Qureshi, Z; King, M (2025) A framework for assessing the economic significance of NPL's spillovers. NPL Report. IEA 25

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Abstract

Spillovers are a significant part of the total impact the National Physical Laboratory generates. However, currently NPL does not have a systematic approach to understanding these spillovers. This document aims to address the issue and build a conceptual framework for the spillovers generated. By doing so, NPL can better understand the impact of its activities, beyond its direct userbase. In this document, two categories are used to classify knowledge spillovers: Indirect Benefits and Indirect Costs. The focus is on the indirect benefits which have two main streams: free to access information goods; and codified knowledge. Additionally, a conceptual framework is developed for each of the streams, to understand the channel through which the benefits disseminate to indirect users. The first stream concerns the market for calibration services and NPL’s role in the calibration chain. Using the concept of entropy in information theory, it finds that for £1 spent on improved measurement, the return on measurement is £1.30. The second stream explains NPL’s role in the creation and revision of standards and how that leads to product and process diffusion. Through the route of product diffusion, it finds that, on average, products have a lifetime of 13 years within an industry and 7 years within a firm. Moreover, it finds a 55-45 split between the direct and indirect benefits. The purpose of this document is to construct a top-level structure and a basic conceptual framework for the indirect benefits. This document makes a start at the mathematisation of the framework but developing a complete economic model for the spillovers requires further work.

Item Type:	Report/Guide (NPL Report)
NPL Report No.:	IEA 25
Divisions:	Strategy Directorate
Identification number/DOI:	10.47120/npl.IEA25
Last Modified:	28 Jan 2025 11:37
URI:	https://eprintspublications.npl.co.uk/id/eprint/10114