by Mark Boroush[1]

Overall spending on research and development conducted in the United States in 2009 is estimated to have totaled $400.5 billion (current dollars), somewhat below the 2008 level of $403.0 billion, although still well above the $377.0 billion spent in 2007 (table 1). The growth of U.S. R&D from 2007 to 2008 was 6.9%, considerably ahead of the 1.9% expansion of gross domestic product (GDP) during that period (table 2). Although the level of total R&D dropped in 2009 by 0.6%, the depth of the decline was much less than the 2.5% decline in GDP. After adjusting for inflation, the 2009 level declined $6 billion from the 2008 level (down 1.7%) but was still $10 billion higher than in 2007.[2] (Amounts cited throughout this InfoBrief are in current dollars unless stated otherwise.)

  Table 1 Source Data: Excel file

  Table 2 Source Data: Excel file

This R&D spending slowdown in 2009 primarily reflects a drop in business R&D (both current and constant dollars) in the face of the financial crisis and economic downturn that started in late 2008. Even so, R&D spending in other performing sectors continued to rise, which offset some of the business R&D decline. Part of this was the effect—notably for federal and academic R&D and R&D infrastructure—of the one-time $18.3 billion funding increase for R&D appropriated by the American Recovery and Reinvestment Act of 2009 (ARRA, Public Law 111-5, enacted February 2009).

The 2009 drop in U.S. R&D is only the second such decline (current dollars) since the early 1950s. Nonetheless, the broader perspective remains that year-to-year increases in national R&D have occurred largely uninterrupted since 1953, in both current and constant dollars (figure 1). Over the 2004–09 period, annual growth in total R&D spending averaged 5.8%, compared with 3.3% for GDP (table 2). Growth in total R&D spending similarly outpaces that of GDP when the averaging period is either 10 years or 20 years. The same relative findings prevail when the dollars are adjusted for inflation.

  Figure 1 Source Data: Excel file

R&D Performers and Funders

The U.S. R&D system consists of a variety of performers and sources of funding, including businesses, the federal government, universities and colleges, other (nonfederal) government agencies, and nonprofit organizations.[3] A mix of performing and funding roles exists across this diverse group of organizations. Organizations that perform R&D often receive significant levels of outside funding; those that fund R&D may also be significant performers.

R&D Performers

In 2009, the business sector continued, by far, to be the largest performer of U.S. R&D, conducting $282.4 billion, or 70.5%, of the total (table 1, figure 2, figure 3). This predominance of the business sector in national R&D has long been the case, with its annual share ranging from 69% to 75% over the 20-year period 1989–2009. The 2009 level declined from the 2008 level of $290.7 billion, the first year-to-year decline since 2002. Even so, business R&D performance grew on average at 6.3% annually from 2004 to 2009, outpacing the rates of growth of both U.S. R&D at 5.8% and GDP at 3.3% (table 2).

  Figure 2 Source Data: Excel file

  Figure 3 Source Data: Excel file

Universities and colleges performed $54.4 billion, or 13.6%, of U.S. R&D in 2009, an increase of around $3 billion over the 2008 level. Indeed, academic R&D spending has increased (in current and constant dollars) each year over the period 2004–09. The academic sector's share in U.S. R&D has ranged between 11% and 14% over the 20-year period 1989–2009.

The federal government conducted $46.2 billion, or 11.5%, of U.S. R&D in 2009 (including federal intramural, $30.9 billion, and federally funded research and development centers [FFRDCs], $15.3 billion). This was up by well over $1 billion from the $44.7 billion spent in 2008. In 1989, the federal performance share was 16%, but it gradually declined in the years since, ranging marginally above and below 12% since 2004.

Other nonprofit organizations performed $17.5 billion, or 4.4%, of U.S. R&D in 2009.

R&D Funders

With regard to R&D funding, the business sector was again the predominant source in 2009, providing an estimated $247.4 billion, or 61.8%, of the total (table 1, figure 2, figure 3). The federal government accounted for $124.4 billion, or 31.1%, of the funding total. Universities and colleges provided $11.4 billion, or 2.9%; other nonprofit organizations, $13.6 billion, or 3.4%; and nonfederal government agencies, $3.7 billion, or 0.9%. In recent years, these shares have remained relatively stable.

