Businesses Spent Over a Half Trillion Dollars for R&D Performance in the United States During 2020, a 9.1% Increase Over 2019
Businesses spent $538 billion on research and development performance in the United States in 2020, a 9.1% increase from 2019 (table 1). Funding from the companies’ own sources was $466 billion in 2020, an 8.7% increase from 2019. Funding from other sources was $71 billion, an 11.7% increase from 2019. These increases follow a 2-year period of double-digit annual growth in the level of national domestic R&D performance, which is especially notable because of the low rate of inflation during the period 2017–20. This robust rate of growth may continue based on the large increase in the amount that companies projected they would spend from their own funds for domestic R&D performance during 2021 as they began to recover from the COVID-19 pandemic. Data for this InfoBrief are from the 2020 Business Enterprise Research and Development Survey (BERD), developed and cosponsored by the National Center for Science and Engineering Statistics (NCSES) within the National Science Foundation (NSF) and by the Census Bureau, which collected and tabulated data for the survey.
Funds spent for business R&D performed in the United States, by type of R&D, source of funds, and size of company: 2017–20
i = more than 50% of the estimate is a combination of imputation and reweighting to account for nonresponse.
a Domestic R&D performance is the cost of R&D paid for and performed by the respondent company and paid for by others outside of the company and performed by the respondent company.
b R&D comprises creative and systematic work undertaken in order to increase the stock of knowledge and to devise new applications of available knowledge. This includes (1) activities aimed at acquiring new knowledge or understanding without specific immediate commercial applications or uses (basic research), (2) activities aimed at solving a specific problem or meeting a specific commercial objective (applied research), and (3) systematic work, drawing on research and practical experience and resulting in additional knowledge, which is directed to producing new processes or to improving existing products—goods or services—or processes (development).
c Includes foreign subsidiaries of U.S. companies.
d Includes companies located inside and outside the United States; U.S. state government agencies and laboratories; U.S. universities, colleges, and academic researchers; and all other organizations located inside and outside the United States.
e Includes only companies with 10 or more domestic employees.
Note(s):
Detail may not add to total because of rounding. Beginning in survey year 2018, companies that performed or funded less than $50,000 of R&D were excluded from tabulation. These companies in aggregate represented a very small share of total R&D expenditures in prior years. Had the companies under this threshold been included in the 2018 estimates, they would have contributed approximately $90 million to overall R&D expenditures. Excludes data for federally funded research and development centers.
Source(s):
National Center for Science and Engineering Statistics and Census Bureau, Business Enterprise Research and Development Survey.
R&D Performance, by Type of R&D, Industry Sector, and Source of Funding
In 2020, of the $538 billion that companies spent on R&D, $36 billion (7%) was spent on basic research, $76 billion (14%) on applied research, and $426 billion (79%) on development. The distribution was similar to the 2019 distribution (7%, 15%, and 78%, respectively) (table 1). In 2020, companies in manufacturing industries performed $308 billion (57%) of domestic R&D, defined as R&D performed in the 50 states and Washington, DC (table 2). Most of the funding came from these companies’ own funds (86%). Companies in nonmanufacturing industries performed $229 billion of domestic R&D (43% of total domestic R&D performance), 88% of which was paid for from companies’ own funds.
Funds spent for business R&D performed in the United States, by source of funds, selected industry, and company size: 2020
D = suppressed to avoid disclosure of confidential information; i = more than 50% of the estimate is a combination of imputation and reweighting to account for nonresponse.
NAICS = North American Industry Classification System; nec = not elsewhere classified.
a All R&D is the cost of R&D paid for and performed by the respondent company and paid for by others outside of the company and performed by the respondent company.
b Includes foreign subsidiaries of U.S. companies ($27.0 billion).
c Includes foreign parent companies of U.S. subsidiaries ($17.8 billion) and unaffiliated companies ($2.1 billion). Excludes funds from foreign subsidiaries to U.S. companies paid for through intercompany transactions ($27.0 billion).
d Includes U.S. state government agencies and laboratories ($0.2 billion); U.S. universities, colleges, and academic researchers (< $0.01 billion); and all other organizations located inside ($0.7 billion) and outside the United States (< $0.01 billion).
e Includes only companies with 10 or more domestic employees.
