“Imagine you had a machine where you put in a dollar and five dollars come out, sometimes ten,” says Avi Hasson. “We have that machine and it’s called the Office of the Chief Scientist.”
The economic impact of the government’s R&D investment, however, is not measured by the size of the investment, but by the size of the “additionality,” a term used by economists to capture the net positive difference that results from the government’s intervention in the economy. A 2008 study (re-validated in 2014, according to Hasson), found that a government grant of NIS1 million causes firms in the manufacturing sector to invest another NIS1.28 million (the comparable figure in computer-related sectors is NIS1.81 million), meaning that the economy gains NIS2.28 million invested in business R&D that would not have been invested without government intervention. The study also found that the economic effects (in terms of incremental GDP) of the government’s investment in R&D are, at a minimum, between 5 and 6 times the amount of money invested by the government.
The whole Forbes article is worth of reading and learning.