1 Economic Report of the President (Washington, DC: U.S. Government Printing Office, 1994), p. 190.

2 For a review of the literature, see M. Ishaq Nadiri, Innovations and Technological Spillovers, NBER Working Paper No. 4423, August 1993. Another literature review of about the same time shows an average social rate of return of about 90 percent. See Frank Lichtenberg, R&D Investment and International Productivity Differences, National Bureau of Economic Research Working Paper No. 4161, September 1992. Returns vary considerably by industry. Dozens of studies over 30-odd years through 1990 show social returns on the government's investment in agricultural R&D averaging 35 to 50 percent, with a substantial number showing returns of 50 to more than 100 percent. Landmark studies led by Mansfield and Tewkesbury of a heterogeneous sample of private-sector investments in both product and process innovation showed high social returns (private benefits to the investing firm, profits to imitators, and benefits to buyers) -- 56 and 99 percent respectively (both figures are medians). See Edwin Mansfield, "Social and Private Rates of Return from Industrial Innovations," Quarterly Journal of Economics, vol. 91, 1977; J. Tewkesbury, M. Crandall, and W. Crane, "Measuring the Societal Benefits of Innovation," Science, vol. 209, August 1980, pp. 658-662.