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?
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.
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.