The Returns to Publicly Funded R&D

The Returns to Publicly Funded R&D focuses on the returns to U.S. public-sector investments in R&D and the accompanying new empirical analysis relates specifically to the returns to public-sector R&D expenditures in U.S. Federally Funded Research and Development Centers (FFRDCs). One motivation for studying the rates of return to public-sector R&D is the paucity of existing literature on the topic. However, there are two other important motivations for studying the rates of returns to public-sector R&D: a public accountability motivation and a mandated public policy motivation. Although the analysis of investments in R&D in FFRDCs presented herein is econometrics based, there is however a frequently overlooked program evaluation literature that also offers insight into the rates of returns to public-sector R&D. Examples of the program evaluation literature is presented in Section 3 for completeness as well as to illustrate a broader rate of return concept than that presented in the econometrics-based literature. U.S. legislative actions to increase publicly funded R&D in support of private-sector R&D are discussed in Section 4. For the purpose of providing context, a brief history of FFRDCs in the United States is presented in Section 5. FFRDCs have surprisingly been an overlooked element of the public-sector ecosystem that supports public-sector research. An empirical analysis of U.S. public-sector R&D expenditures in FFRDCs, and the associated scientific publications, is presented and discussed in Section 6. Concluding observations about the themes discussed throughout this monograph are offered in Section 7.