GDP as if R&D was an investment

In my earlier posting on GDP, I noted that BEA is working on including intangibles in the data (see also the BEA article "Toward Better Measurement of Innovation and Intangibles"). As part of that effort, BEA has a GDP "satellite account" that treats R&D as an investment rather than an expense. This morning, BEA released its latest calculations for GDP in the past few decades as if R&D was counted as an investment (see previous posting for their earlier calculations):

Gross Domestic Product (GDP) would have been, on average, 2.7 percent, or $301.5 billion higher between 1998 and 2007 if research and development (R&D) spending was treated as investment in the U.S. national income and product accounts, the Bureau of Economic Analysis (BEA) announced today. The 2010 R&D Satellite Account updates and extends BEA's estimates of the effect of R&D on economic growth through 2007, and now includes coverage of the most recent business cycle expansion.

R&D accounted for about 6.3 percent of average annual growth in real GDP--that is, GDP adjusted for inflation--between 1998 and 2007, and 6.6 percent between 2002 and 2007. To put the contribution of R&D in perspective, the business sector's investment in commercial and other types of structures accounted for just over 1.3 percent of average annual growth in real GDP between 1998 and 2007.