The Theory and Practice of Public-Sector R&D Economic Impact Analysis: The Case of the National Institute of Standards and Technology

This paper summarizes National Institute of Standards and Technology’s (NIST’s) previous economic impact analyses and provides guidelines for NIST’s management for planning, conducting, and interpreting NIST’s future economic impact analyses that (1) document the economic contribution of NIST’s investments in infrastructure technology (infratechnology) and (2) inform management about the effectiveness of past projects and guide strategic planning. Motivating this agency-specific case study is the general expectation and challenge for public institutions to be accountable for their use of public resources. Economic impact analysis is one way that public institutions can quantify the social contribution of their activity. Impact analysis can also provide important lessons to management about the effectiveness of previous resource allocation decisions, and it can provide guidelines for future strategic planning. This paper discusses each of the 17 NIST economic impact analyses in the context of the stages of economic activity—R&D, production, or commercialization—benefiting from the infrastructure technology research studied in each analysis. The analyses find that there are typically benefits for private-sector conduct of R&D because R&D is more difficult without state-of-the-art infratechnologies, such as measurement and test methods and critically evaluated scientific data. There are benefits for production because data, measurement methods, process control models, etc. contribute to better process control. Also, there are benefits for commercialization because products are of higher quality (yielding more value to consumers) and the infratechnologies lower transaction costs through product acceptance testing standards (lower overall acquisition costs for consumers and accelerate market penetration). In addition to discussing the findings in the 17 analyses about the benefits for the three stages of activity, the paper explains how the benefits of NIST’s infratechnology investments occur throughout the supply chains in industry, from the producers of materials through the producers of intermediate products to the final consumers of the product or service. The 17 analyses are also discussed in the context of where in the relevant supply chains the benefits were realized and the extent to which those benefits could be estimated quantitatively and incorporated into the evaluation metrics presented in each analysis.