Technical and management notes: The impact of federal research and development spending on productivity

Although the government has a long history of supporting R&D activity, very little is known about the effects of federal R&D spending. The hypothesis investigated in this paper is that federal R&D indirectly affects the productivity of the conducting firm. The empirical results support the theoretical model which predicts that the marginal rate of return to private R&D is lower in firms receiving relatively more federal R&D dollars.