Bernanke: Public research funding valuable
Fed Chairman calls for stable U.S. investment in R&D
Source: Reuters, May 16 2011
WASHINGTON (Reuters) - Public funding for research and development is valuable and is most effective if it is stable over the long term, Federal Reserve Chairman Ben Bernanke said on Monday.
"The primary economic rationale for a government role in R&D is that, absent such intervention, the private market would not adequately supply certain types of research," he told a conference on jobs and growth at Georgetown University.
Bernanke did not talk about the outlook for the economy or monetary policy in his speech.
The United States has benefited in documented examples dating back to the late 19th century from federal research initiatives and government support spurring the emergence of new technologies in areas including agriculture, chemicals, health care, and information technology, he said.
Research and development funded by both public and private sources has held steady at about 2.5 percent of gross domestic product for the last three years, Bernanke said. However, government spending on research has trended down since the 1970s, he said.
In addition, the share of spending on basic research, as opposed to applied activities, has also fallen, Bernanke said.
"The declining emphasis on basic research is somewhat concerning because fundamental research is ultimately the source of most innovation, albeit often with long lags," he said.
Bernanke said some economists believe that because of the potentially high social return to basic research, expanded government support for research could, over time, significantly boost economic growth.