New Study Shows Influence of R&D Spending on
Firm Formation and Regional Economic Growth

Do investments by government and private in R&D at research universities pay measurable area economic growth dividends? According to a study by the National Commission on Entrepreneurship and the Kauffman Center for Entrepreneurial Leadership, they do.

The study findings "lend strength to the argument that government and private sector R&D expenditures made through research universities contribute to economic growth. Although this argument has traditionally been made with the expectation of long term lags in the R&D to growth relationship, our findings are that this lag is relatively small – as little as one year and the effect seems to decrease slowly, but steadily, after the first year but lasts for at least five years. University R&D spending is also associated with localities with higher levels of human capital, which also contributes substantially toward generating new firms., Thus, research universities and investment in R&D at these universities are major factors contributing to economic growth in the labor market areas in which the universities are situated."

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