MIT Technology Review Narrated How to measure the returns on R&D spending
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Oct 8, 2025 Discover the complexities of valuing research and development investments. Economists reveal that investing in R&D yields significant long-term returns, with every dollar potentially adding five to GDP per person. Public R&D has driven substantial productivity growth, yet funding has declined since the 1960s. The conversation highlights the political challenges in securing R&D funding, the benefits of public research, and the need for rigorous studies to assess its impact. Intriguing insights emphasize the importance of maintaining robust public investment in innovation.
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ROI Beats Anecdotes For R&D
- ROI gives a clearer basis for R&D policy than cherry-picked success stories.
- Calculating returns forces accounting for both big wins and many failures.
High Macroeconomic Returns
- Economists find public R&D yields very large long-term returns to GDP per person.
- Even conservative estimates suggest roughly $1 invested yields about $5 in extra GDP per person.
Public R&D Drives Productivity
- Public R&D significantly boosts private-sector total factor productivity.
- Non-defense public R&D accounted for roughly 20–25% of private productivity growth since WWII.