R&D by Character of Work

Basic research activities accounted for $76.0 billion, or 19.0%, of all U.S. R&D expenditures in 2009 (table 3). Applied research was $71.3 billion, or 17.8%; development was $253.2 billion, or 63.2%.

  Table 3 Source Data: Excel file

Universities and colleges were the predominant performers (53.4%) of the $76.0 billion of basic research in 2009, with the federal government providing the largest share (53.2%) of the funding (table 3). The business sector performed more than half (57.6%) of the $71.3 billion of applied research and was also the largest funder (48.1%). Business was even more predominant in development, where it both performed the vast majority (89.5%) and provided the largest percentage (77.6%) of the nation's $253.2 billion of development expenditures in 2009.

R&D Intensity

The ratio of total national R&D expenditures to GDP is often reported as a measure of the intensity of a nation's R&D effort and is widely used as an international benchmark for comparing countries' overall R&D systems.

The National Science Foundation (NSF) estimates that U.S. expenditures on R&D totaled 2.87% of GDP in 2009. This figure is somewhat higher than the ratios prevailing in the last several years (figure 4). Over the 10-year period from 1999 to 2009, the ratio has fluctuated to some degree year to year, between a low of 2.55% in 2004 and a high of 2.87% in 2009. The broader trend since the mid-1990s has been toward a rising ratio since a low point of 2.39% in 1994.

  Figure 4 Source Data: Excel file

The federal and nonfederal components of U.S. R&D performance are plotted in figure 4. It is evident from this chart that most of the rise of the R&D/GDP ratio over the last several decades has come from the increase of nonfederal spending on R&D—particularly, that by the business sector. This reflects the growing role of business R&D in the national R&D system and, in turn, the growing prominence of R&D-derived goods and services in the national and global economies. By contrast, the ratio of federal R&D spending to GDP declined from the mid-1980s to the late 1990s—notably, from the continuing cuts in defense-related R&D. The trend since has been a gradual uptick, the result of increased federal spending on biomedical and national security R&D and the one-time incremental funding for R&D provided by ARRA in 2009.

International Comparisons

Worldwide R&D expenditures totaled an estimated $1.276 trillion in 2009.[4] The corresponding estimate 5 years earlier in 2004 was $873 billion. Ten years earlier, in 1999, it was $641 billion. By these figures, growth in total global R&D has averaged nearly 8% annually over the last 5 years and 7% over the last 10 years.

Many countries conduct R&D; however, global R&D performance is concentrated in a relative handful of countries (table 4). Three countries account for more than half of global R&D. The United States is by far the largest R&D performer ($402 billion in 2009), accounting for about 31% of the global total.[5] China became the second-largest performer ($154 billion) in 2009, accounting for about 12% of the global total. Japan moved down to third, at 11% ($138 billion). The other established performers spend comparatively less: Germany ($83 billion, 6%), France ($48 billion, 4%), and the United Kingdom ($40 billion, 3%). The most recent data available for South Korea are for 2008, which showed the country had $44 billion of R&D—in recent years, South Korea has typically been among the top seven R&D performing countries, representing from 3% to 4% of the global total. Taken together, these top seven countries account for about 71% of the global total. Russia, Italy, Canada, India, Brazil, Taiwan, and Spain make up the next rung, with national R&D expenditures ranging from $20 billion to $33 billion.

  Table 4 Source Data: Excel file

With regard to R&D intensity, the U.S. R&D/GDP ratio was just under 2.9% in 2009 (table 4). At this level, the United States is eighth among the economies tracked by the Organisation for Economic Co-operation and Development and the United Nations Educational, Scientific and Cultural Organization. Israel continues to have the highest ratio, at 4.3%, although Finland is not far back, at 4.0%. Sweden, Japan, and South Korea all have ratios well above 3%; Switzerland and Taiwan are slightly above the U.S. figure.

Data Sources and Availability

The statistics on U.S. R&D presented here are derived chiefly from integrating the data on R&D expenditures and funding collected from NSF's major national surveys of the organizations that perform the bulk of U.S. R&D. In some cases, the primary survey data are adjusted to enable consistent integration of the statistics from these separately conducted surveys. Estimated values may be used where final data from one or more of the surveys are not yet available and can reasonably be prepared.

