Government R&D Spending Stagnates in U.S., OECD Countries

In many industrialized countries, including the U.S., government spending on research and development (R&D) has stagnated since the beginning of the decade. A new report from the Organization for Economic Cooperation and Development (OECD) highlights this trend, noting that overall government R&D spending in the group’s 34 member countries has reverted to levels at the beginning of the century. Recent data from the National Science Foundation (NSF) reveals that U.S. government spending grew modestly in fiscal years 2014 and 2015, but not enough to offset substantial losses in the early part of the decade.

In the OECD Science, Technology and Industry Scoreboard 2015, researchers report that total R&D spending in OECD countries grew by 2.7 percent, reaching 2.4 percent of total GDP, in 2013. Most of that growth, however, was driven by increases in business R&D spending.  Research at institutions of higher education has also grown since 2010, but at a lower rate than private R&D. Meanwhile, government R&D remained flat in 2014 after three consecutive years of reductions. OECD attributes the retrenchment to budget consolidation measures and rising volatility in public support for basic science.

Within those larger trends, a few shifts are occurring in the global R&D landscape. Small- and medium-sized enterprises (SMEs) are responsible for much of the increase in business R&D spending, outpacing growth at larger businesses in most countries. This may be partially due to public policies that incentivize the creation of smaller, affiliated arms of larger companies to manage R&D performance, but there also seems to be a move toward open innovation through spin-offs, independent startups and specialized SMEs. Also, China and developing economies are taking on a larger role in the global research economy. China appears to be on trajectory to catch up with U.S. spending in a few years. OECD notes, however, that Chinese R&D spending has been focused on applied, rather than basic, research, leaving some uncertainty as to the long-term impact of that spending.

Download OECD Science, Technology and Industry Scoreboard 2015…

NSF data on federal budget authority for R&D confirms that spending growth has stalled in the U.S. Total authority in fiscal year 2015 for R&D and R&D plant was about $132 billion. This represents a $1 billion (0.7 percent) increase over FY2014, and a $3.7 billion (2.8 percent) increase over FY13. Despite that moderate growth, large declines in spending between FY11 and FY13 mean that U.S. R&D investment remains well behind spending projections from the 2000s. In constant 2009 dollars, R&D spending decreased 13.9 percent between FY06 and FY15.

Read the NSF InfoBrief (with links to detailed statistical tables)…