Innovation and productivity policies: a budgetary perspective | IFS Annual Lecture 2024

Professor Heidi Williams, Professor of Economics at Dartmouth College, gave the 2024 IFS Annual Lecture on "Innovation and productivity policies: a budgetary perspective". The recent slowdown in productivity growth across the UK, US, and other industrialised nations has generated renewed interest in what changes to innovation policies – e.g. R&D investments and eased restrictions on high skilled immigration – could encourage productivity growth. Such policy debates would ideally be informed both by evidence on which policies are most effective at stimulating innovation, and by comprehensive estimates of the budgetary impacts of the proposed changes. If government debt continues to grow, the role of budgetary estimates in such debates will likely grow in importance in the coming years. In this talk, Professor Williams presented evidence from a series of case studies suggesting that current US budgetary practices – many of which are analogous to current UK budgetary practices – capture a substantially incomplete share of the budgetary impacts of changes to innovation and productivity policies. Building on these examples, she discussed potential approaches for broadening the scope of budget estimating to more consistently provide comprehensive estimates of the budgetary impacts of policy changes.