FRAME Final Policy Conference in London
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FRAME Final Policy Conference in London

October 9, 2019

London in February 2019 – setting of the
final conference of FRAME, a project which is promoted by the EU within the framework
of the research and innovation programme “Horizon 2020”. Its goal has been to develop valid instruments
to measure the impact of innovation policy on key variables such as productivity and
long-term growth. Political decision-makers are handed an instrument
to develop an effective innovation policy, which promotes research and at the same time
ensures that research results find their way into the private sector, where they can contribute
to economic growth. About 80 researchers from all over Europe
came together in Grocers’ Hall in London’s financial district. The participants – mostly researchers from
partner institutions of the Leibniz Centre for European Economic Research, namely the
Centre for Economic Policy Research in London, Bocconi University in Milan, London Business
School, Pompeu Fabra University in Barcelona and Lund University – took this opportunity
to look back on what has been done so far and to share their views. Their conclusion: The project has pushed the
boundaries in this field of research further than originally intended. FRAME has thus been a great success. We have taken on new innovative lines of
research. For example, some of them have to do with
the role of demand and how demand changes, when you’re richer; to understand there
are exchanges of innovation; to understand the polarization in labour markets; how we
should measure TFP growth to take into account the cyclical variation in capacity utilization The FRAME final conference was hosted by the
CEPR, the Centre for Economic Policy Research, in London. The CEPR’s president sees the cooperation
of the various partners as a critical successfactor. We are delighted to be one of the project
partners in this FRAME project. It’s a collaborative effort and it is an
excellent example of what CEPR also stands for. It is to combine research excellence with
policy relevance. As you know Europe has done very well in terms
of research excellence over the last decades: a lot of excellent places and a lot of excellent
research has been produced. But the gap between applying this to relevant
policy instruments is sometimes rather large and FRAME is one of those projects that tries
to bridge this gap. The value of FRAME lies in the models, which
have been created as part of the two-year project. These include current technological developments
as well as developments in the global economy. We have provided a new class of models
to analyse economic policy, in particular innovation policies. Those models are richer and they recognise
that technologies that companies use is something that changes over time in response to economic
conditions, in response to the choices and the investment decisions of companies. That’s a critical mechanism, that changes
quite significantly the predictions of the models. For example, Tom Schmitz of Bocconi University
presented a contemporary model for calculating total factor productivity in Europe. The special feature is that it integrates
the various framework conditions in the Member States of the EU. “We did start by looking at different measures
of productivity that were available in the literature, we found some puzzle. We realized that European research was a bit
lacking with respect to the US research. So, we decided to fill this gap and go ahead
with this research project. That’s the reason why the project is there,
it is because of FRAME. There would have been no project without FRAME. At the conference, a critical look at the
results were taken, while further aspects were added and elaborated on, for example
by Georg Licht from ZEW, the Leibniz Centre for European Economic Research in Mannheim,
as seen here. The institute coordinated the activities of
FRAME throughout the project. Internationally recognised researchers like
Philippe Aghion followed the discussion and introduced their own aspects – for example,
his study which shows that the focus of innovation on so-called “superstar companies” like
Amazon, Google and Facebook in the USA is a reason for the weaker economic growth. These newly developed models help to create
a holistic view of things. That framework allowed us to analyse the
relationship between growth and competition, between growth and firm dynamics, between
growth and unemployment. I could look at green innovation and growth
in the environment and so you can look at a number of important aspects of society in
relation to growth by taking a very micro founded approach and very much with the dialogue
between modeling and empirics, you see? FRAME’s scientific advisory board, which
is composed by economists from external institutions, evaluated the results of the project and their
remote impact during a panel discussion. From the point of view of the European Union
– which commissioned FRAME – the project goal has been clearly accomplished. „We have managed to introduce aspects such
as technology diffusion in the model or better assessments of the skills accumulation, better
disentangling of the role of the public and the private sector in the model and this is
all you know, making us better understand the relations between the different macroeconomic
aggregates and is leading to a better picture overall, that pays due tribute to the role
of science and innovation to create growth and wellbeing in Europe. Researchers of other universities who attended
the FRAME final conference take home the insights gained from the event. It is their judgement that validates the results
of the project. „I just finished a large project called
ADEMU for the Horizon 2020 within this last months and we had done a lot of work, which
also involved microeconomics and policies and so on. And I knew about FRAME, which has developed
a little after that. We overlapped, substantially, and I also wanted
to be participant and to learn what has been the final outcome and I’m pleased to be
here. Two intensive years have passed since the
start of FRAME – but the research is not concluded yet. “FRAME is not finishing – you know in
a month, FRAME is going to continue because we still have lots of work to do and we’re
going to continue working on it despite the fact that the end date of FRAME is in 30 days.” All in all, the project has achieved a lot,
and has given many fresh impulses and ideas – and this provides an excellent basis for
further research projects on the impact of innovation policy.

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