Note(s):
Detail may not add to total because of rounding. Beginning in survey year 2018, companies that performed or funded less than $50,000 of R&D were excluded from tabulation. These companies in aggregate represented a very small share of total R&D expenditures in prior years. Had the companies under this threshold been included in the 2018 estimates, they would have contributed approximately $90 million to overall R&D expenditures. Industry classification was based on the dominant business code for domestic R&D performance, where available. For companies that did not report business codes, the classification used for sampling was assigned. Excludes data for federally funded research and development centers.
Source(s):
National Center for Science and Engineering Statistics and Census Bureau, Business Enterprise Research and Development Survey, 2020.
The U.S. federal government was a large source of external funding for R&D (also referred to as R&D paid for by others) across all industries. Of the $71 billion paid for by others, the federal government accounted for $29 billion. Ninety percent of federal government funding went to three industry groups: aerospace products and parts (North American Industry Classification System [NAICS] code 3364) ($13 billion), professional, scientific, and technical services (NAICS 54) ($7 billion), and computer and electronic products (NAICS 334) ($6 billion). Companies also received funds from other U.S. companies ($22 billion) and foreign companies—including foreign parent companies of U.S. subsidiaries ($20 billion). The distribution of this external nonfederal R&D funding was spread more broadly across multiple industries (table 2). (See “Survey Information and Data Availability” for information on the availability of data tables with full industry detail.)
Sales, R&D Intensity, and Employment of Companies That Performed or Funded R&D
U.S. companies that performed or funded R&D reported domestic net sales of $11 trillion in 2020 (table 3). For all industries, the R&D intensity (R&D-to-sales ratio) was 4.8%; for manufacturers, 5.4%; and for nonmanufacturers, 4.1%. Manufacturing industries with high levels of R&D intensity in 2020 were pharmaceuticals and medicines (NAICS 3254) (16.6%), computer and electronic products (NAICS 334) (13.1%), and aerospace products and parts (NAICS 3364) (8.5%). Among the nonmanufacturing industries, industries with high levels of R&D intensity were scientific research and development services (NAICS 5417) (36.4%), software publishers (NAICS 5112) (13.9%), and computer systems design and related services (NAICS 5415) (10.7%).
Sales, R&D, R&D intensity, and employment for companies that performed or funded business R&D in the United States, by selected industry and company size: 2020
i = more than 50% of the estimate is a combination of imputation and reweighting to account for nonresponse.
NAICS = North American Industry Classification System; nec = not elsewhere classified.
a Dollar values are for goods sold or services rendered by R&D-performing or R&D-funding companies located in the United States to customers outside of the company, including the U.S. federal government, foreign customers, and the company's foreign subsidiaries. Included are revenues from a company’s foreign operations and subsidiaries and from discontinued operations. If a respondent company is owned by a foreign parent company, sales to the parent company and to affiliates not owned by the respondent company are included. Excluded are intracompany transfers, returns, allowances, freight charges, and excise, sales, and other revenue-based taxes.
b All R&D is the cost of R&D paid for and performed by the respondent company and paid for by others outside of the company and performed by the respondent company.
c R&D intensity is the cost of domestic R&D paid for by the respondent company and others outside of the company and performed by the company divided by domestic net sales of companies that performed or funded R&D.
d Data recorded on 12 March represent employment figures for the year.
e Includes researchers, R&D managers, technicians, clerical staff, and others assigned to R&D groups.
f Includes only companies with 10 or more domestic employees.
Note(s):
Detail may not add to total because of rounding. Beginning in survey year 2018, companies that performed or funded less than $50,000 of R&D were excluded from tabulation. These companies in aggregate represented a very small share of total R&D expenditures in prior years. Had the companies under this threshold been included in the 2018 estimates, they would have contributed approximately $90 million to overall R&D expenditures. Estimates of aggregate sales and total domestic employment would have been similarly affected. Industry classification was based on the dominant business code for domestic R&D performance, where available. For companies that did not report business codes, the classification used for sampling was assigned. Excludes data for federally funded research and development centers.
Source(s):
National Center for Science and Engineering Statistics and Census Bureau, Business Enterprise Research and Development Survey, 2020.
