The Impact of Private and Public R&D on Industry Productivity

In the early 1980s, developments in federal innovation policy sought to maximize the returns to the government's substantial investment. Legislation such as Bayh-Dole in 1980 and the creation of the Small Business Innovation Research Program in 1982, encouraged the private-sector commercialization of technologies developed through federal contract R&D. These and subsequent programs have allowed and encouraged firms to utilize technology developed through federal R&D contracts to create new commercial products. This paper addresses the question: have these programs been successful in encouraging the transfer of technology created from federal R&D contracts to marketable output? It examines the impact of federal R&D investment on the creation of private R&D and commercial output in six high-tech industries. The paper finds that the returns to private R&D investment have remained constant over time, but the returns to public R&D investment in the private sector has increased since 1980.