A report from the Federal Bureau of Economic Analysis provides an extremely detailed look at the impact of R&D investment on the growth of the U.S. economy over the last 50 years.
The experimental estimates of the effect of intangible assets on the U.S. GDP suggest that R&D accounted for a substantial share of the resurgence in U.S. growth in recent years.
- Between 1959 and 2002, R&D investment accounted for 4 1/2 percent of growth in real GDP.
- Between 1995 and 2002, its contribution to real growth rose to 6 1/2 percent.
- In comparison, businesses’ investment in commercial and all other types of buildings accounted for just over 2 percent of real GDP growth between 1959 and 2002.
The estimates measure solely the direct impact of R&D investment. They do not include the effect of R&D beyond those in the industries that conducted the R&D. For example, the increase in output and productivity of the computer industry associated with a new R&D-based innovation are included in the estimates, but the increase in output and productivity of the banking industry associated with using the more efficient computer are not. The banking-industry effect is included in the GDP, but it is not attributed to R&D investment in these estimates. These preliminary R&D estimates are the next steps in BEA’s multi-year program to better measure intangibles.
R&D is a prime example of an intangible asset. Such assets contribute to economic growth, but they are difficult to measure. In 1999, BEA incorporated its first estimates of intangibles — investments in computer software — into its definition of investment.