Businesses that performed or funded R&D employed 22.0 million people in the United States in 2020 (table 3). Approximately 1.9 million (9%) were business R&D employees. Not surprisingly, industries with high levels of R&D intensity also had high numbers of R&D employees: computer and electronic products (NAICS 334) (264,000 R&D employees), pharmaceuticals and medicines (NAICS 3254) (146,000), and aerospace products and parts (NAICS 3364) (62,000). Nonmanufacturing industry groups with high numbers of R&D employees were software publishers (NAICS 5112) (113,000 R&D employees), scientific research and development services (NAICS 5417) (107,000), and computer systems design and related services (NAICS 5415) (94,000).
Of the 1.9 million people working on R&D in companies that performed or funded business R&D in 2020, 1.4 million were men, and 0.5 million were women; 52% of the men and 48% of the women worked in manufacturing industries (table 4). Researchers—that is, scientists, engineers, and their managers—accounted for 1.3 million of the 1.9 million R&D workers (68%). Of the R&D workers, 129,000 (7%) held PhD degrees. R&D technicians numbered 443,000, and there were 181,000 grouped as other supporting staff.
Domestic employment, R&D employment by sex and work activity, R&D researchers by level of education, and full-time equivalent researcher employment for companies that performed or funded business R&D in the United States, by industrial sector: 2020
i = more than 50% of the estimate is a combination of imputation and reweighting to account for nonresponse.
NAICS = North American Industry Classification System.
a Data recorded on 12 March represent employment figures for the year.
b Includes R&D scientists and engineers and their managers.
c Includes clerical staff and others assigned to R&D groups.
d The number of persons employed who were assigned full time to R&D, plus a prorated number of employees who worked on R&D only part of the time.
Note(s):
Detail may not add to total because of rounding. Beginning in survey year 2018, statistics are representative of companies located in the United States that performed or funded $50,000 or more of R&D. These changes have affected the comparability of these estimates with estimates published for years prior to 2018. Industry classification was based on the dominant business code for domestic R&D performance, where available. For companies that did not report business codes, the classification used for sampling was assigned. Excludes data for federally funded research and development centers. Also available in the full set of data tables are statistics on domestic R&D employment, by state; foreign R&D personnel headcounts, by country; and headcounts of leased (i.e., external) R&D personnel, by function.
Source(s):
National Center for Science and Engineering Statistics and Census Bureau, Business Enterprise Research and Development Survey, 2020.
R&D Performance, by Company Size
Small- and medium-sized companies (10–249 domestic employees) performed 10% of the nation’s total business R&D in 2020 (table 1). For these companies as a group, the R&D intensity was 8.6% (table 1 and table 3). These companies accounted for 6% of sales and employed 7% of the 22.0 million employees who worked for R&D-performing or R&D-funding companies. They employed 19% of the 1.9 million employees engaged in business R&D in the United States.
Large companies with 250–24,999 domestic employees performed 50% of the nation’s total business R&D in 2020, and their R&D intensity was 4.9%. They accounted for 48% of sales, employed 44% of those who worked for R&D-performing or R&D-funding companies, and employed 51% of R&D employees in the United States.
The largest companies (25,000 or more domestic employees) performed 40% of the nation’s total business R&D in 2020, and their R&D intensity was 4.1%. They accounted for 46% of sales, employed 49% of those who worked for R&D-performing or R&D-funding companies, and employed 31% of business R&D employees in the United States.
R&D Performance, by State
In 2020, of the $538 billion of R&D performed in the United States, businesses in California alone accounted for 36% (table 5). Other states with large amounts of business R&D were Washington (8% of the national total in 2020); Massachusetts (6%); Texas (5%); New York, New Jersey, and Michigan (4% each); Pennsylvania and Illinois (3% each); and North Carolina (2%).
Funds spent for business R&D performed in the United States, by state and source of funds: 2020
e = more than 50% the value of the state estimate uses a hybrid estimator modeling technique; see section "Survey Information and Data Availability" for more details. i = more than 50% of the estimate is a combination of imputation and reweighting to account for nonresponse.
a All R&D is the cost of domestic R&D paid for by the respondent company and others outside of the company and performed by the respondent company.
b Includes data reported that were not allocated to a specific state by multi-establishment companies. For single-establishment companies, data reported were allocated to the state in the address used to mail the survey form.
