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How do macroeconomics and innovation policy interact? This question was discussed by international scholars and policy-makers at the FRAME Final Policy Conference in London on 18 and 19 February 2019. During the conference, the project participants presented the key results and discussed the related policy conclusions of the EU Horizon 2020 project FRAME (Framework for the Analysis of Research and Adoption Activities and their Macroeconomic Effects) with different end users of the project’s research results.

FRAME Final Policy Conference took place in February 2019 in London
FRAME Final Policy Conference in London

The aim of the FRAME project was to develop a toolkit to better assess the effects of innovation policies on key variables such as productivity and long-term growth. Central findings include new dynamic stochastic equilibrium (DSGE) models and new estimation techniques for total factor productivity (TFP), which help policymakers to develop a suitable research and innovation policy for Europe.

Concentration of innovation: Causes and consequences

Representatives from science and politics had the opportunity to discuss the main results with renowned guests within the framework of the final conference. The discussion on the causes and consequences of the concentration of innovation was led by researchers already acknowledged as leading experts in the field. Diego Comin, professor of economics and business at Dartmouth College and Research Fellow at CEPR, presented new insights on the effects of growth and productivity on inequality and polarisation. Harvard professor Philippe Aghion presented a study on the slowdown in long-term growth and the subsequent concentration of capital and industries due to the expansion of big firms. According to Aghion, the focus of innovation on so-called “superstar companies” like Amazon, Google and co. in the USA is one of the reasons for the weaker economic growth.

Top-class filled panels featuring international experts like Goldman Sachs’s Chief European Economist Huw Pill, Professor Dietmar Harhoff from the Max Planck Institute for Innovation and Competition in Munich, Professor Jonathan Haskel from Imperial College London and the Bank of England, and Dr. Román Arjona, Chief Economist of the Directorate-General for Research and Innovation of the European Commission, paved the ground for interesting discussions. The panels generated a series of recommendations about the scope and the relevance of the research results, but also the way to implement the new methodologies developed within the FRAME project. However, there is still a lot of research to do. After two intensive years of project work, many new ideas for further projects have emerged for the future.

FRAME receives funding from the European Union’s research and innovation programme Horizon 2020 under the terms of Grant Agreement No. (CO-CREATION-08-2016/2017: Better integration of evidence on the impact of research and innovation in policy making, Grant No. 727073). The project is coordinated by ZEW and run by a number of renowned international institutions, including Bocconi University in Milan, the London Business School, the Centre for Economic Policy Research in London, Pompeu Fabra University in Barcelona and Lund University. The project is also supported by the Fraunhofer Gesellschaft.

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