Government spending on R&D might not help economic growth

From Cafe Hayek.

"from page 269 of Matt Ridley’s 2010 book, The Rational Optimist; (the quotation is from Terence Kealey’s 2006 book, Sex, Science and Profits; the OECD study is here):

A large study by the Organization for Economic Co-operation and Development concluded that government spending on R&D had no observable effect on economic growth, despite what governments believe.  Indeed it ‘crowds out resources that could be alternatively used by the private sector, including private R&D’."

The paper does not rule out a positive effect. It seems that so far they could not find one and the private sector seems to be doing a good job:

"Research and development (R&D) activities undertaken by the business sector seem to have high social returns, while no clear-cut relationship could be established between non-business-oriented R&D activities and growth. There are, however, possible interactions and international spillovers that the regression analysis cannot identify. Moreover, non-business oriented R&D (e.g. defence, energy, health and university research) may generate basic knowledge with possible “technology spillovers” in the long run."