The Social Returns to Public R&D

Andrew Fieldhouse and Karel Mertens

No 33780, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Recent empirical evidence by Fieldhouse and Mertens (2024) points to a strong causal link between federal nondefense R&D funding and private-sector productivity growth, and large implied social returns to public R&D investment. We show that these high social return estimates broadly align with existing evidence on the social returns to private or total R&D spending. If the R&D increases authorized under the CHIPS and Science Act were fully appropriated, our modeling indicates a boost in U.S. productivity within a few years, reaching gains of 0.2–0.4% after seven years or more. At their peak, the direct productivity effects of the implied expansion in nondefense R&D alone would raise output by over $40 billion in a single year—exceeding total outlays from the CHIPS Act R&D provisions over a decade. The potential productivity impact of fiscal consolidations changing R&D spending is not clear ex ante. We show that in recent fiscal consolidations, cuts to federal R&D funding were largely borne by defense R&D, whereas funding for nondefense R&D was largely spared or was increased. Our evidence suggests that future deficit reduction efforts that instead emphasize cuts to nondefense R&D funding could have a larger adverse impact on productivity and economic growth than previous fiscal consolidations.

JEL-codes: E6 O38 O47 (search for similar items in EconPapers)
Date: 2025-05
New Economics Papers: this item is included in nep-eff
Note: PR
References: Add references at CitEc
Citations:

Forthcoming: The Social Returns to Public R&D , Andrew J. Fieldhouse, Karel Mertens. in Entrepreneurship and Innovation Policy and the Economy, volume 5 , Jones and Lerner. 2025

Downloads: (external link)
http://www.nber.org/papers/w33780.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
Chapter: The Social Returns to Public R&D (2025)
Working Paper: The Social Returns to Public R&D (2025)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:33780

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w33780
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().