Government Funding for R&D and Productivity Growth

What’s the return on government funding for research?

There are a few places in the academic literature you can look to for insight. Jones and Summers (2021) uses a hypothetical thought experiment to make the case that, on average, every dollar of R&D spent probably generates several dollars in benefits via its long-run impact on economic growth (see What are the returns to R&D? for more discussion). But that result applies only to R&D in general, government and non-government, bundled together. Is government funding above or below this average? This approach can’t say. Moreover, while I find it a compelling thought experiment, at some point we probably want to check the results against data. Fortunately, a set of recent papers help us do that.

This podcast is an audio read through of the (initial version of the) article Government funding for R&D and productivity growth, originally published on New Things Under the Sun.

Articles mentioned

Jones, Benjamin F., and Lawrence H. Summers. 2020. A calculation of the social returns to innovation. NBER Working Paper 27863. https://doi.org/10.3386/w27863

Fieldhouse, Andrew, and Karel Mertens. 2023. The Returns to Government R&D: Evidence from U.S. Appropriations Shocks. Federal Reserve Bank of Dallas Working Paper 2305. https://doi.org/10.24149/wp2305r2

Dyevre, Arnaud. 2024. Public R&D Spillovers and Productivity Growth. Working paper.

Moretti, Enrico, Claudia Steinwender, and John Van Reenen. 2025. The Intellectual Spoils of War? Defense R&D, Productivity, and International Spillovers. The Review of Economics and Statistics 107(1): 14-27. https://doi.org/10.1162/rest_a_01293