Economic Benefits

In 2019, NOAA contracted with Eastern Research Group, Inc. (ERG) of Lexington, MA to perform a study to assess the economic value created by the Small Business Innovation Research (SBIR) Program and the CRADA activities under the Technology Transfer Program. Understanding the economic benefits and value of these activities is critical as we continue to improve our use of public funding. 

Learn More:  TPO Economic Value Case Studies - 2019

Background

NOAA and ERG identified 157 SBIR and CRADA projects that comprised the pool of in-scope projects for this study; these 157 projects represented 129 unique companies. The SBIR program has a total of 132 in-scope projects, representing 104 unique companies. NOAA also selected 25 of the 70 total CRADA collaborators for inclusion in this study.

To assess the value of the SBIR and CRADA under this review, ERG performed five main tasks:

  • ERG reviewed the background information on the 132 in-scope SBIR awardees and 25 in-scope CRADA collaborators. As part of this review, ERG assessed the focus of these projects and assigned each company to an industry sector as defined by the Bureau of Economic Analysis (BEA) to facilitate economic impact modeling.
  • ERG performed a series of ten interviews with SBIR awardees and CRADA collaborators to better understand how the programs generated value for participants.
  • ERG developed five case studies that delved deeper into how specific projects generated value for participants and for society at large.
  • ERG implemented a survey for each program that asked about outcomes (e.g., revenues), satisfaction with NOAA, and drivers of success in the program.
  • ERG estimated economic impacts by combining the data collected in the surveys with Bureau of Economic Analysis (BEA) economic impact multipliers.

KEY FINDINGS

ERG’s review of project documents and participants’ perceptions indicated that the primary beneficiaries of SBIR and CRADA projects were federal agencies (outside of NOAA), the scientific community (especially those involved in ocean and coastal research) and, to a lesser extent, the public and industry.

For each program, we had two sources of information on the beneficiaries of the projects. First, we did our own review and assessment of the projects to identify beneficiaries cited in the background information for each project. Second, the survey directly asked participants who benefitted from their projects. Thus, this finding is based on primarily on the participants’ perception of their projects’ beneficiaries.

The SBIR Program and CRADA engagements generated $275 million in economic activity and 1,156 jobs.

ERG estimated economic impact by collecting data on the revenues and other final demand components that were associated with the in-scope SBIR and CRADA projects and then applying appropriate state-level multipliers obtained from the BEA to each project. There were four categories of multipliers we looked at:

  • Output multipliers reflect the change in the output of industries in a region for a one-dollar change in demand for a specific industry. That is, how does an increase in demand for one industry in a region impact the demand for industries in that same region that provide inputs to that industry? We found that the SBIR and CRADA program combined for total output of almost $275 million annually.
  • Value-added multipliers reflect the change in regional value-added (gross domestic product, GDP) for a one-dollar change in demand for a specific industry. That is, how does an increase in demand for one industry in a region increase the GDP for that region? Our estimates indicate that the SBIR and CRADA programs resulted in an increase of $138 million in annual value-added across all states that had companies with these agreements.
  • Earnings multipliers reflect the total change in household earnings in the region for a one-dollar change in demand for a specific industry. That is, how does an increase in demand for one industry in a region increase earnings in that region? SBIR and CRADA projects led to an increase of approximately $74 million annually in earnings.
  • Jobs multipliers reflect the change in the total number of jobs (full- and part-time) per a one million dollar change in the demand for a specific industry. That is, how does an increase in demand for one industry in a region increase employment in the region? The in-scope SBIR and CRADA projects we looked at led to 1,156 new jobs.

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