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When we talk about R&D, does it mean that the final goods of R&D amount to 3% of GDP? Or does it mean that a specific nation is spending an amount of money on R&D that is equivalent to 3% of GDP?

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Expenditure, which can be thought of as a form of investment that does not involve the production of physical capital.

First, the satellite account provides estimates of expenditures on R&D that are designed to be used in conjunction with the national income and product accounts measures. Second, it treats R&D expenditures as a form of investment, recognizing the role R&D plays in adding to knowledge and in developing new and improved processes and products that lead to increases in productivity and growth. Third, it provides estimates of the stock of knowledge capital.

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Expenditures on R&D can be viewed as generating future income and product. With this view, a case is made for treating them as investment, paralleling the treatment of business expenditures on structures and durable equipment, and for recognizing a stock of intangible capital, just as there is a stock of tangible capital.

Source: BEA’s R&D satellite accounts.

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  • $\begingroup$ So basically if a company spends $100 on R&D, it will be counted as investment? $\endgroup$ – Vasting Apr 18 at 19:00
  • $\begingroup$ Not in the main accounts. In the main NIPA accounts, they are treated simply as expenditures, and you often can’t tell them apart from other expenditures, which is why they developed the R&D satellite accounts. $\endgroup$ – dismalscience Apr 18 at 19:02
  • $\begingroup$ So R&D is just counted as normal expenditure. I've never really heard of these satellite accounts - is it just a way to document some specific areas of the economy (like R&D) that one can't see from the main NIPA accounts? $\endgroup$ – Vasting Apr 18 at 19:13
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    $\begingroup$ Yes, exactly. They also have a satellite account on travel and tourism, and back in the 90s they once produced one on environmental resources, before Congress specifically banned them from doing it again. $\endgroup$ – dismalscience Apr 18 at 19:16

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