R&D's Direct Role in GDP Increasing

According to a recently released report by the U.S. Bureau of Economic Analysis (BEA), investment in research and development accounted for 4.5 percent of the growth of inflation-adjusted U.S. gross domestic product (GDP) between 1959 and 2002. This value has increased in recent years, with R&D contributing to 6.5 percent of GDP growth from 1995 to 2002.

 

These statistics are a result of a recent effort to chart how intangible assets, which are not normally used in GDP calculations, affect economic growth. According to BEA Director Steve Landefeld, some 40 percent of U.S. productivity and growth is unaccounted for in the annual GDP calculations. Research and development is one of those intangible assets that are not currently incorporated in BEA calculations.

 

With the assistance of the National Science Foundation, R&D expenditure data was collected and then used to create separate estimates to calculate these economic measurements. Besides the contributions to GDP, the estimates stated that if R&D was included as an investment and not as an expense, business investment would be 11 percent higher and the national savings rate would be 2 percent higher.

 

These new estimates performed by the BEA only include the direct impact of R&D within the industries that conducted the R&D. They do not include productivity gains in sectors that are the result of R&D from separate sectors. For example, productivity gains in the banking industry resulting from research in the computer industry were not included in these R&D estimates. This report is part of a multi-year effort by the BEA to better measure these intangible assets. This recent research is part of an ongoing econometric analysis, and R&D values may not be officially incorporated into GDP calculations until 2013.

 

Press release from the NSF about the program:

http://www.nsf.gov/news/news_summ.jsp?cntn_id=108067&org=SBE&from=news

 

The BEA/NSF paper, R&D Satellite Account: Preliminary Estimates, is available at: http://www.bea.gov/bea/newsrelarchive/2006/rdreport06.pdf



Links to this paper and more than 4,000 additional TBED-related research reports, strategic plans and other papers can be found at the Tech-based Economic Development (TBED) Resource Center, jointly developed by the Technology Administration and SSTI, at: http://www.tbedresourcecenter.org/.