Science and Innovation: The Under-Fueled Engine of Prosperity JULY 14, 2021 AUTHOR Benjamin F. Jones* ABSTRACT Science and innovation are central to human progress and national economic success. Currently, the United States invests 2.8% of GDP in research and development, which is supported by a range of public policies. This paper asks whether the United States invests enough. To answer that question, the conceptual case for government intervention and skepticism about that case are reviewed. The paper then turns to systematic evidence, including the very latest evidence, regarding the operation of the science and innovation system and its social returns. This evidence suggests a clear answer: We massively underinvest in science and innovation, with implications for our standards of living, health, national competitiveness, and capacity to respond to crisis. * Kellogg School of Management and National Bureau of Economic Research. Email:
[email protected]. 1. Introduction Scientific and technological advances have long been recognized as engines of economic growth and rising prosperity. The fruits of these advances—instantaneous global communications, vaccines, airplanes, heart surgery, computers, skyscrapers, industrial robots, on-demand entertainment, to name a few—might seem almost magical to our ancestors from not-too-many generations ago. The power of this progress has been broadly evident since the Industrial Revolution and was recognized at the time, including by political leaders. As the British Prime Minister Benjamin Disraeli noted in 1873, “How much has happened in these fifty years … I am thinking of those revolutions of science which … have changed the position and prospects of mankind more than all the conquests and all the codes and all the legislators that ever lived.” Disraeli was talking of things like the steam engine, the telegraph, and textile manufacturing.