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A Calculation of the Social Returns to Innovation

In: Innovation and Public Policy

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  • Benjamin F. Jones
  • Lawrence H. Summers

Abstract

This paper estimates the social returns to investments in innovation. The disparate spillovers associated with innovation, including imitation, business stealing, and intertemporal spillovers, have made calculations of the social returns difficult. Here we provide an economy-wide calculation that nets out the many spillover margins. We further assess the role of capital investment, diffusion delays, learning-by-doing, productivity mismeasurement, health outcomes, and international spillovers in assessing the average social returns. Overall, our estimates suggest that the social returns are very large. Even under conservative assumptions, innovation efforts produce social benefits that are many multiples of the investment costs.
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Suggested Citation

  • Benjamin F. Jones & Lawrence H. Summers, 2020. "A Calculation of the Social Returns to Innovation," NBER Chapters, in: Innovation and Public Policy, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:14422
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    Cited by:

    1. John Van Reenen, 2022. "Innovation and Human Capital Policy," NBER Chapters, in: Innovation and Public Policy, National Bureau of Economic Research, Inc.
    2. Auboin, Marc & Koopman, Robert & Xu, Ankai, 2021. "Trade and innovation policies: Coexistence and spillovers," Journal of Policy Modeling, Elsevier, vol. 43(4), pages 844-872.
    3. Alston, Julian M. & Pardey, Philip G., 2022. "Are Ideas Really Getting Harder to Find?," Staff Papers 320517, University of Minnesota, Department of Applied Economics.

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    More about this item

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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