Assessment of the investments by the European Institute of Innovation and Technology (EIT) in innovation and human capital

EU Economic Modelling System (EU-EMS)

In order to account for all the potential direct, indirect and spatial spillover effects of EIT investments, this study employs a spatially explicit general equilibrium model for Europe (EU-EMS), with regional and sectoral details that enable the identification of various spillovers from investments in knowledge and human capital. This EU Economic Modelling System (EU-EMS) is a new spatial computable general equilibrium (SCGE) model, developed by PBL Netherlands Environmental Assessment Agency, within the EU Framework Programme for Research and Innovation – Horizon 2020.

EU-EMS is a global modelling system that looks at 62 individual countries (among which 28EU member states) and one rest-of-the-world region. Such a detailed global geographic representation allowed us to take into account for the  global value chains. The EU28 Member States in the EU-EMS model were further disaggregated into 276 NUTS2 regions, and each regional economy was subsequently disaggregated into 63 economic sectors according to NACE rev 2 classification of Eurostat.

Significant spatial spillover effects to other, non-EIT-supported, EU regions

The highly detailed EIT expenditure data that resulted from our simulation suggest that, besides sizeable direct effects in regions that receive EIT investment support, there are also significant spatial spillover effects in other, unsupported regions in the EU. Taking all of the main indirect and spatial spillover effects into account is a particular feature of the spatial general equilibrium methodology. Our results suggest that they are indeed important and need to be taken into account when assessing the impact of EIT investment policies on regional economies.