Massachusetts Institute of Technology

To study R&D investment levels and returns in the context of current U.S. productivity and innovation trends

  • Amount $390,487
  • City Cambridge, MA
  • Investigator John Van Reenen
  • Year 2017
  • Program Economics
  • Sub-program Economic Institutions, Behavior, & Performance

While advances in information technology may be changing our lives, they are not necessarily translating into greater productivity or prosperity for the economy as a whole. Having peaked in the 1950s, productivity growth fell dramatically in the U.S. from 2004 to 2008. The last five years have seen some of the lowest levels since the U.S. began collecting such statistics. This grant funds a project by John Van Reenen of MIT and Nicholas Bloom of Stanford to study how R&D investment in the U.S. affects the productivity growth rate. In previous work, Van Reenen and Bloom have identified how organizational innovations affect worker productivity. This grant funds an extension of that work as the team tries to isolate the role research and development plays in productivity by studying what they call “Ideas-TFP.” From a macroeconomic view, the team will examine trends in Ideas-TFP across countries and regions. At the meso level, they will concentrate on a few key sectors, such as medical and agricultural innovation. Focusing further on individual firms, they will compile private and public data about R&D spending as well as patenting and new product introductions. Of particular concern to the team will be constructing measures of market “dynamism” that reflect the rates at which jobs and firms are created or destroyed. The datasets compiled and shared by this project will also help other recent grantees, since estimating the returns on R&D is one of the animating and abiding goals for the Sloan Foundation’s subprogram on the Economic Analysis of Science and Technology.

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