SCIENCE & ENGINEERING INDICATORS

1 A Technical Appendix to this report provides an overview of the R&D surveys and key methods used in this report. In addition to the data presented in this section’s figures and tables, NCSES statistics on U.S. R&D performance go back to 1953 and provide details by R&D performers and funders and by type of R&D. These data time series and additional statistics are part of the NCSES National Patterns of R&D Resources series released yearly and can be accessed on the NCSES website at https://ncses.nsf.gov/pubs/nsf20307/.

2 In this report, dollars adjusted for inflation (i.e., constant dollars) are based on the GDP implicit price deflator (currently in 2012 dollars) as published by the Department of Commerce, Bureau of Economic Analysis (BEA) (https://www.bea.gov/iTable/index_nipa.cfm). Note that GDP deflators are calculated on an economy-wide scale and do not explicitly focus on R&D.

3 The ratio of total national R&D expenditures to GDP is often reported as a measure of the intensity of a nation’s overall R&D effort and is widely used as an international benchmark for comparing countries’ R&D activities.

4 The data for higher education R&D appearing in this report adjust the academic fiscal year basis of NCSES’s Higher Education Research and Development Survey data to calendar year and net out pass-throughs of research funds to remove double-counting in the national totals (see NCSES National Patterns of R&D Resources: https://www.nsf.gov/statistics/natlpatterns/). Accordingly, the higher education data included in this report differ from those cited in Indicators 2020 report “Academic Research and Development.”

5 FFRDCs are R&D-performing organizations that are exclusively or substantially financed by the federal government. An FFRDC is operated to provide R&D capability to serve agency mission objectives or, in some cases, to provide major facilities at universities for research and associated training purposes. Each FFRDC is administered by an industrial firm, a university, a nonprofit institution, or a consortium. NCSES maintains a current Master Government List of Federally Funded R&D Centers. For information on the current FFRDC count, along with its history, see https://www.nsf.gov/statistics/ffrdclist/.

6 An additional factor affecting the reported level of federal intramural R&D performance in 2016 and beyond is OMB’s adoption in 2016 of a definition of “development” that narrowed what is counted to “experimental development.” The largest effect has been the exclusion of DOD’s Activity 6.7 Operational Systems Development from the federal tally of R&D expenditures. As a result, the federal intramural R&D totals reported for 2016 and 2017 (in Table 4-1, Figure 4-2, and elsewhere in this report) are approximately $5 billion lower than they would have been if tallied in the same way as 2015 and earlier. For a further discussion of this technical development in federal R&D reporting, see section Recent Trends in Federal Support for U.S. R&D in this report.

7 R&D funding by business in this section refers to business funding for domestic business R&D performance plus business funding for FFRDCs and U.S. academic and nonprofit R&D performers.

8 R&D encompasses a wide range of activities, ranging from research yielding fundamental knowledge in the physical, life, and social sciences; to research addressing national defense needs and such critical societal issues as global climate change, energy efficiency, and health care; to the development of platform or general-purpose technologies that can enable the creation and commercial application of new and improved goods and services. The most widely applied classification of these activities characterizes R&D as “basic research,” “applied research,” or “experimental development” (OECD 2015, OMB 2016, and NSF 2018). This longstanding trio of categories has been criticized over the years as reinforcing the idea that creating new knowledge, invention, and innovation is a linear process beginning with basic research, followed by applied research and then development, and ending with the production and diffusion of new technologies and eventually commercially significant innovations. Nonetheless, alternative classifications that provide measurable distinctions, capture major differences in types of R&D, and are widely accepted as superior have yet to be developed. Despite the recognized limitations of the basic research–applied research–development classification framework, it remains useful in providing indications of differences in the motivation, expected time horizons, outputs, and types of investments associated with R&D projects.

9 The Organisation for Economic Co-Operation and Development notes that in measuring R&D, one source of error is the difficulty of locating the dividing line between experimental development and the further downstream developmental activities needed to realize an innovation (OECD 2015:51–52). Most definitions of R&D set the cutoff at the point when a particular product or process reaches “market readiness.” At this point, the defining characteristics of the product or process are substantially set—at least for manufactured goods, if not also for services—and further work is aimed primarily at developing markets, engaging in preproduction planning, and streamlining the production or control system.

10 The arithmetic is straightforward to calculate type-of-R&D shares for past years, based on the time-series data reported annually in the NCSES National Patterns of R&D Resources series. Nonetheless, care must be taken in describing the trends for these shares over time. Although NCSES’s sectoral surveys of R&D expenditures have long and consistently used the Organisation for Economic Co-Operation and Development Frascati Manual’s type-of-R&D definitions, the survey instruments have occasionally been revised to improve the reliability of the responses received, most notably in the academic, business, federal funds, and FFRDC R&D expenditure surveys. Accordingly, some differences observed in the shares directly calculated from the supplemental table time-series data more nearly reflect the effects of these improvements in the type-of-R&D survey questions than changes in the type-of-R&D shares among R&D performers.