Note(s):
Beginning in survey year 2018, companies that performed or funded less than $50,000 of R&D were excluded from tabulation. These companies in aggregate represented a very small share of total R&D expenditures in prior years. Had the companies under this threshold been included in the 2018 estimates, they would have contributed approximately $90 million to overall R&D expenditures. Excludes data for federally funded research and development centers.
Source(s):
National Center for Science and Engineering Statistics and Census Bureau, Business Enterprise Research and Development Survey, 2020.
Capital Expenditures
Companies that performed or funded R&D in the United States in 2020 spent $686 billion on capital, that is, assets with expected useful lives of more than 1 year (table 6). Of this amount, $32 billion (5%) was for assets used for domestic R&D operations—land acquisitions, buildings and land improvement, equipment, capitalized software, and other assets: $20 billion by companies in manufacturing industries, and $13 billion by companies in nonmanufacturing industries. Manufacturing industries with high levels of capital expenditures on assets used for domestic R&D in 2020 were pharmaceuticals and medicines (NAICS 3254) ($5 billion, or 14% of national capital expenditures on assets used for R&D), semiconductor and other electronic products (NAICS 3344) ($4 billion, or 12%), and motor vehicles, bodies, trailers, and parts (NAICS 3361–63) ($1 billion, or 4%). Among the nonmanufacturing industries with high levels of capital assets used for domestic R&D were computer systems design and related services (NAICS 5415) ($1 billion, or 4%), software publishers (NAICS 5112) ($1 billion, or 3%), and scientific research and development services (NAICS 5417) ($1 billion, or 3%). Among all types of capital assets, manufacturing industries spent the most on equipment ($12 billion, or 59% of total capital assets used for domestic R&D), and nonmanufacturing industries disbursed the most on capitalized software ($6 billion, or 46%).
Capital expenditures in the United States and for domestic R&D paid for and performed by the company, by type of expenditure, industry, and company size: 2020
* = amount < $500,000; i = more than 50% of the estimate is a combination of imputation and reweighting to account for nonresponse.
NAICS = North American Industry Classification System; nec = not elsewhere classified.
a Domestic R&D is the R&D paid for by the respondent company and others outside of the company and performed by the company.
b Capital expenditures are payments by a business for assets that usually have a useful life of more than 1 year. The value of assets acquired or improved through capital expenditures is recorded on a company’s balance sheet. BERD statistics exclude the cost of assets acquired through mergers and acquisitions.
c Capital expenditures for long-lived assets used in a company’s R&D operations are not included in its R&D expense, but any depreciation recorded for those assets is included in its R&D expense. For 2020, depreciation associated with domestic R&D paid for and performed by the company was $18.6 billion and with domestic R&D performed by the company and paid for by others was $2.4 billion.
d Includes the cost of purchased or improved buildings and other facilities that are fixed to the land.
e Includes the cost of other capital expenditures, including purchased patents and other intangible assets, and expenditures not distributed among the categories shown.
f Includes only companies with 10 or more domestic employees.
Note(s):
Detail may not add to total because of rounding. Beginning in survey year 2018, companies that performed or funded less than $50,000 of R&D were excluded from tabulation. These companies in aggregate represented a very small share of total R&D expenditures in prior years. Had the companies under this threshold been included in the 2018 estimates, they would have contributed approximately $90 million to overall R&D expenditures. Estimates of aggregate capital expenditures would have been similarly affected. Industry classification was based on dominant business code for domestic R&D performance, where available. For companies that did not report business codes, the classification used for sampling was assigned. Excludes data for federally funded research and development centers.
Source(s):
National Center for Science and Engineering Statistics and U.S. Census Bureau, Business Enterprise Research and Development Survey, 2020.
Survey Information and Data Availability
The sample for BERD was selected to represent all for-profit, nonfarm companies that were publicly or privately held, had 10 or more employees in the United States, and performed or funded R&D either domestically or abroad. The estimates in this InfoBrief are based on responses from a sample of the population and may differ from actual values because of sampling variability or other factors. As a result, apparent differences between the estimates for two or more groups may not be statistically significant. All comparative statements in this InfoBrief have undergone statistical testing and are significant at the 90% confidence level unless otherwise noted. The variances of estimates in this report were calculated using design-based formulas. Also, because the statistics from the survey are based on a sample, they are subject to both sampling and nonsampling errors. (See “Technical Notes” in the data tables reports at https://www.nsf.gov/statistics/srvyberd/#tabs-2.)
