Putting a Value on R&D

By Tom Branna, Editorial Director | August 2, 2013

The US economy took a big leap forward on July 31. No, Detroit didn’t start turning out more cars (in fact, the city is broke). And no, Silicon Valley hasn’t released another superchip on the market (how many devices do we really need anyway?). Instead, the US economy grew thanks to a little bookkeeping that finally puts a value on research and development. On July 31, the US Bureau of Economic Analysis (BEA) rewrote US economic output by restating the size and composition of gross domestic product all the way back to 1929, the first year it was recorded.

As a result of this move by the BEA, R&D is no longer treated as an expense—like corporate fuel consumption or sales reps’ bar bills. Instead it is now categorized as an investment; as much of an investment as that shiny new plant in Mumbai or Guangdong.
You may ask, “So what?”

Sure, it’s only on paper, but it’s still a pretty big deal as analysts expect measured GDP received a one-time boost of 2.7%. Taking a look backward, measured economic growth from 1959 to 2007 will rise from 3.32% to 3.39%. Experts expect future growth will be fractionally higher too. What’s more, if all forms of intangible investments (including R&D, brand building and total quality management) were officially recorded, they would top physical investments in buildings, machinery and other easier-to-measure units, according to experts.

It just goes to show you that a company’s biggest asset is its people—particularly its people in the lab. To find out if these gals and guys are being compensated fairly for their efforts, read the results of our annual R&D Salary Survey, which is available on Happi.com.

This month, we take a look at the biggest companies in the industry with headquarters outside the US. See The International Top 30 on the site. Also, read an update on color cosmetics collections for Fall 2013 and learn more about the latest trends in fine fragrance packaging.

Tom Branna
Editorial Director