6.3.1 Contribution of Eurostars to the European Research Area
The EUREKA Strategic Roadmap 2010-201460 identified the importance of assessing
the impact of EUREKA projects regarding their added value for other EU initiatives, such as the European Research Area (ERA). As recommended in the EUREKA Impact
Assessment 1985-201061, an Eurostars impact analysis, depending on when it would
be carried out, could follow an econometric assessment, thus promoting a better understanding and contributing to an evidence-based analysis of Eurostars’ effects. According to interviews with the NPCs and NFBs, Eurostars fills an important gap in ERA on industrial R&D, as it is a unique programme in that it is market-oriented and bottom-up. The NPCs think that it fits well with the ERA objectives and that its impact on ERA is extremely positive.
It is noted that Eurostars contributes to ERA objectives by promoting synchronisation and harmonisation of national funding programmes with Eurostars, and by pooling national financial resources in order to support the common goal of strengthening the competitiveness of the European economy by giving targeted support to R&D- performing SMEs. Certain ERA principles, such as using independent experts and conducting an international evaluation of project applications, were also applied in Eurostars.
60 The document can be found here:
http://www.eurekanetwork.org/c/document_library/get_file?uuid=198d5458-27e1-44f4-a6d9- afce96a5e167&groupId=10137
November 2014 Page 91 of 139 The British NPC stated that they use Eurostars as an example in their ERA-NETs, where they define partnered projects in such a way that no one partner of a country can carry out more than 75% of the work. In the UK, in 15-20 ERA-NETs, this approach is being adopted as best practice.
Box 10: Impact assessment study
According to the EUREKA HLG Minutes (Jerusalem, 22 June 2011), the first results of the global “Impact Assessment Study” were presented by Daniel Wasserteil, from Applied Economics, Ltd. The presentation included the study’s final results and its recommendations, some of which were included in the Minutes. These are as follows:
EUREKA should conduct impact assessment studies on a regular basis. These should be overseen by a permanent expert taskforce.
Data collection from firms should be mandatory upon application and for three years after the end of the project. It should be a systematic, real time accumulation and coordinated at a single entry point, preferably the ESE.
Full access to the Amadeus database should be acquired to help estimate the EUREKA effect for firms that participated in EUREKA projects up till 2008.
The Amadeus database should be matched to patent data sources to improve pre- participation matching and the dimensions of the databases.
Source: HLG/NPC Minutes, Jerusalem, 22 June 2011
Furthermore, France has proposed that a new programme targeting “less R&D intensive companies” (“innovative SMEs”) that represents a large portion of SMEs can be developed and implemented alongside Eurostars based on the experience gained in the contribution of Eurostars to the ERA.
6.3.2 Economic and social impacts of Eurostars
A “back-of-the-envelope” calculation of total employment effects can be derived from the econometric treatment effects analysis. As the estimated treatment effect of Eurostars with respect to job creation amounts to a 3.1% higher average annual employment growth-rate when compared to the counterfactual situation of no Eurostars grant, these numbers can be used to derive a total programme effect. This exercise, however, is subject to a number of assumptions that cannot be verified. It should thus be interpreted with care:
The sample of the employment regressions contained 435 observations on SME
awardees. According to the name disambiguation routine carried out, 1,406 different SMEs were subsidised within the Eurostars programme. This number includes projects that were committed by January 2014, but not necessarily started yet, and it accounts for the fact that some firms received multiple grants. For the subsequent exercise, it was assumed that the 435 observations in the sample are representative of the 1,406 SMEs that were funded or where funds were committed.
The initial firm size before the grant receipt amounts to 27.34 employees in the sample. It is assumed that this average employment of the 435 firms in the sample is representative of the 1,406 firms in the Eurostars population of awardees.
November 2014 Page 92 of 139 For firms in the sample, on average 6.05 years elapsed between observing
initial firm size and the firm size at the end of the current observation period. The following calculation now assumes a scenario where this is the case for all projects. Thus it makes the assumption that the projects that are currently not in the sample, for instance because they only started very recently, are also evaluated after a similar time-frame and that future economic conditions would lead to the same treatment effects estimations as the current econometric application.