The main R&D surveys utilized include NSF's new Business R&D and Innovation Survey (for 2008 and 2009; see the preceding Survey of Industrial R&D for 2007 and earlier years), the Survey of R&D Expenditures at Universities and Colleges (FY 2009 and earlier years), the Survey of Federal Funds for R&D (FY 2009–11 and earlier years), and the Survey of R&D Expenditures at Federally Funded R&D Centers (FY 2009 and earlier years). Figures for R&D performed by other nonprofit organizations with funding from within the nonprofit sector and business sources are estimated, based on parameters from the Survey of R&D Funding and Performance by Nonprofit Organizations, 1996–97.

Data from the Business R&D and Innovation Survey are reported on a calendar-year basis and are used directly in the integration of the National Patterns totals. Those from the Federal Funds and FFRDC surveys are reported on a federal fiscal-year basis and are adjusted to calendar year for the integration. The data from the Survey of Universities and Colleges are reported on an academic fiscal-year basis and converted to calendar year.

The data on federally funded R&D discussed in this report were derived from surveys of organizations that perform R&D, such as companies, universities, and FFRDCs. These amounts can differ substantially from the R&D that federal agencies have reported funding. In FY 2009, federal agencies reported obligating $133 billion for R&D funding to all R&D performers (including $53 billion to the business sector), compared with an estimated $124 billion in federal funding reported by all performers of R&D ($40 billion by businesses). Although NSF has not found a definitive explanation for this divergence, the National Academies' Committee on National Statistics (CNSTAT) notes that comparing federal outlays (as opposed to obligations) for R&D to performer expenditures results in a smaller discrepancy.[6] For FY 2009, federal agencies reported R&D outlays of $127 billion to all R&D performers.

A full set of detailed statistical tables associated with the National Patterns estimates will be available in the report National Patterns of R&D Resources: 2009 Data Update, accessible at http://www.nsf.gov/statistics/natlpatterns/.

For further information on the National Patterns data and methodology, contact the author.

Notes

[1]  Mark Boroush, Research and Development Statistics Program, National Center for Science and Engineering Statistics, National Science Foundation, 4201 Wilson Boulevard, Suite 965, Arlington, VA 22230 (mboroush@nsf.gov; 703-292-8726).

[2]  Adjustments for inflation reported in this InfoBrief are based on the GDP implicit price deflator. GDP deflators are calculated on an economy-wide rather than an R&D-specific basis. As such, they should be interpreted as measures of real resources engaged in R&D rather than in other activities, such as consumption or physical investment. They are not a measure of cost changes in performing R&D. The GDP deflators used in this chapter come from the Bureau of Economic Analysis, Survey of Current Business, 29 July 2011.

[3]  The National Science Foundation (NSF) identifies the main categories of R&D performers to be the following: businesses, federal agency intramural R&D facilities, federally funded research and development centers (administered by businesses, universities/colleges, or nonprofit organizations), universities and colleges, and other nonprofit organizations. With regard to R&D funding, NSF identifies businesses, the federal government, other nonfederal government agencies, universities and colleges, and other nonprofit organizations as the main sources.

[4]  The figures cited here for total global R&D in 1999, 2004, and 2009 are all NSF estimates. R&D expenditures by all countries are denominated in U.S. dollars, based on purchasing power parities. These estimates are based on data from the Organisation for Economic Co-operation and Development (OECD), Main Science and Technology Indicators (Volume 2011/1) and from R&D statistics for additional countries assembled by the United Nations Educational, Scientific and Cultural Organization (UNESCO), Institute for Statistics (as of August 2011). At present, there is no database on R&D spending that is comprehensive and consistent for all nations performing R&D. The OECD and UNESCO databases together provide R&D performance statistics for over 100 countries, although the data are not current for all. NSF's estimate of total global R&D reflects the 78 countries that account for most all of current global R&D.

[5]  The $402 billion cited here for U.S. R&D spending in 2009 reflects the OECD statistical conventions for calculating total national R&D (minor differences with the NSF approach) and results in a slightly higher figure than listed earlier in this report. For international comparisons and to ensure consistency, NSF reports the statistics for all countries based on the OECD conventions.

[6]  National Research Council. 2005. Measuring Research and Development Expenditures in the U.S. Economy. Panel on Research and Development Statistics at the National Science Foundation; Brown LD, Plewes TJ, Gerstein MA, editors. Committee on National Statistics, Division of Behavioral and Social Sciences and Education. Washington, DC: National Academies Press.