Useful Stats: Two looks at state-level higher-ed R&D intensity

Readers may have noticed the most populous states end up topping many of the statistical tables related to economic development. Normalizing the data by some relevant, related measure can provide a higher quality look that is a little closer to the “apples to apples” appeal that might help influence some policy issues. For this week’s edition of Useful Stats, SSTI is exploring research intensity as a component of state gross domestic product (GDP) and the research load “carried” by each member of the R&D personnel within the state’s higher education community.

HERD and GDP

Higher education R&D (HERD) intensity as it relates to GDP, calculated as HERD expenditures as a percentage of total GDP, indicates the relative importance of R&D spending by colleges and universities to their regional economies and varies greatly across the U.S. Note that HERD survey data is released by Fiscal Year (FY), while GDP data, drawn from the U.S. Bureau of Economic Analysis (BEA), is released by calendar year.

Nationwide, the HERD-to-GDP ratio has consistently ranged narrowly between 0.37% and 0.40%, and, in 2023, had a value of 0.38%.

In 2023, Maryland led the nation in HERD as a proportion of GDP at 1.16%, followed by Massachusetts at 0.70%, Rhode Island at 0.66%, and Pennsylvania at 0.61%. A total of 13 states had HERD-to-GDP ratios of at least half a percentage point, while just six (Maine, Florida, New Jersey, South Dakota, Idaho, and Nevada) were under a quarter of a percentage point.

Maryland’s large intensity compared to other states can be easily explained. Johns Hopkins University, which includes the Applied Physics Laboratory’s over $2.3 billion in total R&D expenditures in 2023 (39% of the state’s total), is located in Maryland. Subtracting just the Applied Physics Lab, Maryland’s HERD-to-GDP ratio falls to 0.71% in 2023. That places it still at the top of the list but within the similar range of other leading states.

Figure 1, below, includes data for each year across the past decade for which it is available. Data for each year is divided into five equal quintiles based on data for that year only, allowing for comparison between states for each year.

Figure 1: HERD intensity map of states, 2014-2023

Over the ten most recent years of data, from 2014 to 2023, nine states experienced the greatest increase in R&D intensity, each with HERD-to-GDP ratios rising by over a tenth of a percentage point. Delaware’s 0.19 percentage point increase was the largest growth, followed by Vermont (0.17), Wyoming (0.16), and Maryland (0.15). On the other end of the spectrum, 16 states decreased their R&D intensity over the same period, with two states, Rhode Island (-0.16) and Hawaii (-0.13), having over a tenth of a percentage point decrease.

While Figure 1 is designed to best compare between states for each year, Figure 2, below, is designed for comparison within each state across the past 10 years of available data. Note that each state’s grouped column charts operate on their own scales, so data should be viewed as relative trends within each jurisdiction rather than for comparison.

Figure 2: HERD-GDP intensity by state, 2014-2023

Referring to Figure 2, states such as Delaware, Georgia, Louisiana, and Vermont show relatively steady growth of their HERD-to-GDP ratios over the past decade of available data, which may suggest a growing significance towards university-driven research as a component of their economic activity.

In contrast, states like Florida, Hawaii, and South Carolina exhibit declining ratios over the same period, potentially indicating a decreased significance or a more diversified economy where higher education R&D represents a smaller share of total GDP.

The trends across states also reveal stability in some regions, such as the Midwest, where states like Iowa, Minnesota, and Michigan have maintained relatively steady HERD-to-GDP ratios over time.

HERD and R&D personnel

Turning to considering HERD expenditures on a per higher education R&D personnel basis, SSTI finds that the highest values are concentrated in New Jersey (approximately $218,000 in HERD expenditures on a per R&D personnel basis), New Hampshire ($207,000), and Montana ($201,000).

The national HERD expenditure per R&D personnel was approximately $102,000 in 2023.

Nineteen states have over $100,000 in HERD expenditures for each R&D personnel within their institutions, with a median value of approximately $90,000 and a mean value of just under $100,000—a distribution that suggests that there are a small amount of states skewing the data while most states have smaller values.

The states with the lowest values in 2023 are South Dakota (approximately $48,000), Idaho ($53,000), Nevada ($56,000), and Alaska ($56,000).

There are several possible explanations for a state’s higher or lower ratios. One might be that higher values indicate a focus on high-cost, specialized research fields, such as pharmaceutical development or artificial intelligence, which require significant resources and advanced capital or infrastructure yet lower personnel counts.

On the other hand, states with lower HERD expenditures per R&D personnel working in lower cost fields or those with considerable human capital needs.

Figure 3, below, contains a map of the data above, as well as HERD expenditures per full time equivalent-only[1] R&D personnel, for 2023. Each metric is togglable via the buttons beneath the figure’s title. Note that the data is separated into five equal quintiles to allow for comparison between states. Refer to each metric’s webpage for any data notes, including imputations and unavailable data for R&D personnel.

Figure 3: HERD per R&D personnel by state, 2023

This article 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.