CERN Procurement Stimulates Far-Reaching Global Value Chains Beyond Member Nations

A detailed econometric time-series analysis evaluating procurement expenditures by the European Organization for Nuclear Research between 1999 and 2024 demonstrates that while the vast majority of direct contracts are placed with suppliers located in member states, the resulting indirect and induced economic value added expands significantly across international supply networks. Conducted by researchers Gerhard Streicher and Fabian Gabelberger, the study combines twenty-five years of microdata comprising between 40,000 and 90,000 individual annual purchase orders with a dynamic multiregional input-output model to track the cross-border distribution of direct, indirect, and capital-replacement-induced value added. The findings reveal that although firms situated in member nations received approximately 94 percent of direct contract volume across the quarter-century observation window, their combined share of total global value added declined to roughly 77 percent once the intermediate tiers of international production networks were incorporated. This pronounced geographic divergence demonstrates how the economic stimulus of major international scientific installations diffuses globally through interconnected upstream supply chains.

The underlying empirical dataset supplied by CERN encompassed all orders issued between 1999 and 2024, regardless of whether funding originated from the core CERN budget or dedicated team accounts, covering both supplies and service contracts alongside in-kind contributions for CERN-managed projects and activities. Annual procurement expenditure fluctuated within a range of 350 million to over 900 million Swiss francs throughout the period. Direct contract awards showed a strong structural concentration: member states received an average of 94 percent of contract volumes, while associated member states, together with the two observer states, Japan and the United States, accounted for approximately 4 percent. Non-member states secured only about 2 percent of direct procurement volume. Because the dataset gathered all operational and investment channels across twenty-five years, the resulting country contract proportions diverge from standard standalone annual CERN Procurement Reports. Tracking individual procurement lines across this extended interval required addressing a major institutional change in commodity coding, which evolved from a historical three-digit alphanumeric classification comprising around 620 contract categories prior to 2016 into a modern hierarchical eight-digit classification cataloging over 2,400 contract categories distributed across fourteen families from 2018 onward.

To integrate these granular purchasing records into standardized macroeconomic frameworks, the authors developed a systematic two-stage classification workflow aligning CERN-specific codes with the European statistical Classification of Products by Activity. In the initial phase, a large language model, GPT-4.5, processed textual procurement descriptions within structured prompts presenting complete candidate classifications to generate preliminary correspondences. To prevent algorithmic biases—such as the tendency of generalist models to assign ambiguous, brief, or underspecified descriptions to overly common commodity groupings—the researchers executed a comprehensive human-in-the-loop manual review. Rather than relying on sample checks, every single automated mapping was evaluated by human experts, with all classification disagreements resolved strictly in favor of expert human judgment. For the modern eight-digit taxonomy, an explicit distinction separating material contracts from service contracts was similarly generated and verified. Roughly 1 percent of entries represented non-substantive accounting records, such as advance payments to contractors, and were excluded from subsequent economic modeling.

Analysis of the harmonized procurement data established that high-technology hardware—encompassing computers, electronic components, and optical instrumentation—represented the single largest commodity category, capturing 14 percent of total contract allocations over the 1999 to 2024 timeframe. Specialized construction works and electrical equipment each accounted for approximately 12 percent. The physical composition of purchasing proved highly volatile across the operational lifecycle of CERN accelerators: electrical equipment climbed to 30 percent of procurement volume during peak installation periods in 2003 to 2005 and again in 2021, while total manufactured products exceeded 70 percent during the mid-2000s. These equipment surges were preceded by extensive civil engineering phases where construction shares ranged between 13 and 30 percent. Conversely, electricity demand, which varied between 3 and 19 percent of annual expenditures, operated in a counter-cyclical rhythm relative to infrastructure investment, expanding during sustained experiment phases and contracting during machine construction periods. Across the entire duration, manufactured goods accounted for 52 percent of direct procurement, followed by services at 21 percent, construction at 18 percent, and utilities at 9 percent.

To model how these diverse purchasing flows propagated through domestic and international economies, the investigation employed a time-series adaptation of ADAGIO, a Dynamic Global Input-Output model operating under Dynamic New Keynesian modeling principles. Rather than adopting static general equilibrium assumptions, the framework accommodates long-run full-employment equilibria constrained in the short term by institutional rigidities, such as consumer liquidity limits, collective wage bargaining, and imperfect industrial competition. The analytical engine was constructed by linking multiregional supply-use tables, which preserve distinct linkages between producing sectors and user commodities without the information loss inherent in symmetrical input-output transformations. The time-series core utilized the World Input-Output Database for historical matrices spanning 2000 to 2009, anchored to the newer FIGARO database produced by Eurostat and the Joint Research Centre, which governed 2010 through 2023. Baseline structures from 2000 were applied to 1999 data, while 2023 structures supported 2024 projections. Because neither global database incorporates Israel or Serbia, their specific indirect and induced outcomes could not be analyzed individually.

