Economic contribution of R&D

Hello, The most obvious impacts from arise from the direct spending associated with R&D activities, either by companies or by universities/governments. Impacts of direct R&D expenditures (mostly salaries plus office & equipment spending) could be evaluated by creating an event for commodity 3376 using a company's total R&D budget as the total sales value. See the tax impact report associated with a scenario using this event for the income tax impacts. One could use a similar event with commodity 3376 as a proxy for public sector R&D spending, or alternatively a specific spending pattern activity for a public sector R&D budget could be created. Particularly in the public sector, the purpose of a classic R&D program is to add to the body of knowledge rather than produce a commercial product. For this reason there are rarely "stemming-from" activities/products that clearly result from the R&D program that could lead to further economic impacts. However if there are stemming-from products that clearly result from the R&D, they could be included. For example, agricultural research may result in a hybrid apple that can be commercially produced. The economic impacts of from the commercial sales of the new apple could be added to the economic impacts of the direct R&D expenditures that created the hybrid. Let us know if you have further questions.

Thank you for the response. So, it's O.K. to set up a commodity change activity for any particular commodity at the CURRENT level of consumption, run the analysis, and report the results as the contribution of the commodity spending to the local economy? Here's my specific scenario. I created a new commodity change activity and included one event for 3376 Scientific Research and Development Services. I set the commodity value at the estimated total R&D expenditures in the region, $5.16 billion (includes R&D spending across all industries and sectors, public and private). I set up a new scenario based on this activity and analyzed the region. The results showed personal income tax from direct effects to be $96.7 million. Using these results, is it then appropriate to say that R&D spending in the region generates $96.7 million in personal income taxes? Thank you! -Mike

Hi Michael, Generally it looks like your methodology here is good. However, the one thing that we would suggest, if you are using the current total level of production for the entire region, is that you will want to use the Multiplier information for Sector 376 to adjust your Commodity Value, so that your total level of production (direct, indirect, and induced)in the model does not exceed the actual current production in the region. The 'Single Industry' contribution analysis described at this link (http://implan.com/v4/index.php?option=com_multicategories&view=article&id=660:660&Itemid=14) will walk you through how to adjust your Event value. Please let us know if you have any additional questions.