The ‘certain’ returns from expenditures for ‘uncertain’ activities: a local multiplier approach to evaluate regional R&I policy

Abstract

ABSTRACT The paper proposes a policy evaluation approach to estimate the local multiplier effect of (public) R&I expenditures in the context of regional innovation systems (RIS). Starting from input-output tables and recent improvements in local multipliers, the proposed approach tracks all economic flows generated by the initial public R&I expenditures, distinguishing direct impact and subsequent effects on the supply chain, consumption, fiscal flows and inter-regional spillovers. The main interest of this approach is the focus on the ‘certain’ returns occurring within a RIS, irrespective of their ‘uncertain’ innovative outcomes, i.e. this approach tracks the economic flows of R&I expenditures even if innovation-oriented activities should fail to provide the expected benefits for regional productivity. The case of Innoviris, the Brussels regional R&I agency, is discussed to validate this approach unpacking the economic flows in a context of strong interregional linkages showing the spatial distribution of economic returns generated by R&I-oriented public expenditures.