Abstract U.S. firms have reduced their investment in scientific research ("R") compared to product development ("D …"), raising questions about the returns to each type of investment, and about the reasons for this shift. We use Census data that … disaggregates "R" from "D" to study how US firms adjust their innovation investments in response to an external increase in funding …

innovation investment suggests that policies that aim to reduce this threshold or support firms around this threshold could … catalyze the innovation investment …The role of innovation in improving productivity might vary according to a country's relative position in technology …