Useful Stats: State trends in higher education R&D expenditures
Higher education R&D expenditures, while continuing to steadily increase, have not grown evenly across state lines. This matters to successful TBED policymakers because a strong R&D enterprise within a state’s public and private institutions of higher education can and should provide a consistent source of skilled workers, new technology, and sources for innovation-driven business growth. So where is R&D growing?
The Higher Education R&D (HERD) survey is the primary data source for such information in the U.S. and is used by many to inform policy decisions not just at the university-level, but also the state-level. The majority of growth is due to states with the largest historic higher education R&D expenditures, like California, New York, and Texas by having the largest baseline values. These states, however, are not the ones with the largest relative growths; states with much smaller total higher education R&D portfolios such as Delaware, Nevada, and Wyoming, have shown the highest relative growths over recent years, while others like research-intensive Pennsylvania and Georgia have increased in national market share by approximately half a percentage point each over the past decade.
Refer to Figure 1 below for each state’s higher education R&D expenditures for fiscal years (FYs) 2014 through 2023. Note that the data is divided into five equal quantiles adjusted for each year. This layout allows for quick visual comparisons between states of the same year.
Figure 1: HERD by state, FY 2014-2023
In the five years since 2019, the United States’ overall HERD value has increased by 30%, from approximately $83 to $108 billion. The largest relative growth occurred in Delaware, the only state to surpass 100% over the five years. Wyoming (87%), Vermont (72%), and New Mexico (54%) followed, for a total of 23 states and Washington, D.C., to have outpaced the relative growth of the nation as a whole.
A total of 27 states fell below the national increase, but all remained positive. The lowest growth state since 2019, South Dakota, still increased by 9%, while Hawaii, Mississippi, Nevada, and Michigan followed at 13%, 14%, 15%, and 17% respectively. Puerto Rico, on the other hand, decreased by 4% over the same period as it recovered from devastating hurricanes, like Maria in late 2017.
If we look further back over the past 10 years, from 2014 through 2023, the United States total HERD value has increased 62% from $67 billion. The growth rates of slightly under half of all states (22) and Washington, D.C. outpaced the national rate, led by Wyoming (192%), Delaware (139%), and Nevada (112%). Two other states, Montana and Vermont, also had increases of over 100% since 2014.
Inversely, the 28 remaining states, while having all increased HERD values, did so at a slower pace than the national value. Hawaii had the lowest growth at just 1%, followed by Rhode Island’s 15%, South Dakota’s 23%, and New Mexico’s 37%. Puerto Rico, on the other hand, decreased by 6%. Note that these dollar amounts are not inflation-adjusted, meaning many states likely decreased HERD expenditures in real terms.
While an increase in R&D expenditures can be associated with positive consequences, such as the attraction of top talent, business R&D investment, and an increased number and scope of research projects, this may not always be the case. Inflation can take a bite out of impact, however, as it means an increase in operating and materials costs. These outcomes and reasonings vary greatly between regions, institutions, and individual research projects, and will be explored in future issues of the Digest.
Percent change in R&D for 10, five and 1-year can be found in Figure 2. Like Figure 1, the data are separated into five equal quintiles, adjusted for each measure, allowing for quick visual comparisons between states.
Figure 2: Percentage change in HERD expenditures by state for selected years
Outside of relative change, another metric to consider when exploring metrics like HERD is the percentage share for each year. By considering the share that each state controls of the national HERD value concentrations and how they shift over time can be seen.
Figure 3, below, reveals that California, the state with the largest share of higher education R&D expenditures in the nation, has maintained nearly the same value over the past decade since 2014, while, for example, HERD in Pennsylvania and Georgia have increased in national market share by approximately half a percentage point each.
Texas (0.37%), Alabama (0.24%), and Arizona (0.23%) had the next largest increases in share. Including the above, 22 states and Washington, D.C. increased HERD expenditure market share. Two states, New Hampshire and Arkansas, maintained nearly identical shares of the national total.
A total of 26 states, including California, decreased in HERD expenditure share over the past decade. Massachusetts (0.45%), Illinois (-0.27%), Washington (-0.25%), Michigan (-0.24%), and North Carolina (-0.19%) had the largest decreases in share.
Figure 3: Percentage share of national HERD value, FYs 2014 and 2023
This page was prepared by SSTI using Federal funds under award ED22HDQ3070129 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.
useful stats, higher ed, r&d