Beyond the “Innovation's Black-Box”: Translating R&D outlays into employment and economic growth

•Governmental R&D Investment does not have impact on employment and economic growth.•Governmental R&D Employment creates youth-employment but has a negative effect on GDP.•University R&D Employment is an efficient way to promote employment/youth-employment.•Technological Capacity is the most effective ‘solution’ for Youth-Unemployment.•Technological Capacity is a policy with a robust impact regarding Gross Value Added.

The emergence of the so-called “European Paradox” shows that increasing Governmental R&D Investment is far from being a ‘panacea’ for stagnant growth. Surprisingly, Governmental R&D Employment does not contribute to ‘mass-market’ employment, despite its important role in reducing Youth-Unemployment. Despite the negative side-effect of Governmental R&D Employment on economic growth, University R&D Employment appears to have a quite important role in reducing Unemployment, especially Youth-Unemployment, while it also does not have a downside in terms of economic growth. Technological Capacity enhancement is the most effective instrument for reducing Youth-Unemployment and is a policy with a quite robust effect regarding sustainable economic development.