Jim Turnure Principal, Energy Group

• Representation of Technological Change: Some Economic Approaches

• Jim Turnure
• Principal, Energy Group
• ICF Consulting
• ORNL Conference on
• Estimating the Benefits of Government-Sponsored Energy R&D
• Arlington, VA

• March 4, 2002

Outline

• I. Overview
• II. NREL Research Task: Process and Methodology
• Purpose of Study
• Scope and Limitations
• Research Methodology
• III. Summary of Approaches to Technological Representation
• Capital Investment and Growth Models
• Option Value and Principal-Agent Models
• Spillover Effects and Network Models
• Sidebar: ‘Top-Down’ vs. ‘Bottom-Up’ Models
• Discussion

• I. Overview

Baseline Estimation is a Critical Step in R&D Benefit Assessment

• R&D investment is intended to advance technological change, and to improve indicators of technological change
• In order to assess the impact of R&D investment, it is necessary to understand and measure how technological change would develop in the absence of specific R&D investments
• Baseline estimation cannot occur in a vacuum; it must be carried out in a robust analytic framework. In turn, such analytic frameworks need theoretical foundations and specific premises regarding how the processes of innovation and technological change operate in the economy
• The purpose of this presentation is to outline major theoretical approaches that have developed in the field of economics, partly based on a literature survey conducted for the National Renewable Energy Laboratory (NREL).

• II. NREL Research Task: Process and Methodology

Purpose of Study

• NREL required a thorough survey of the major economics literature in order to develop the knowledge base on the role of technological change in economic growth.
• The intent of the research task was to conduct a literature survey, select key papers from the survey results, and summarize them in a readily usable format. This allows for rapid access to the underlying literature base.
• The study is one of a number of starting points for R&D benefit estimation, which in being reevaluated by many organizations partly in response to the requirements of the Governmental Performance and Results Act (GPRA).