r&d

Corporate laboratories were hotspots for U.S. innovation for most of the twentieth century. Large firms, such as DuPont or Bell Labs, acted as epicenters for research and development activities, driving investment in frontier technologies underserved by university researchers at the time. By the 1980s, however, many of these powerhouses of industrial research began to cut back on their research programs, paving the way for universities and startups to emerge as new centers of innovation.

While the Tax Cuts and Jobs Act of 2017 was passed more than five years ago, many businesses seem to be just discovering the effects of one of its sections this tax season. The law stipulated that, for tax years beginning in 2022, companies could no longer choose to expense their entire “research and experimentation” costs in one year and must instead amortize those cost over five years (with a half year look-back). The result is posing a threat for companies with limited, or non-fungible, cash flow. Congress displayed broad support for restoring the original rule but failed to pass the change during the previous session. The question on many people’s minds is, “what happens now?”

A new report compiled by The White House Office of Science and Technology Policy (OSTP) outlines a whole-of-government approach to biotechnology and making it a national priority. The report lays out bold goals over two decades for biotech R&D, calling for an increase in agricultural productivity by 28% in the next decade and reducing food waste and loss by 50% by 2030.

Western democracies are losing the race for scientific and research breakthroughs, and the ability to retain global talent, integral ingredients in developing technologies, according to a recent report from the Australian Strategic Policy Institute (ASPI). In the project funded by the U.S. State Department’s Global Engagement Center and a grant from The Special Competitive Studies Project, ASPI says that their research reveals that “China has built the foundations to position itself as the world’s leading science and technology superpower, by establishing a sometimes stunning lead in high-impact research across the majority of critical and emerging technology domains.”

The U.S. National Science Foundation announced a new $60 million investment led by NSF's Directorate for Technology, Innovation and Partnerships — the Accelerating Research Translation, or ART, program. The program will build capacity and infrastructure at higher education institutions that are needed to strengthen and scale the translation of basic research outcomes into impactful solutions and practice.

Microbusinesses (businesses with 1-9 domestic employees) spent $7.5 billion in both domestic and foreign R&D expenditures or costs in 2020, of which $6.7 billion was in the U.S. Of this total, $5.6 billion was performed by microbusinesses themselves, according to the National Center for Science and Engineering Statistics (NCSES) and data from the Annual Business Survey (ABS). The $5.6 billion performed by U.S. microbusinesses in 2020 shows over a $1 billion increase in domestic R&D performed by microbusinesses themselves as compared to 2018.

A previous Digest article gave a broad overview of the most recent survey of Higher Education Research and Development (HERD) for FY 2021 (the most recent data available), including a breakdown of what field of studies receive the most R&D funding. The survey showed that the federal government funds the bulk of higher-ed R&D, and looking at each of its agencies can shed light on investment priorities. Within the federal government, Health and Human Services (HHS) funded the most higher-ed R&D activities by far (approximately $27.5 billion), followed by the Department of Defense (DoD; $7.4 billion) and National Science Foundation (NSF; $5.4 billion). A bulk of HHS funding went toward the life sciences ($24.2 billion), with engineering following behind at approximately $1 billion. DoD primarily funded engineering ($3.7 billion), followed by life sciences ($1.4 billion).

New fiscal year (FY) 2021 Higher Education Research & Development (HERD) survey data released by the National Science Foundation (NSF) reveals a $3.4 billion (4%) increase in research and development (R&D) spending by institutions of higher education ($86.5 to $89.9 billion), driven almost entirely by a decades high federal government R&D funding increase of $3 billion.

State government agencies’ expenditures for research and development totaled nearly $2.5 billion in FY 2021, an increase of 1.1% from FY 2020, but far below the year-over-year inflation of 6.4% when measured in February 2022. The findings on state R&D were recently reported by the National Center for Science and Engineering Statistics (NCSES). The sluggish state spending was exacerbated by real decline in extramural share of federal R&D spending in FY 2021. Intramural R&D by feds grew from 30.7% of total in FY 2020 to 35.8 percent in FY 2021 (see https://ncses.nsf.gov/pubs/nsf22323).

A report from ITIF exploring the factors involved in ecosystem strength found that states in Germany generally perform better than states in the U.S., Italy, and Canada in terms of globalization, knowledge economy, and innovation capacity.