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R&D in the National Income and Product Accounts: A First Look at its Effect on GDP

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Listed:
  • Barbara M. Fraumeni
  • Sumiye Okubo

    (Bureau of Economic Analysis)

Abstract

According to the estimates in this paper, R&D is a significant contributor to economic growth. Over the forty-year period studied, 1961-2000, returns to R&D capital accounted for 10 percent of growth in real GDP. Treating R&D as an investment raises the national savings rate by two percentage points from 19 to 21 percent. This paper is a preliminary and exploratory examination of the role of R&D in the U.S. economy. It extends the National Income and Product Accounts (NIPA) framework by treating R&D as an investment and imputing a net return to general government capital. Capitalizing R&D investment has a small positive effect on the rate of growth of GDP. There is a significant effect on the distribution of consumption and investment on the product-side and the distribution of property-type income and labor income on the income-side. Most importantly, the partial R&D satellite account developed in this paper increases our understanding of the sources of economic growth.

Suggested Citation

  • Barbara M. Fraumeni & Sumiye Okubo, 2002. "R&D in the National Income and Product Accounts: A First Look at its Effect on GDP," BEA Papers 0019, Bureau of Economic Analysis.
    • Handle: RePEc:bea:papers:0019
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    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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