Does Public Research Funding Boost Innovation in Biotech? An Agent-Based Simulation

This paper investigates the influence of public research funding on the innovation performance of a localized biotech cluster and its dynamics. For this purpose an agent-based model was built which serves as a computational laboratory that allows simulating various public research funding schemes. Companies, universities, public research and other relevant organizations are modelled as heterogeneous agents that make investment decisions about conducting research, exchange assets with other agents in geographical space, and produce innovative output for generating revenues they need to survive. Agents receive feedback from the system level and their activities are stimulated by different types of public RTI funding. The credibility of the model is strengthened by a transparent calibration and validation strategy based on own qualitative and quantitative empirical research, as well as secondary data from Vienna, Austria. The first simulation results show strong effects of public research funding on the agent population, their research activities and on the output of the biotech innovation system.