Seismic changes in global geopolitics, the rapid rise of global production networks, increasing disputes surrounding trade integration initiatives and challenges to ensuring coherence across policy initiatives at EU and Member State level have made the pursuit of EU external policy objectives more complex. The overarching goal of RESPECT is to identify options and opportunities for better realizing the EU’s soft power in achieving its external policy objectives. It does so through rigorous empirical analysis of the effects of trade and trade policy on nontrade policy objectives (NTPOs) and the development of conceptual frameworks to inform the design of a more coherent external policy mix. Four broad objectives are pursued: (i) documenting the prevailing situation – the set of EU and Member State policies that together characterize the EU’s trade and investment-related policy regime; (ii) understanding the factors that influence the ability of different constellations of EU external policies to attain both trade goals and NTPOs; (iii) determining success factors for effective EU external policies; and (iv) developing practical, operationally feasible recommendations to redesign trade policy to promote better overall EU external policy objectives while recognizing the political economy incentives confronting key actors in and outside the EU. The project centres on in-depth, multi-disciplinary analyses based on methodological triangulation of the impacts of EU trade-related policies, broadly defined to include the investment policies and economic diplomacy activities of Member States. Pathways to impact centre on close involvement of policymakers responsible for – and affected by – EU trade in all stages of the project, a focus on the design of institutional arrangements to enhance the coherence of EU external policies, and structured deliberation with key EU institutions, including the European Parliament and stakeholder groups in and outside the EU.

FRAME will develop a new generation of Dynamic Stochastic General Equilibrium (DSGE) models that will advance the state of the art by allowing for the first time realistic estimates of the impact of public research and innovation activities on innovation, productivity growth and unemployment. FRAME will begin by constructing a baseline model,which can be extended to address different policy issues. The baseline DSGE model incorporates important new features: it distinguishes between investment by companies in R&D and their investment in technology adoption; it allows public R&D and innovation activities not only to enhance the productivity of private R&D but also to facilitate the diffusion of technologies to private companies. FRAME will extend this baseline model to allow: multiple sectors; multiple countries; endogenous skills; and labour markets with search frictions and unemployment. These extensions allow us to investigate the effects of different policy interventions over the short, medium and long term. In addition to developing new models, FRAME will explore new approaches to estimate key model parameters, including: the elasticities of innovation with respect to private and public R&D; adoption lags; the elasticity of the speed of diffusion with respect to private adoption expenditures; and the elasticity of adoption with respect to public activities aimed at fostering the diffusion of new technologies to private companies. This last parameter will be estimated using a unique dataset combining information from firms on the introduction of new products with data on research contracts they have signed with the Fraunhofer Society. Public research and innovation activities have played a critical role in technological progress, yet we have little quantitative knowledge about their impact. FRAME will fill this gap and provide policymakers with a more realistic framework to study the impact of innovation policies and institutions on a broader range of variables.