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At the BEA Advisory Committee meeting today, Ledia Guci described the BEA-NSF collaborative effort to construct a Regional R&D Satellite Account. BEA welcomes questions and feedback.

Background paper intro and conclusion: The U.S. Bureau of Economic Analysis (BEA), in partnership with the National Science Foundation’s (NSF’s) National Center for Science and Engineering Statistics (NCSES), is developing a new satellite account to track the regional distribution of research and development (R&D) production and investment and the contribution of the R&D sector to regional economies. This account represents a continuation of both agencies’ efforts to expand and improve measures of economic activity related to R&D. This document outlines relevant concepts, data and methods used to prepare an initial set of R&D production by state statistics for this account.

BEA’s satellite accounts are supplemental accounts that, while linked to BEA’s core accounts, expand their analytical capability by exploring new concepts and methodologies and providing enhanced, complementary statistics that focus on a particular aspect of the economy. Satellite accounts provide additional data for more in-depth analyses of key sectors of the U.S. economy and are particularly useful to measure economic activity that is spread across multiple industries as defined by the standard industry classification system—the North American Industry Classification System (NAICS)—which is used for BEA’s official statistics. BEA publishes several satellite accounts, including two satellite accounts—arts and culture production and outdoor recreation—that have a regional component.
The regional R&D satellite account measures the economic activity associated with R&D production and investment in each state. It presents national statistics on R&D value added, compensation, and employment by R&D performing sector and provides new state-level statistics on each of these measures.  These statistics can be used to show the contribution of individual industries to R&D production and the contribution of the R&D sector to the national economy and each state’s economy. With this satellite account, BEA will also refine and improve its measures of R&D investment by state that are incorporated in GDP by state.  
Like other satellite accounts, the statistics developed in this account do not change the official U.S. economic statistics that BEA produces, because the R&D economic activity is already captured in BEA’s core statistics, including national and regional data on GDP, employment, and compensation. For this satellite account, all data elements associated with R&D activity in the core accounts are rearranged and
combined using the framework used to estimate GDP.
The advantage of constructing an R&D account within this framework is that the overall R&D activity can be compared to GDP for the nation and for each state both in terms of levels (i.e., R&D as a percentage of GDP) as well as change (i.e., whether GDP for the R&D sector is increasing faster or slower than the overall national or state economy). R&D economic activity can also be directly compared to the economic activity of NAICS-defined sectors such as mining, construction, utilities, chemical manufacturing, accommodation, and food services. Another important advantage of this framework is that the contribution of the R&D sector is also measured in terms of the number of jobs supported by R&D activities and the compensation for R&D-related work. . . .

Next Steps: BEA plans to improve and refine the preliminary statistics outlined in this document by incorporating additional source data. A primary area of focus is the ongoing research into the linking of the NSF enterprise data with establishment data from the Census Bureau and examining the suitability of the R&D employment and compensation data from the special tabulation of the BERD survey. In addition, BEA plans to release a set of prototype R&D production statistics for the regional R&DSA for public comment seeking comments on the potential uses of the data, the methodology, and enhancements of the data that would be most beneficial to the data users. Following the release of the prototype R&D production statistics, BEA plans to focus work on this account on the development of measures of R&D investment by state.

Background paper: Regional R&D Satellite Account: Concepts, Data, and Methods for Preparing Preliminary R&D Production by State Statistics https://www.bea.gov/system/files/2023-05/Ledia-ACM-regional-RDSA-background-document.pdf
Slide presentation: https://www.bea.gov/system/files/2023-05/Guci.pdf

Carol Robbins, NSF  https://www.bea.gov/system/files/2023-05/Robbins.pdf
Fernando Galindo-Rueda, OECD  https://www.bea.gov/system/files/2023-05/Galindo-Rueda.pdf
Contact: Ledia Guci https://www.bea.gov/research/meet-the-researchers/ledia-guci

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