The modeling framework decomposed economic impact into three distinct tiers: direct effects occurring at the immediate contractor level; indirect effects arising as primary contractors purchase intermediate goods and services from upstream suppliers; and induced effects generated through the replacement of depreciating industrial capital. Direct value added represents the turnover retained by direct suppliers to compensate personnel via wages and social contributions, satisfy net production taxes, fund capital depreciation, and generate operating profits after deducting intermediate inputs. Indirect effects cascade backward through multiple echelons of specialized component and raw material vendors. To avoid conflating broad consumer spending with procurement-specific production, the model excluded generalized household consumption effects and restricted induced analysis strictly to capital stock replacement investments, capturing the 5 to 10 percent depreciation rates typical of standard manufacturing and the higher rates characteristic of advanced high-technology sectors like electronics.

When these inter-industry linkages were computed, the resulting geographical distribution shifted markedly outward from CERN member states into the wider global economy. While non-member states obtained only about 2 percent of direct contract awards, their share of indirect value-added reached 11 percent, expanding to 13 percent once capital replacement was incorporated. In contrast, member states saw their collective share drop from 94 percent of direct awards to 77 percent of total direct, indirect, and induced value-added. This spatial dispersal intensified noticeably over the historical timeline: non-member participation expanded from approximately 7 percent of total economic effects in 1999 to 14 percent in 2008, matching the rapid expansion of global trade linkages during which global trade relative to gross domestic product rose from under 30 percent to 57 percent. Following the 2008 financial crisis and the onset of slower trade growth, the non-member share remained largely stable overall. However, mainland China emerged as a prominent structural exception: despite securing only 0.2 percent of direct contracts, China’s share of CERN-associated indirect and induced value added climbed steadily from 0.5 percent in 1999 to approximately 5.0 percent by 2024, reflecting its expanding role in global manufacturing supply chains.

A parallel structural transformation appeared in the sectoral composition of economic effects when comparing initial purchasing categories to final value-added distribution. Although manufactured products accounted for 52 percent of CERN direct expenditure, manufacturing sectors captured only 32 percent of aggregate value added. Conversely, service activities represented only 21 percent of initial procurement outlays but absorbed 46 percent of total direct, indirect, and induced value added. A primary driver of this sectoral rebalancing is the role of trade and transport margins embedded in final purchaser prices for manufactured hardware, which contributed approximately 15 percent of total value-added effects. The service sector captured additional indirect demand through upstream requirements for engineering consulting, scientific testing, financial services, and commercial insurance necessary to deliver advanced experimental hardware.

At the national level, direct contract distribution correlated moderately with annual member contributions to the CERN budget, displaying an average correlation coefficient of 56 percent across member, associated, and observer nations. This relationship is heavily influenced by the organization’s host states, France and Switzerland, which captured 31 percent and 27 percent of direct procurement respectively due to their proximity. Facility operations necessitate regional procurement for localized activities such as electrical power supply, specialized construction, machine maintenance and repair, and site security services, which cannot be efficiently sourced internationally. When France and Switzerland were excluded from the sample, the statistical correlation between budgetary contributions and direct contract allocations rose from 56 percent to 92 percent. Together, the two host nations accounted for nearly 40 percent of total estimated economic benefits. In contrast, Austria contributed 2.2 percent of member fees, or roughly 23.6 million Swiss francs annually out of a 1.08 billion total budget, receiving 1.7 percent of procurement contracts, 1.4 percent of direct effects, and 1.3 percent of global value added.

The study also identified contrasting integration profiles among major non-member and observer nations participating in CERN procurement value chains. The United States and Japan, both holding official observer status and contributing to designated scientific missions without contributing to the regular operational budget, averaged nearly 4 percent of direct contract volume combined. This performance was driven by direct technological expertise in specialized instrumentation and advanced machinery manufacturing. In contrast, Chinese enterprises entered CERN value chains almost exclusively downstream as indirect suppliers of intermediate inputs and capital goods. The authors emphasize that these input-output estimations isolate operational supply-chain mechanics without capturing wider long-term technological spillovers, human capital enhancement, or endogenous growth effects arising from fundamental discovery science.

Subject of Research: Global value chains and macroeconomic effects of CERN procurement expenditures

Article Title: The Global Value Chains of CERN Procurement: A Time Series Analysis for 1999–2024

Article References: Streicher, G., & Gabelberger, F. (2026). The Global Value Chains of CERN Procurement: A Time Series Analysis for 1999–2024. EPJ Research Infrastructures, 10(1), Article 10. https://doi.org/10.1007/s41781-026-00165-8

Image Credits: AI Generated

DOI: 10.1007/s41781-026-00165-8

Keywords: CERN, global value chains, input-output analysis, procurement economics, economic value added, science policy, international trade, research infrastructure, Global, Value, Chains, Procurement