Write a short note on economic impact on the life of the people
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INDIRECT ECONOMIC BENEFITS OF RESEARCH
Government research expenditures are increasingly justified in terms of economic benefits such as job creation. But the practical benefits of research are disputed even by some scientists, said Bruce Weinberg, Professor of Economics and Public Administration at Ohio State University, and there is little accepted methodology for estimating these benefits.
Weinberg focused on “indirect benefits.” He described these as the “productivity spillover benefits” beyond particular products or processes that develop out of research. Examples include a better trained workforce that generates higher productivity, solutions to industrial problems, new infrastructure, or hubs for innovation. Even if these spillover benefits turn out to be smaller than the direct benefits, “they are important and are increasingly driving the discussion about the cost and benefits of research.”
One way to estimate the economic benefits of research is through job creation, but Weinberg noted that “this poses deep fundamental and practical problems.” For example, if a job pays $50,000 a year, the value of the job to a person is really that amount minus what a jobholder would have been earning on another job. Also, as wages go up in science jobs, people may move to science from other occupations, which moves jobs from one sector to another rather than creating jobs.
Instead, Weinberg suggested focusing on outcomes—wages or productivity— in places where more science and research is carried out. What should be estimated, he said, is whether research leads to more productive industries in local economies.
Weinberg related measurements of research in particular cities to economic metrics of those cities. He asked whether wages and employment are better in cities where more research is being done. He also looked at measures of innovation such as patenting in cities with more science.
Based on preliminary results for U.S. metropolitan areas, a positive correlation exists between wages, employment, and academic R and D, he said. The results indicate that a 1 percent increase in academic R and D is associated with roughly 120,000 more people employed and $3 billion more earnings in a metropolitan area. Weinberg cautioned, however, that these results are far from definitive because of confounding factors. For example, science-intensive cities may be different from other cities, or workers may have different abilities across cities. “The literature hasn’t really addressed the underlying challenges convincingly,” he said.
“If I were to summarise the literature, I would say there is some evidence that science or research impacts wages, industrial composition, and patenting, but these estimates are weak,” Weinberg concluded. For the future, it is important to think about productivity spillovers not simply in terms of job creation but by doing studies that “unpack the mechanisms by which science and research impact economic outcomes.”
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