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The BEA-NSF R&D Satellite Accounts, 2007 Results and Current Challenges

This report discusses the purpose, main topics, and enhancements of the R&D Satellite Accounts in 2007, including regional and international issues in measuring R&D. It also explores future improvements and data quality issues.

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The BEA-NSF R&D Satellite Accounts, 2007 Results and Current Challenges

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  1. The BEA-NSF R&D Satellite Accounts, 2007 Results and Current Challenges Carol E. Moylan Bureau of Economic Analysis OECD Working Party on National Accounts October4, 2007

  2. Purpose of R&D Satellite Account • Treat R&D as investment • R&D creates a future stream of benefits • Appropriable R&D has the qualities of an economic asset • Part of broader BEA program to improve measures of intangibles in national accounts • Why R&D? • Good data on R&D expenditures collected by the National Science Foundation for over 50 years • Numerous studies rates of return • Greater professional agreement on its capitalization

  3. Main Topics • What is new in the 2007 estimates. • Preliminary Results from the September 2007 release of the R&D Satellite Account. • Regional and international issues for measuring R&D. • Looking ahead.

  4. 2007 Enhancements • Satellite account extended two years: 1959-2004. • R&D adjusted for both unaffiliated and affiliated trade. • Purchases of business R&D adjusted from cost basis to imputed purchase price. • Adjusted for R&D in software. • First look at industry-level estimates of R&D investment (1987-2004). • Improved measures of prices and depreciation for R&D. • R&D adjusted rates of return to broad industry groups. • First look at how the international and regional accounts would implement the capitalization of R&D.

  5. R&D Investment as a Percent of Adjusted GDP1959-2004

  6. GDP When R&D Treated as Investment Comparison Between 2006 and 2007 Vintages

  7. Contributions to Real GDP Growth

  8. Impact on the Growth and the Industry Share of Growth in Private Industry Value Added When R&D is Treated as Investment (1995-2004)

  9. Business R&D's contribution to the Growth Rate of Real GDP Average Contribution to GDP Growth, 1995-2004

  10. Rates of Return for Chemical and Computer Industry GroupsAdjusted and Unadjusted for R&D Investment

  11. Regional & International Issues • Location of R&D activity: • Performing states vs. funding states • Data challenges • How to distinguish transfers of ownership of R&D capital from limited rentals of rights to use R&D capital • How to treat the sharing of R&D capital among different parts of a multinational corporation

  12. Looking Ahead • Address the asset boundary/freely available R&D issue • Greater industry detail for service sector R&D • Depreciation rates for government R&D? • Slower depreciation for basic? • Data quality issues • Better measures of capital inputs • Company to establishment data • Quarterly indicators

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