Is R&D overrated?
Over at Slate, Konstantin Kakaes argues that countries don’t always gain an advantage by boosting spending on scientific research:
[A]s Argentino Pessoa of the University of Porto, among others, has pointed out, there is a slight negative correlation between R&D intensity and GDP growth — in other words, spending more on research doesn’t necessarily make you richer. Amar Bhide, in his book The Venturesome Economy, cites the example of Norway, which isn’t even in the top 20 countries ranked by share of scientific papers published, but has the highest labor productivity in the world.
Kakaes isn’t implying that R&D is worthless. Far from it: Economists have found that the returns to public spending on research are quite high, especially since private firms do a less-than-optimal amount. If no one funded R&D, we’d be in trouble. But nations can’t always get rich on research alone — indeed, Norway has found a way to piggyback off the innovations of others.
Related: Ezra’s post on whether cuts to military R&D will harm the U.S. economy.