Beginning in survey year 2018, companies that performed or funded less than $50,000 of R&D were excluded from tabulation. In prior years, companies that performed or funded any amount of R&D were tabulated. This change has affected the comparability of these estimates to those published for years prior to 2018. These companies in aggregate represented a very small share of total R&D expenditures in prior years, but they accounted for a larger share of the company count estimates. (Company counts are available in the full set of data tables.)
In this InfoBrief, money amounts are expressed in current U.S. dollars and are not adjusted for inflation. A company is defined as a business organization located in the United States, either U.S. owned or a U.S. affiliate of a foreign parent company, of one or more establishments under common ownership or control.
For 2019, a total of 46,000 companies were sampled to represent the population of 1,125,000 companies; for 2020, a total of 47,500 companies were sampled, representing 1,140,000 companies. The actual numbers of reporting units in the sample that remained within the scope of the survey between sample selection and tabulation were 42,500 for 2019 and 44,500 for 2020. These lower counts represent the number of reporting units that were determined to be within the scope of the survey after all data collected were processed. Reasons for the reduced counts include mergers, acquisitions, and instances where companies had fewer than 10 employees in the United States or had gone out of business in the interim. Of these in-scope reporting units, 69% were considered to have met the criteria for a complete response to the 2019 survey; 67% fulfilled the 2020 complete response criteria. Among the units with account managers—that is, the top R&D companies based on prior year reported or imputed data that were assigned an analyst to act as a single point of contact for all communications—80% met the 2019 complete response criteria, and 82% met the 2020 criteria. Coverage of the previous year’s known positive R&D stratum for 2019 was 83%; the coverage rate for 2020 was 85%. Industry classification was based on the dominant business activity for domestic R&D performance, where available. For reporting units that did not report business activity codes for R&D, the classification used for sampling was assigned.
The estimation methodology for state estimates in BERD takes the form of a hybrid estimator, combining the unweighted reported amount, by state, with a weighted amount apportioned (or raked) across states with relevant industrial activity. The hybrid estimator smooths the estimate over states with R&D activity, by industry, and accounts for real observed change within a state. Table 5 shows the results of this estimation methodology for state estimates.
The full set of data tables from this survey will be available in the report Business Enterprise Research and Development: 2020. Individual data tables and tables with relative standard errors and imputation rates from the 2020 survey are available from the author in advance of the full report. To minimize reporting burden, survey items are rotated on and off the survey on an odd- and even-numbered year schedule. Statistics on patents, intellectual property, and technology transfer activities for 2020 are available in the full set of data tables. Items rotated off of the survey for 2020 included questions on activities with academia, R&D performed by others by type of performer, federal R&D by government agency, and R&D by application area. Statistics on these items will be available again for the 2021 cycle.
BERD contains confidential data that are protected under Title 13 and Title 26 of the U.S. Code. Restricted microdata can be accessed at the secure Federal Statistical Research Data Centers (FSRDC) administered by the Census Bureau. FSRDCs are partnerships between federal statistical agencies and leading research institutions. FSRDCs provide secure environments supporting qualified researchers using restricted-access data while protecting respondent confidentiality. Researchers interested in using the microdata can submit a proposal to the Census Bureau, which evaluates proposals based on their benefit to Census, scientific merit, feasibility, and risk of disclosure. To learn more about the FSRDCs and how to apply, please visit https://www.census.gov/about/adrm/fsrdc.html.
Notes
1See Wolfe R; NCSES. 2021. Businesses Reported an 11.8% Increase to Nearly a Half Trillion Dollars for U.S. R&D Performance During 2019. NSF 22-303. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf22303.
2When responding to the 2020 survey, companies projected they would spend $575 billion of their own funds for R&D performance in the United States during 2021. For more information about recent trends in national R&D, see Boroush M; NCSES. 2022. U.S. R&D Increased by $62 Billion in 2019 to $667 Billion; Estimate for 2020 Indicates a Further Rise to $708 Billion. NSF 22-330. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf22330.
