  This is the first study that attempts to assess the regional economic impacts
of the European Institute of Innovation and Technology (EIT) investments in a
spatially explicit macroeconomic model, which allows us to take into account
all key direct, indirect and spatial spillover effects of EIT investments via
inter-regional trade and investment linkages and a spatial diffusion of
technology via an endogenously determined global knowledge frontier with
endogenous growth engines driven by investments in knowledge and human capital.
Our simulation results of highly detailed EIT expenditure data suggest that,
besides sizable direct effects in those regions that receive the EIT investment
support, there are also significant spatial spillover effects to other
(non-supported) EU regions. Taking into account all key indirect and spatial
spillover effects is a particular strength of the adopted spatial general
equilibrium methodology; our results suggest that they are important indeed and
need to be taken into account when assessing the impacts of EIT investment
policies on regional economies.
