GDP Revisions Show Idea-Based Economy

This week, the Bureau of Economic Analysis (BEA) put in place a set of critical changes in how it measures America’s Gross Domestic Product (GDP).  The most important change reclassifies what businesses spend on research and development, which now will be counted as economic investments rather than ordinary business expenses. By so doing, the country’s official national accounts finally recognize that ideas play the same role in prosperity and income growth as new factories and equipment. More important, the change signals that Washington—or at least its accountants—accepts that the United States has an idea-based economy.