Some concepts and their proxies for innovation inputs, outputs, and outcomes are given in Table 4-1. It is not exhaustive. A key feature of innovation outputs and outcomes is that they often occur as spillover benefits to other firms or parts of the economy. Spillovers occur when beneficial effects of a firm's research and innovation activity accrue to other firms or industries without compensation to the investing firm. In this sense they refer to the failure of markets to fully capture the economic value of an innova- tion.
Spillover effects can occur as productivity improvements or as new prod- ucts and processes.
Many workshop partici- pants remarked on the importance of this empirical problem, noting that for many industries or technologies the spillover effects are at least as significant as the appropriated returns. Some analysts seek to track and model the generation, trans- fer, absorption, and application of new knowledge through the economy. To measure spillover effects on productivity, for example, one needs to look at different kinds of outputs and outcomes at different levels of aggregation. This underscores the importance of improving output and outcome measures. Other participants in the meeting commented that better links be- tween science and technology data and regional economic data are needed to increase understanding of the inputs to innovation and its economic development results.