11 This report provides new R&D expenditures data relative to what is presented in the previous (2018) edition of Indicators. The new data include updated data for 2016 and 2017 and revisions for prior years. Actual 2018 data for all countries will not be available at the time of the report’s publication.

12 The figures cited for total global R&D in 2000, 2010, and 2017 are NCSES estimates. R&D expenditures for all countries are denominated in U.S. dollars, based on PPP dollar conversions. These estimates are based on data from the Organisation for Economic Co-Operation and Development’s (OECD’s) Main Science and Technology Indicators 2019/1 (OECD 2019b) and from R&D statistics for additional countries assembled by the United Nations Educational, Scientific and Cultural Organization’s (UNESCO’s) Institute for Statistics (as of mid-March 2019). Presently, no database on R&D spending is comprehensive and consistent for all nations performing R&D. The OECD and UNESCO databases together provide R&D performance statistics for 158 countries, although the data are not current or complete for all. NCSES’s estimate of total global R&D reflects 106 countries, with reported annual R&D expenditures of $50 million or more, which accounts for most of the current global R&D.

13 The regional groupings of countries reported throughout this section of the report are the classifications of the U.S. Central Intelligence Agency, as described in its World Factbook publication (https://www.cia.gov/library/publications/the-world-factbook/).

14 Up through 2016, the reference population for the Business R&D and Innovation Survey (BRDIS) did not include companies with fewer than 5 employees in the United States. Starting in 2017, the survey was renamed the Business R&D Survey (BRDS), and the reference population was revised to exclude companies with fewer than 10 employees.

15 The industry-level data presented in this section are obtained by classifying a company’s total R&D into a single industry, even if R&D activities occur in multiple lines of business. For example, if a company has $100 million in R&D expenses—$80 million in pharmaceuticals and $20 million in medical devices—the total R&D expense of $100 million is assigned to the pharmaceuticals industry because it is the largest component of the company’s total R&D expense (Shackelford 2012). However, most companies performed R&D in only one business activity area. In 2010, 86% of companies reported domestic R&D performed by and paid for by the company related to only one business activity. See Shackelford (2012) for an in-depth analysis of the relationship between business codes and industry codes.

16 ISIC Revision 4 was released by the United Nations Statistics Division in August 2008. For an overview of the classification structure, comparisons with earlier editions, and background, see https://unstats.un.org/unsd/cr/registry/regcst.asp?Cl=27.

17 The analysis in this section focuses primarily on developments in federal R&D priorities and funding support over the course of the last decade. Nevertheless, there is an important and interesting story to tell about how the comparatively minor federal role in the nation’s science and research system up until World War II was reconsidered, redirected, and greatly enlarged, starting shortly after the end of the war and moving through the subsequent decades to the present. For a review of the essential elements of this evolving postwar federal role, see Jankowski (2013).

18 For a further account of this recent federal budget history, see Boroush (2015, 2016). Notable among the various interconnected developments over these years were the federal-wide spending reductions imposed by the enacted FY 2011 federal budget: the Budget Control Act of 2011, intended to address the then-ongoing national debt ceiling crisis, which commanded a 10-year schedule of budget caps and spending cuts; the budget sequestration provision, which ultimately took hold in the FY 2013 federal budget; and the Bipartisan Budget Act of 2013, which provided some subsequent relief from the deepening sequestration requirements, but only for the FY 2014 and FY 2015 budgets.

19 Data collected annually by NCSES on federal R&D funding include detail on the distribution of support for research (i.e., basic and applied research) across differing S&E fields.

20 Government R&D funding statistics compiled annually by OECD provide insights into how national government priorities for R&D differ across countries (OECD 2015). Known technically as government budget allocations for R&D (GBARD), this indicator provides data on how a country’s overall government funding for R&D splits among a set of socioeconomic categories (e.g., defense, health, space, and general research). GBARD statistics are available for the United States and most of the other top R&D-performing countries discussed earlier in this report’s section on Cross-National Comparisons of R&D Performance (however, corresponding GBARD data for China and India are not currently available).

21 Defense received 50% or more of the federal R&D budget in the United States for many years. The defense share was 63% in 1990 as the Cold War period waned but then dropped in subsequent years. It rose again in the first decade of the 2000s—in large part, reflecting post-9/11 security concerns—but it has been declining again in the most recent years. For the other countries, the defense share of government R&D funding has generally declined or remained at a stable, low level.

22 The treatment of GUF is one of the major areas of difficulty in making international R&D comparisons. In many countries, governments support academic research primarily through large block grants that are used at the discretion of each higher education institution to cover administrative, teaching, and research costs. Only the R&D component of GUF is included in national R&D statistics, but problems arise in identifying the amount of the R&D component and the objective of the research. Moreover, government GUF support is in addition to support provided in the form of earmarked, directed, or project-specific grants and contracts (funds that can be assigned to specific socioeconomic categories). In several large European countries (France, Germany, Italy, and the United Kingdom), GUF accounts for 50% or more of total government R&D funding to universities. In Canada, GUF accounts for about 38% of government academic R&D support. