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For first time, American R&D expenditures surpass $500 billion

December 20, 2017

Estimates indicate that R&D expenditures in the United States reached $510 billion in 2016, marking the first time this total has eclipsed the half-trillion mark, according to recently released National Science Foundation data. The majority of R&D expenditures and performance comes from the private sector. From 2011 to 2016, R&D growth kept pace with the economy as a whole, and R&D intensity – measured as R&D expenditures as a share of gross domestic product – was essentially flat. The analysis finds, though, that federal expenditures on R&D decreased during this period.

As SSTI discussed in a three-part 2015 Digest series, there are important differences between R&D expenditures and R&D performance in the United States. Many of these differences hold true in the FY 2016 data. For example, private industry is both the largest spender on (71.3 percent of total expenditures) and performer of (67.4 percent of performance) R&D in the U.S.  While universities are among the largest performers of R&D (13.2 percent), they represent a small share of R&D expenditures (3.7 percent). The federal government is the second largest funder of R&D (24.1 percent), but performs a considerably smaller share (11.3 percent).

From 2011 to 2016, expenditures on R&D increased the most from higher education (42.6 percent), other nonprofit organizations (35.5 percent increase), and the private sector (29.0 percent increase). Federal expenditures on R&D decreased by 3.4 percent from 2011 to 2016, the only source to decline over that period. An analysis of R&D performance from 2011 to 2016 shows increases among business (23.7 percent), other nonprofit organizations (15.9 percent), and higher education (12.4 percent), while other performers saw smaller gains.

R&D intensity, calculated as the share of R&D expenditures to gross domestic product, declined by just 0.3 percent from 2011 to 2016. This finding suggests that R&D and GDP increased at similar rates during those years; GDP increased by 20.0 percent from 2011 to 2016, while total R&D expenditures grew by 19.6 percent.

Basic research expenditures represented 17.1 percent of the total, on average, for each year from 2011 to 2016, while applied research (19.5 percent) and experimental development (63.4 percent) comprised the remainder. From 2011 to 2016, basic research and experimental development expenditures increased at slower rates (18.2 percent and 19.3 percent, respectively) than GDP, while applied research expenditures increased at a faster rate (22.2 percent).

It is worth noting that 2016 data, which comes from the Science and Engineering Statistics (NCSES) within the National Science Foundation (NSF), is based on performer-reported expectations and will be adjusted sometime next year.

The data used to inform this analysis can be found in the attached excel file.

r&dFile R&D performance and expenditures, 2011-2016.xlsx