In my earlier posting on GDP, I noted that BEA is working on including intangibles in the data (see also the BEA article “Toward Better Measurement of Innovation and Intangibles“). As part of that effort, BEA has a GDP “satellite account” that treats R&D as an investment rather than an expense. This morning, BEA released its latest calculations for GDP in the past few decades as if R&D was counted as an investment (see previous posting for their earlier calculations):
Gross Domestic Product (GDP) would have been, on average, 2.7 percent, or $301.5 billion higher between 1998 and 2007 if research and development (R&D) spending was treated as investment in the U.S. national income and product accounts, the Bureau of Economic Analysis (BEA) announced today. The 2010 R&D Satellite Account updates and extends BEA’s estimates of the effect of R&D on economic growth through 2007, and now includes coverage of the most recent business cycle expansion.
R&D accounted for about 6.3 percent of average annual growth in real GDP–that is, GDP adjusted for inflation–between 1998 and 2007, and 6.6 percent between 2002 and 2007. To put the contribution of R&D in perspective, the business sector’s investment in commercial and other types of structures accounted for just over 1.3 percent of average annual growth in real GDP between 1998 and 2007.