Working Paper: NBER ID: w27863
Authors: Benjamin F. Jones; Lawrence H. Summers
Abstract: This paper estimates the social returns to investments in innovation. The disparate spillovers associated with innovation, including imitation, business stealing, and intertemporal spillovers, have made calculations of the social returns difficult. Here we provide an economy-wide calculation that nets out the many spillover margins. We further assess the role of capital investment, diffusion delays, learning-by-doing, productivity mismeasurement, health outcomes, and international spillovers in assessing the average social returns. Overall, our estimates suggest that the social returns are very large. Even under conservative assumptions, innovation efforts produce social benefits that are many multiples of the investment costs.
Keywords: social returns; innovation; spillovers; R&D; economic growth
JEL Codes: O30; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Innovation investments (O31) | Social returns (I26) |
| R&D investments (O32) | Productivity gains (O49) |
| Innovation investments (O31) | GDP growth (O49) |
| Delays in realizing benefits from R&D investments (O39) | Social returns (I26) |
| Capital deepening (E22) | Social returns (I26) |
| Health innovations (O35) | Social returns (I26) |
| International spillovers (F69) | Social returns (I26) |