Download Update of the 1994 R&D Satellite Account

The U.S.R&D Satellite Account:
Preliminary Estimates
Sumiye Okubo
OECD Working Party on National Accounts
October 10-12, 2006
Purpose of R&D Satellite Account
 Treat R&D as investment
 R&D creates a future stream of benefits
 Appropriable R&D has the qualities of an
economic asset
 Improved measurement important for:
 Identifying sources of economic growth
 Monetary, tax, regulatory and other policies
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Progress on Intangible Investment in
BEA’s accounts
 Software treated as investment 1999
 R&D treated as investment
 BEA satellite accounts, 1994, 2002, 2005
 Education, human capital, and medical care
 BEA research underway
 Harder intangibles to measure
 Advertising
 Organizational change
 May only be measurable through broad
imputations
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Measuring Intangibles: Problems in Using
Imputations Rather Than Direct Measures
[Billions of dollars]
18,000
Implicit value of intangibles: $7 trillion (2000:I)
16,000
14,000
12,000
10,000
8,000
6,000
Implicit value of intangibles: -$2 trillion (2002:III)
4,000
2,000
0
96:I
96:III
97:I
97:III
98:I
98:III
99:I
99:III
00:I
Market value of equities
00:III
01:I
01:III
02:I
02:III
03:I
03:III
04:I
04:III
Tangible assets
Source: FRB Flow of Funds (L.102 and B.102) release March 9, 2006. Data based on nonfarm nonfinancial corporate
business.
Note: A number of analysts attributed the large difference between equity values and the replacement value of plant
and equipment to intangibles during the market run-up in the late 1990s.
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Measuring intangibles
 Limited information on market prices
 Stock market valuation of implicit
value of assets is of questionable value
 Good data on R&D expenditures
 Need to directly estimate real output
 Assemble information on depreciation,
rate of return, price profile of products or
similar services that embody the R&D
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5
Overview of Method
 Start with output measure from the
sum of input costs
 Adjust for the known characteristics of
R&D
 Ever shorter service lives
 Declining prices of products embodying
R&D
 High rates of return to R&D investment
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6
Results of Preliminary R&D Satellite
Account: 1959-2002
 Capitalizing R&D increases
 Current dollar GDP by 2.6 percent,
 Real GDP growth by 0.1 percentage point.
 R&D investment accounted for 4.6 percent of
growth in real GDP between 1959-2002, and
accounted for 6.7 percent between 1995-2002.
 Gross private domestic investment (in current
dollars) is 11 percent higher in 2002.
 Adjusted national savings rate is 16 percent,
instead or 14 percent, in 2002.
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Agenda for R&D Satellite Accounts
 Work with business and academic experts to
improve and expand these first year
estimates:
 Applying more refined economic
estimation concepts and methods
 Obtaining more complete information on
R&D process from performers and
investors
 Developing input-output R&D satellite
accounts
 Extending the satellite account to BEA’s
international and regional accounts
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Schedule
• Feasibility Study of Industry R&D Satellite
Account, Spring 2007
• Final R&D Satellite Account, September 2007
• New source data
• Conceptual and methodological issues
beyond 2007
• BEA plans to incorporate R&D into the I-O
accounts in 2012 and into the NIPAs in 2013.
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Questions?
 R&D paper:
http://www.bea.gov/bea/newsrelarchi
ve/2006/rdreport06.pdf
 Or send questions to:
[email protected]
www.bea.gov
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