# Presentation: 403540

## R&D, Innovation, and       Economic Impact Indicators

***R&D, Innovation, and       Economic Impact Indicators***
**Gregory Tassey**
**Senior Economist                                                                National Institute of Standards and Technology**
**December 2005**** **
**tassey@nist.gov**
**http://www.nist.gov/public_affairs/budget.htm**

## Technology’s Importance

- For several decades, productivity in “high-tech” manufacturing has grown three times as fast as for all of manufacturing
- The increase in U.S. productivity growth that began in the mid-1990s is *entirely due to technology* investments.
- The productivity advantage of the U.S. economy over other OECD countries accounts for *three-quarters of the per capita income gap*
- The rate of return to basic science is about *three times* that for applied R&D, which, in turn, has *twice* the return on physical capital

**Technology’s Importance**

- Economic studies over several decades have shown that

## Technology’s Importance

**Technology’s Importance**

## Technology’s Importance

**Technology’s Importance**

## How Important is the Composition of R&D?

## Indicators of Underinvestment

- Public and Private Investment Trends, 1953-2002

- Source: Bureau of Economic Analysis

- Gross Private Domestic Investment

- Gross Government Investment

**Indicators of Underinvestment**

- _$billions_

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Indicators of Underinvestment

- Source: National Science Foundation

**Indicators of Underinvestment**

## Indicators of Underinvestment

| State | R&D/GSP (%) |
| --- | --- |
| New Mexico | 7.12 |
| Maryland | 5.84 |
| Massachusetts | 5.10 |
| Michigan | 4.85 |
| Washington | 4.65 |
| Oregon | 4.54 |
| Rhode Island | 4.28 |
| District of Columbia | 3.94 |
| California | 3.75 |
| Idaho | 3.41 |

- Source: National Science Foundation (GSP = Gross State Product)

**Geographic Distribution of U.S. R&D:                          Top Ten States by R&D Intensity**

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## How Important is the Composition of R&D?

**How Important is the Composition of R&D?**

## Indicators of Underinvestment

- Source: Industrial Research Institute’s annual surveys. The Sea Change Index is calculated by subtracting the percent of respondents reporting a planned decrease in the particular category of R&D spending from the percent planning an increase of greater than 5 percent. Sample size varies from year to year, but is approximately 100 firms.

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Indicators of Underinvestment

**Indicators of Underinvestment**

## Magnitude of Underinvestment

## Magnitude of Underinvestment

**Magnitude of Underinvestment**

## Magnitude of Underinvestment

- Source: RTI International, *The Economic Impacts of Inadequate Infrastructure for Software Testing* (NIST Planning Report 02-3)

**Magnitude of Underinvestment**

## Magnitude of Underinvestment

**Magnitude of Underinvestment**