Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/250309 
Year of Publication: 
2022
Series/Report no.: 
Fraunhofer ISI Discussion Papers - Innovation Systems and Policy Analysis No. 72
Publisher: 
Fraunhofer-Institut für System- und Innovationsforschung ISI, Karlsruhe
Abstract: 
Estimating the economic returns to public science investments has been a key topic in economics. However, while in particular microeconomic approaches have been proposed, only a few studies have tried estimating the macroeconomic effects of public science investments. In this paper, we propose a micro-rooted macro-modelling framework, which combines the strength of an econo-metric causal identification of key effects with the power of a Computable General Equilibrium (CGE) framework, and provides additional economic structure of the estimates allowing us a fine-grained sectoral differentiation of all effects. Applying our approach to the German Fraunhofer-Gesellschaft, the world's largest publicly funded organization for applied research, we show that macroeconomic returns are - irrespective of econometric specification - a high multitude of the original investment costs. In specific, the activities by the Fraunhofer-Gesellschaft increase German GDP by 1.6% and employment by 437,000 jobs. Our CGE analysis further shows that the effects concentrate in chem-icals, pharmaceuticals, motor vehicles and machinery sectors. The substantial size of our estimated effects corroborate recent macroeconomic evidence on the social returns to innovation.
Subjects: 
macroeconomic Effects of public Research
Fraunhofer-Gesellschaft
Regression-microfounded CGE-model
Document Type: 
Working Paper

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