Created jobs in the average firm are obtained by calculating the initial employment multiplied by the growth factor of 1.031 to the power of 6.05 elapsed years minus the initial employment. By multiplying this number by the 1,406 SMEs that received a grant, the total employment creation of the programme is obtained. Total employment creation is then:
Employment Creation = (27.34 * (1+0.031)6.05 - 27.34) * 1406 = 7798 which
amounts to approximately 7798 jobs created.
The “back-of-the-envelope” nature of this calculation means that the final number of 7798 jobs should only be taken as a rough approximation, and that it is based on strong assumptions; among others, that projects only started recently, and also that ongoing projects will have similar employment effects as the projects in the sample. It should also be understood that the current observation is just a snapshot of jobs created in sampled firms until 2013. It is by no means clear that these are all jobs that are created by marketing new products and services. The number could rise as time elapses and the new products reach established market positions. The number could also shrink if the jobs were only created during the innovation phase but are not sustainable in the production and marketing phase of the products and services, or if some products and services turn out to be unsuccessful on the market.
To show how much sampling variation can affect this number, the back-of-the- envelope calculation can also be carried out within the bounds of the 90% confidence interval of the estimated treatment effect. The 3.1% “average treatment effect on the treated” is a point estimate. This coefficient is significantly different from zero. However, if one takes the confidence interval into account, one would, rather than the point estimate of 3.1%, state with a confidence of 90% that the actual population parameter lies in the interval between 1.3% and 4.9%. Using these confidence bounds for the back-of-the-envelope extrapolation from the sample to the 1,406 project modules carried out by SMEs, the following total employment effects are obtained: at the lower bound of 1.3% additional annual growth because of the Eurostars grant, the total employment creation would amount to about 3,124 jobs; while at the upper bound of 4.9%, the created jobs would approximately total 12,902. Thus it becomes apparent that the 7798 jobs derived from the point estimate of the treatment effect should be interpreted with caution when concluding on overall programme-level effects. A more precise estimate could be established after more projects are completed and more time has elapsed.
6.3.3 Sustainability of Eurostars
The NPCs and NFPs consider that both the synchronisation of national funding procedures and the harmonisation of funding rules will have a lasting effect. Similarly,
November 2014 Page 93 of 139 the exchange of knowledge and experiences between NFBs will also have a lasting effect in programme management practices in Europe. Finally, Eurostar supported new partnerships between SMEs in Europe, which 90% of SMEs expect to be continued after the project and even more that will be continued even if funding was not gained. An indication of the sustainability of the programme is also the finding that the majority of SMEs will likely reapply for Eurostars.
At the level of projects and beneficiaries, the NCPs think that there is a need for complementary
mechanisms to support the
commercialisation of project results through coaching and finance. One proposal is to create another scheme, with similar funding principles to
Eurostars, to support the
commercialisation phase of successful projects. Another suggestion is to make available the “Access to Risk Finance” facility in Horizon 2020 for projects supported by Eurostars.
According to the NPCs and NFBs, Eurostars projects were managed reasonably efficiently by the participants, and the relatively light reporting requirements under the programme did not put excessive pressure on SMEs. The SMEs interviewed also considered that the workload for reporting and monitoring was appropriate, although some identified the elimination of double reporting as a necessity (for NFB and ESE). Furthermore, the cost statement requirements, and especially time sheets, were considered difficult to adopt by a small company due to scarce human resources and inadequate information systems tools. It was also indicated by some SMEs that reporting periods should be clearly documented, perhaps directly in the contract. On the side of SMEs, Eurostars is seen as an enabler for gaining competitive advantages and sustaining business development. A view from a participant company expresses this vision, stating that due to Eurostars project results, “we will have a chance to compete in the drug development market for the new interferon-free hepatitis C virus therapy, whose size is estimated to be 20 billion USD.”