3NSF has cosponsored an annual business R&D survey since 1953. The Survey of Industrial Research and Development (SIRD) collected data for 1953–2007, and its successor, the Business R&D and Innovation Survey (BRDIS), collected data for 2008–16. Beginning with 2017, the collection of innovation data was moved to the Annual Business Survey (ABS), another survey cosponsored with the Census Bureau, and BRDIS became the Business Research and Development Survey (BRDS). Beginning with 2019, the business R&D data collection reported here was renamed the Business Enterprise Research and Development Survey (BERD) for international comparability.
4Determining the amount of domestic net sales and operating revenues was left to the reporting company. However, guidance was given to include revenues from foreign operations and subsidiaries and from discontinued operations and to exclude intracompany transfers, returns, allowances, freight charges, and excise, sales, and other revenue-based taxes.
5Employment statistics in this InfoBrief are headcounts unless they are designated as full-time equivalent (FTE) estimates. R&D employees include researchers (defined as R&D scientists and engineers and their managers) and the technicians, technologists, and support staff members who work on R&D or who provide direct support to R&D activities.
6The number of persons employed who were assigned full time to R&D plus a prorated number of employees who worked on R&D only part of the time was 1.8 million FTEs, of which 1.2 million FTEs were R&D researchers.
7Company size classifications changed for 2017 and subsequent years in response to the revised Frascati Manual; see Organisation for Economic Co-operation and Development (OECD). 2015. Frascati Manual: Guidelines for Collecting and Reporting Data on Research and Experimental Development. The Measurement of Scientific, Technological, and Innovation Activities. Paris: OECD Publishing. Available at https://www.oecd-ilibrary.org/science-and-technology/frascati-manual-2015_9789264239012-en. Anderson and Kindlon (2019) provide estimates of R&D performance and employment using these new classifications over 2008–15. The authors also compare the trends to those observed in SIRD for the time prior to 2008. The ABS, also cosponsored by NCSES and the Census Bureau, collects R&D data from companies with fewer than 10 employees for 2017 and beyond. See Anderson G, Kindlon A; NCSES. 2019. Indicators of R&D in Small Businesses: Data from the 2009–15 Business R&D and Innovation Survey. InfoBrief NSF 19-316. Alexandria, VA: National Science Foundation. Available at https://www.nsf.gov/statistics/2019/nsf19316/.
8In addition to statistics for all states and for all states by industry, below-state level statistics are available in the full set of data tables and in other InfoBriefs; see Shackelford B, Wolfe R; NCSES. 2019. Over Half of U.S. Business R&D Performed in 10 Metropolitan Areas in 2015. InfoBrief NSF 19-322. Alexandria, VA: National Science Foundation. Available at https://www.nsf.gov/statistics/2019/nsf19322/. Also see Shackelford B, Wolfe R; NCSES. 2020. Businesses Performed 60% of Their U.S. R&D in 10 Metropolitan Areas in 2018. NSF 21-331. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf21331. Information and statistics on U.S. state trends in R&D, science and engineering education, workforce, patents and publications, and knowledge-intensive industries is also available in the Science and Engineering State Indicators data tool at https://ncses.nsf.gov/indicators/states.
9Had the companies under this threshold been included in the 2020 estimates, they would have contributed approximately $130 million to overall R&D expenditures and would have added around 9,300 to the estimated number of U.S. companies with R&D expenditures.
10The Census Bureau reviewed the information in this paragraph for unauthorized disclosure of confidential information and approved the disclosure avoidance practices applied per Census Bureau Data Review Board approval identification numbers CBDRB-FY20-432, CBDRB-FY21-145, CBDRB-FY21-032, CBDRB-FY21-221, and CBDRB-FY22-125.
Suggested Citation
Wolfe R; National Center for Science and Engineering Statistics (NCSES). 2022. Businesses Spent Over a Half Trillion Dollars for R&D Performance in the United States During 2020, a 9.1% Increase Over 2019. NSF 22-343. Alexandria, VA: National Science Foundation. Available at http://ncses.nsf.gov/pubs/nsf22343.
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NSF 22-343
|October 4, 2022