The Horizon effect: A counterfactual analysis of EU research and innovation grants

The Directorate-General for Research and Innovation has recently published a working paper, which shows how Horizon 2020, the Framework Programme for Research and Innovation, has emerged as a driving force behind company growth across Europe.

The study employs a Difference-in-Differences (DiD) approach, a method that helps to understand the real impact of a program by comparing changes over time between two groups – those affected by the program and those not. In this case, the study looks at data from 2010 to 2022, involving around 40,000 private companies. It compares companies that received Horizon 2020 grants with those that did not. By observing how these two sets of companies changed over the same period, the study isolates the effect of the grants. The findings indicate that companies, which received Horizon 2020 grants, experienced a remarkable 20% increase in employment and a staggering 30% boost in total assets and revenues compared to their counterparts. This means that the positive changes in the grant-receiving companies are likely due to the Horizon 2020 program, as opposed to other factors affecting the business environment. This positive impact is particularly evident in the 'Information and communication' and 'Professional, scientific and technical activities' sectors.

Key Takeaways:

• Horizon 2020 grants have fuelled a 20% increase in employment and a 30% rise in total assets and revenues for recipient companies.
• The program's impact is particularly pronounced in the 'Information and communication' and 'Professional, scientific and technical activities' sectors.
• Horizon 2020's effects extend beyond the average project duration, demonstrating its long-lasting impact on company growth.

These impressive findings highlight how Horizon has played a key role in boosting the financial success of companies, fostering innovation, driving growth, and shaping a brighter economic future. The program's effects extend well beyond the average project duration of 2.5 years, demonstrating its enduring impact on company growth. Horizon 2020 has undoubtedly served as a catalyst for innovation and economic prosperity across Europe.

As we move forward, the European Commission remains committed to supporting companies through ground-breaking research and innovation initiatives, ensuring Europe remains at the forefront of global competitiveness.