The Impact of R&D Capitalization on GDP and Productivity Growth in Canada

This article in the Economic Insights series discusses the impact of capitalization of research and development (R&D) expenditure on gross domestic product (GDP) and productivity growth. Capitalizing R&D expenditure increases the scope of investment, and hence, the level of measured capital and GDP. Because R&D expenditure accounts for a small share of GDP, R&D capitalization has little impact on GDP and labour productivity growth.