Papers Commissioned for a Workshop on the Federal Role in Research and Development (1985) / Chapter Skim
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Measuring Economic Effects of Federal Research and Development Expenditures: Recent History with Special Emphasis on Federal R&D Performed in Industry
Measuring Economic Effects of Federal Research and Development Expenditures: Recent History with Special Emphasis on Federal R&D Performed in Industry
Pages 151-172
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From page 151... ...
Analysts of industrial history in the United States have noted that many very important applications to ache private economy have resulted from products developed originally by industry under contract performed in support of defense and space programs. Indeed, it would be hard to argue that ache aviation and computer industries have not been built in a large measure on founda~cions developed in federal contracts, or that much of the progress of celecoonnunica~cions has not been based on federally developed satellite technology.
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From page 152... ...
expenditures have been examined. Often, foreign observers comment that American industry enj oys competitive advantage by performing contract R&D for the A
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From page 153... ...
However, the principal obj ectives of most of the other government expenditures for R&D are different. Economic retunes have not been identified for such programs, and there is a question whether one should expect to find such benefits or whether economic returns as measured currently by economic data systems provide meaningful indicators of ache output of the programs, especially in the basic sciences.
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From page 154... ...
For the entire private bus iness economy, government R&D t~ eated as a capital stock had a positive effect on aggregate praductivity growth, but the estimate of Chat effect was statistically weaker and four times smaller "hen ~cha~c for Ache corresponding effect of the stock of privately funded industrial R&D. In discussing these resui~cs in an earlier paper, Terlecky 16 concluded that while government-financed R&D apparently created oppar~cuntties for additional prince R&D by making such priorate inures t:ments more productive, it apparently could not have direct productivity effects without additional private adap~cation R&D, because products developed for the government usually were not suited for private markets.
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From page 155... ...
This appears to be a reasonable explanation of the general failure of models predicated on estimating marginal products to produce s ignificant direct estimates of any effects of contract R&D on produc~ci~rity of industries. the indications that at the aggregate level there may be an observed residual effect of contract R&D on productivity may mean Chat there are some unappropriated benefits accruing to the users of newly developed private products derived from the antecedent results of federal contract R&D.
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From page 156... ...
They questioned how an increase or decrease fry the mount of government funding for fiche energy projects would affect the companies ' expenditures of their own funds for R&D . The companies' responses were asymmetrical between increases and decreases in federal funding.
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17* Cross - section regressions, 431 companies reporting for 259 TIC lines of bus iness categories, 1974.
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Pooled regressions, 12 manufacturing industries, 1963°1979. S ignif icance not tested.
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From page 159... ...
of Estimate ~Estima~e Part iII~ Macroeconomic Analyses Levy and Terleck~i, 1983 (Table 1) Macroeconomic model equations, UO S O bus iness sector, 1949 - 1980 .
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Baled on data for 20 manufacturing industries, Levers and Reiss estimated a cross - sectional model of R&D and remarket structure involving concentration ratios, advertising, private R&D, and government R&D O The ir es timates o f the end tion for priorate research and development expenditure included in that mode 1 contain significant coefficients for goverrman~c R&D. he relevant version of this equation indicate that one dollar of federal R&D expenditure induced addi "tonal private R&D expenditure of between 8 and 12 cents .
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From page 161... ...
lye Levy and Terleckyj analysis31 did nor succeed in iden~cifying clearly the time lags involved in the effects of government R&D. They did no~c find any lag structure for government R&D performed in industry and found a possible indication of a three-~~ar lag for other government R&~ he Mansfield and Switzer survey indica~ces similar three-year lags O These seem deco be relatively short lag periods.
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From page 162... ...
spending received frotn ache federal government represent a distinct ins~citutiona1 mechanism for funding of R&D; since that mechanism is not available to companies selling only in priorate marke~cs, those funds should be considered separately. Me research rests summarized in Table 1 suggest that direct stimulation of further private R&D investments by the performers of government contract R&D is not the only way in which government R&D may s timula~ce addi Lionel priorate R&D expend)
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From page 163... ...
35~e precariously mentioned study of the National Bureau of Standards R&D program in semiconductor technology illustrates how technology developed in a government laboratory may interact with priorate Rho. In one analysis, ache contributions to company growth made by company patenting activity were found to be significantly higher in the semiconductor companies that maintained frequent contact with the NBS laboratory performing the semiconductor R&D -hen in other companies in the industry.
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From page 164... ...
had a significant relationship deco private R&D spending Kitchen that some area. To avoid possible estimation error arising from the mutual dependence of R&D spending in ache echoes economic areas, the echoes R&D investment functions were estimated by the ins tenemental variables method.
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n Paper given at ache National Bureau of Economic Research Conference on Productivity Growth in Japan and the United States, Cambridge, MA, August 26-28, 1985.
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From page 166... ...
Howe~rer' both absolutely and relatively, ache amounts of government-funded industrial R&D are very small in Japan and cons iderably smaller in Europe than in ache United S vacates a Also, the character of the industrial R&D funded by the government is quite different outside the united Stances. In Europe and Japan, government funding is oriented much more toward supporting private incus try innovations and productivity, while, tn the United S Sauces, it is oriented primarily to government obj ectives O ME I~IESTM~1T E1JNCTION FOR PRIVATE it&i)
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From page 167... ...
. 997 This result supports Lichtenberg' s finding that the government marice~c, and here, specifically, ache market for defense disables, has a much larger effect per dollar on R&D expenditures than the rest of ache market does.
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From page 168... ...
"Trends in Industrial R&D Activities in the United Stances, Europe and Japan, 1963-83." Paper given at the National Bureau of Economic Research Conference on Productivity Growth in Japan and the United States, Cambridge, MA, August 26-28, 198S.
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From page 169... ...
Produ~tivi~cy Impacts of Government R&D Laboratories: The National Bureau of Standards Semi cond uc For Tec* no 1 ogg Program - - A n Prod uc ~ i on Func t~ on Approach O n Report prepared for the National Bureau of Standards, U
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. The Time Pattern of ache Effects of Industrial R&D on Productivity Growth.
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From page 171... ...
"The Relationship between Federal Contract R&D and Company Rid) , n American Economic Review, Vol.
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From page 172... ...
41. Levy and Te~lecky;, 1983, op.
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