Measuring the Social Return to R&D
Open accessAbstract
A large empirical literature reports estimates of the rate of return to R&D ranging from 30% to over 100%, supporting the notion that there is too little private investment in research. This conclusion is challenged by the new growth theory. We derive analytically the relationship between the social rate of return to R&D and the coefficient estimates of the empirical literature. We show that these estimates represent a lower bound on the true social rate of return. Using a conservative estimate of the rate of return to R&D of about 30%, optimal R&D investment is at least four times larger than actual investment.
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Saving and investment can promote growth if they flow into infrastructure, basic and applied research, and institutional improvements.
“Saving and investment can also promote growth if they flow into infrastructure (Barro 1990, Canning & Pedroni 2008),basic and applied research ( Jones & Williams 1998, Prettner & Werner 2016, Huang et al. 2023), and institutional improvements (Acemoglu & Robinson 2010).”
From Fertility in High-Income Countries: Trends, Patterns, Determinants, and Consequences (2024) · cites this paper as Jones & Williams 1998
Technological progress is the main driver of long-run economic growth.
“technological progress as the main driver of long-run economic growth”
From Fertility in High-Income Countries: Trends, Patterns, Determinants, and Consequences (2024) · cites this paper as Jones & Williams 1998
Cites
“A Model of Growth: Through Creative Destruction”
Aghion, P., & Howitt, P. (1992) · Econometrica · doi:10.2307/2951599 · Cited by 7,529 · see citing works
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Negative emissions—Part 3: Innovation and upscaling
Nemet, G. F., Callaghan, M. W., Creutzig, F., Fuss, S., Hartmann, J., Hilaire, J., Lamb, W. F., Minx, J. C., Rogers, S., & Smith, P. (2018) · Environmental Research Letters · doi:10.1088/1748-9326/aabff4 · Cited by 343 · see citing works
Popp, D. (2010) · Annual Review of Resource Economics · doi:10.1146/annurev.resource.012809.103929 · Cited by 217 · see citing works
Fertility in High-Income Countries: Trends, Patterns, Determinants, and Consequences
Bloom, D. E., Kuhn, M., & Prettner, K. (2024) · Annual Review of Economics · doi:10.1146/annurev-economics-081523-013750 · Cited by 42 · see citing works
- Authors
- Jones, C. I., & Williams, J. C.
- Affiliations
- Stanford University (US)
- Federal Reserve Board of Governors (US)
- Venue
- The Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 1998-11-01
- Volume
- 113
- Issue
- 4
- Pages
- 1119-1135
- ISSN
- 0033-5533 (ISSN-L)
- 1531-4650
- OpenAlex
- W2046116978
- Cited by
- 835
- References
- 1
- Citations by year
- 2026: 24 · 2025: 29 · 2024: 38 · 2023: 18 · 2022: 25 · 2021: 29 · 2020: 26 · 2019: 24 · 2018: 27 · 2017: 40 · 2016: 26 · 2015: 35 · 2014: 28 · 2013: 29 · 2012: 29
- FWCI
- 41.54
- Type
- journal article
- Language
- en
- Open access
- green
- doi.org
- Locations
- The Quarterly Journal of Economics (publishedVersion)
- SSRN Electronic Journal (acceptedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- HighWire Press Open Archive (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Growth and Productivity
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Firm Innovation and Growth
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Innovation Policy and R&D
- Keywords
- R&D investment, social rate of return, R&D productivity, economic growth models
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