Conclusion
U.S. R&D expenditures reached an estimated $340 billion in 2006, having risen steadily since 2002, the year expenditures declined for the first time since 1953. In inflation-adjusted terms, this increase represents a rather steady 2.5% average annual change over the past 4 years.
The business sector accounts for the largest share of U.S. R&D performance. The performance share of this sector peaked in 2000 at 75%, declined following the economic slowdown of 2001 and 2002, but has since leveled to an estimated 71% of U.S. R&D in 2006. The major industrial R&D performers include four manufacturing industries (computer and electronic products; chemicals, including pharmaceuticals and biotechnology; aerospace and defense; and automotive) and two services industries (computer-related services and R&D services). In terms of funding, the industry share peaked at 70% also in 2000, but is estimated to have since dipped somewhat to 64% in 2004 before climbing back to 66% of the 2006 R&D total. On the other hand, the federal share of R&D funding dropped to a low of 25% in 2000. Reflecting primarily increased spending in the areas of defense, health, and counterterrorism, the federal share of R&D funding has inched up in recent years and is estimated at 28% of the R&D funding total in 2006.
The international character of the U.S. R&D enterprise may be examined from different perspectives, including comparisons with other countries, business alliances, MNCs, and, according to recently available data, cross-country linkages in the form of exports and imports of R&D services.
In 2002 (latest available cross-country data), global R&D expenditures totaled at least $813 billion, largely funded by and performed in developed countries. The United States and Japan accounted for 45% of total performance, and OECD countries as a group for more than three-quarters. Some non-OECD countries are growing in international prominence in R&D. South Korea maintained its sizable R&D effort and, according to OECD calculations, China has rapidly moved into the top group of R&D-performing nations while India and Brazil are expanding their R&D activities. However, a solid basis is lacking for direct comparisons of R&D effort across developed and developing countries, leading to uncertainty in the cross-country relationship of absolute spending magnitudes.
Between 1999 and 2004, R&D expenditures by affiliates of foreign companies located in the United States increased faster than overall U.S. industrial R&D (2.1% versus 0.2% annual average rate, inflation-adjusted, respectively). Over the same period, overseas R&D by foreign affiliates of U.S. MNCs increased even faster (6.3% annual average rate, inflation-adjusted), particularly in Asian emerging markets such as China, Singapore, and India. Indeed, the share of R&D by foreign affiliates of U.S. MNCs located in Asian countries except Japan surpassed the shares for affiliates located in Japan for the first time in 1999. In 2004, the former had a share of 11.6%, compared with 6.3% for Japan.
The flow of knowledge through trade in services reflects the growing role of services in global innovation and economic activity. U.S. international trade in research, development, and testing services has posted surpluses since 2001. In 2005, exports of these services reached $10.1 billion, compared with imports of $6.7 billion. Furthermore, U.S. trade surpluses in these services have been driven more by exports from affiliates of foreign MNCs located in the United States rather than by exports from parent companies of U.S. MNCs. This finding is consistent with the growing share these affiliates have in U.S. industrial R&D.
In light of the fast pace of international science, technology, and innovation and related policy analysis needs, federal statistical agencies continue to fine-tune their surveys while engaging in interagency and international collaboration. For example, the ability of respondents in industry to answer questions on innovation beyond R&D inputs is being investigated as part of the redesign of the Survey of Industrial R&D. Another strategy for developing new indicators is mining and integrating related data. Planned or ongoing interagency projects include linking data from R&D and international investment surveys and the development of an R&D Satellite Account. The latter not only measures R&D as an investment within GDP, but also serves as a methodology to measure the impact of R&D on productivity and economic growth. Lastly, federal agencies continue to collaborate with international organizations to facilitate comparable data reflecting the ever-changing innovation landscape.
