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Title: Technology, R&D, and the Economy
Editors: Bruce L. R. Smith and Claude E. Barfield
Publisher: The Brookings Institution
Copyright: 1996
ISBN: 0-8157-7985-2
Pages: 222
Price: $16.95
Rating: 85%
Policy-makers have always been interested in how research and development affects economic growth -- the problem is discerning how much growth is a result of improving technology, as opposed to increased capital and labor. Technology, R&D, and the Economy, an edited volume from The Brookings Institution, addresses attributability and other issues. The chapters themselves are revised versions of papers presented at an October 1994 conference held in conjunction with the American Enterprise Institute under the aegis of the National Science Foundation.

After a retrospective piece by Harvard’s Harvey Brooks examining how U.S. science policy has evolved, with particular emphasis on the post-WWII research environment, Technology, R&D, and the Economy addresses various aspects of contemporary science policy. Chapter 3, from Nelson and Romer examines, among other issues, the interrelationship of academic training and industrial development. Brooks addressed this relationship in his chapter as well and, while both pieces discuss industry’s willingness to invest in academic research efforts, neither piece mentions that a fair amount of this industrial investment has come from foreign companies. While U.S. institutions training foreign students who return to their native countries after graduation is addressed, I’m disappointed none of the authors saw fit to mention the related trend of foreign corporate investment in American academic institutions.

One satisfying aspect of Nelson and Romer’s analysis is in how the benefits of R&D, especially “basic research” (i.e., research not intended for a particular application), may be appropriated by the investing party. Their recounting of the classical division of goods based on “rivalry” (that using a particular good precludes the use of a competing good) and “excludability” (that the good’s developer may prevent others from using it) and the division’s implications for various types of research is useful for reader’s like myself whose formal economic training doesn’t extend past the most fundamental levels.

Chapters 4-6 are more mathematically explicit, but not unapproachably so for the lay reader. Boskin and Lau, authors of “Contributions of R&D to Economic Growth”, do a particularly good job of demystifying what the various elements of the differential equations they use in their analysis mean. The analysts’ aim is to determine R&D’s contribution to the “residual”, the technical term for the difference between the observed growth rate and the amount of growth explained by increases in labor and capital, using econometric methods. I’ll leave a detailed analysis of their methods and results to more capable economists, but as a somewhat informed reader I am of the opinion their ideas, especially when taken in concert with the analyses available elsewhere in this volume, are valuable for policy-makers.

Chapters 5 and 6 augment this econometric approach with analyses of similar issues at the national and industrial levels, respectively. I was happy to see the editors saw fit to include other analysts’ comments on these two papers at the end of the chapters.

The final chapter, “Quality of Life Returns from Basic Research”, takes a markedly different approach to the issues at hand. Rather than look at the knowledge outputs of a research program, author Susan Cozzens advocates treating the researchers themselves as the benefits of the research. She justifies this choice by arguing that the expanding and synergistic “pool of knowledge”, rather than each individual component, is the true source of innovation. Cozzens looks at technological progress over various time periods in terms of how research has affected knowledge, practice, and education. The author herself points out that “quality of life” is an extremely vague concept, yet her analysis is welcome and certainly relevant to the book’s focus.

Technology, R&D, and the Economy significantly informs the debate on technology policy, though the individual chapters do repeat quite a bit of information. I marked this book down a bit as a whole, but was very pleased with how much each individual chapter adds to the body of knowledge on how research and development affects the economy.

Curtis D. Frye (  is the editor and chief reviewer of Technology and Society Book Reviews.  He worked for four years as a defense industry analyst at The MITRE Corporation in McLean, VA, and is the author of Privacy-Enhanced Business, from Quorum Books.