This paper is a macro study on higher education R&D and its impact on productivity growth. I measure the social rate of return on higher education R&D in 17 high-income OECD countries using country level data on the percentage of gross expenditure on R&D performed by higher education, business, and government sectors over the period 1981-2006. Empirical results suggest that lagged R&D performed by higher education is positively affecting productivity growth in all specifications. The long-run propensity of productivity growth to R&D performed by the higher education sector is also found to be positive and significant while it is found be insignificant to business R&D. (Contains 13 notes, 3 figures and 8 tables.)