I’ve been posting about knowledge capital writedowns, so now it’s time for a post on where the U.S. is building knowledge capital.
Let’s start with research and development: R&D is not the only type of knowledge capital investment, but it’s one of the more important parts. In my upcoming paper “Biosciences and Long-Term Economy Recovery”, I wanted to compare biosciences R&D in the U.S. with infotech R&D. (Biosciences, by my definition, includes pharmaceuticals, medical equipment makers, and biotech).
Now, these numbers are not published by the government, but I was able to take a decent shot using NSF data. Take a look at the chart below:
By my calculations, the U.S. R&D effort, outside of defense, is divided into thirds–one third biosciences, one third infotech, one third everything else.
I estimate that biosciences accounts for approximately $100 billion a year in domestic R&D spending. This includes domestic business spending, nondefense federal spending and nondefense academic spending.
U.S. domestic infotech R&D totals roughly $95 billion, outside of defense. However, my calculations don’t pick up the portion of the government defense R&D that goes into IT-related projects, which would gross it up to $100 billion. For all intents and purposes, domestic IT R&D is roughly equal to biosciences R&D.
In these two areas–biosciences and IT–it’s likely that the rate of U.S. knowledge capital creation exceeds the rate of knowledge capital writedown. Other areas of R&D? Much dicier.
Note: These are preliminary estimates. I will likely update them in the full version of the paper.
This piece is cross-posted at Mandel on Innovation and Growth