Assessing the EU Framework Programme on R&D

Market failure due to international knowledge spillovers, transboundary positive externalities of innovations, and very uncertain benefits of 'big science''may motivate such a supranational government intervention. However, government failure (e.g., subsidies that crowd out private investments, underprovision of alternative policies such as protection of intellectual property rights and expansion of researchers' labour supply) may reduce the Programme's effectivity.

Sound evaluations of the Programme are not available, partly due to the absence of indicators of the Programme's social benefits.

This paper proposes a quick effectivity scan: compare the projects that have marginally qualified for an FP-subsidy with those that barely did not. If rejected research proposals turn out to be performed nonetheless, hence creating without subsidies about the same social welfare as the projects that were only just entitled to public support, then the Programme must be judged as ineffective.