Regional Impact Analysis of Large-scale Research Infrastructures

This report has been prepared as part of the regional impact of large-scale research infrastructures (RIs) study agreed between the European Organization for Nuclear Research (CERN) and the London School of Economics and Political Science (LSE) (deliverables LSE-RD 1.4 and 1.5). This document outlines a novel framework to identify and estimate the regional economic impacts that a new particle-collider-based research infrastructure set up as a globally distributed project can create through their procurement. To test the validity of this new approach and estimate the potential regional and local economic impacts of RI procurement, this report examines the effects of a technology of relevance for the Future Circular Collider (FCC): superconducting radiofrequency cavities (SRF). To evaluate the regional impacts of this technology, this study uses the European X-ray Free Electron Laser (XFEL) facility in Germany as a case study. This project involved the largest deployment of superconducting radiofrequency cavity technology to date. Schio, a municipality in Italy where one of the two suppliers for this procurement contract is located, is the focus of the analysis. By studying the local economic impact of SRF procurement by XFEL, this report can estimate real world (i.e. non-simulated) counterfactual (i.e. over and above what would have happened in the local economy without such SRF procurement contract) effects, offering insights on the regional and local impacts of future FCC high-tech industry procurement for this and other, comparable technologies. This study provides new evidence on the positive local impact of RI procurement. This report finds that the high-tech procurement contracts for a large-scale scientific project positively affected manufacturing employment in the supplier's municipality well beyond the boundaries of the procurement contract with effects beyond the firm that received the contract. Every new employee that the supplier added to its internal workforce to fulfil the contract supported 15 additional manufacturing jobs outside the firm’s boundaries. In monetary terms, each one million euros spent on procurement supported additional 11 manufacturing jobs in the supplier’s municipality. As a result of this contract, the number of manufacturing employees in Schio was 7% higher than it would have been in the absence of SRF procurement. The results of this report suggest that the positive employment effect remained concentrated within the industrial manufacturing sector. The effect was geographically concentrated within the municipality of Schio. This report focuses on a large high-technology-intensive contract. The advantage of the proposed approach to the estimation of the local impacts of RI procurement is that it can be applied to other technology procurement cases to better understand the heterogeneity of such effects. For example, it can be used to understand how different technologies, different contract volumes and different technology intensity would impact the local economy in which the supplier is located in different ways. The results indicate that the employment effect on the local economy of RI procurement contracts is significant, can be large and should be considered when making investment decisions for an FCC project