of the variety of stakeholders interested in the development of RDI infrastructures, and accumulation of human capital (via training and learning effects);
- Direct and indirect economic impact, linked to the generation of employment and spin offs;
- Societal impact thanks to the contribution to solving major challenges, such as energy sustainability and climate change or resolving treatments of serious diseases.
After having identified the main benefits related to RDI infrastructures, the team will elaborate upon the specific CBA approaches to be applied when appraising RDI projects, so as to build a comprehensive theoretical model for assessing RDI infrastructure effects.
As to the nature of RDI benefits it is convenient to distinguish between pure research and applied research/development/innovation infrastructural projects. Such distinction relies on the type of output generated, which may be more or less quantifiable in economic terms. Actually, the possibility of quantifying RDI effects is larger as the infrastructure produces more tangible outputs, while is limited when the produced outputs are intangibles. For instance, the revenues generated from putting onto the market an innovating product or technology or for taking out a patent, which are the output of applied research, development and innovation activities, could be economically evaluated through a nearly standard CBA. In particular, shadow prices of these benefits could be computed, by applying:
- The Little and Mirrlees (1974) shortcut of using border prices as proxies of shadow prices for traded goods;
- The long-run marginal cost rule for non tradables;
- The willingness-to-pay/willingness-to-accept approach for some externalities.
On the other hand, the output of basic research is in the form of new ideas, which are something intangible and have no immediate monetary value. An example of research output for which benefit quantification may prove to be impossible is the World Wide Web, borne as a technological spin-off of CERN.
For other intangible discoveries, which produce pure knowledge and have no or only minor fallouts in the real life, one may attempt to indirectly quantify the benefit, perhaps on the basis of the concrete outputs of the discovery, i.e. working papers, presentation of results at conferences, publications etc. As to the papers, in particular, although the market value of these outputs is not significant, the willingness-to-pay for producing them could be proxied. A possible approach (inspired from Solla Price, 1963) could be that of applying a statistical construct taking into account the number of times a paper is read, the time needed for reading it and the opportunity cost of time.
In order to answer the research questions related to Line 1, the research activities will be:
- Literature review: inspection of the theoretical and empirical literature concerning the economic impact of RDI infrastructure and identification of the existing gaps;
- Development of the theoretical model: elaboration of the conceptual framework of analysis to understand the economics of RDI infrastructures and assess their net benefits.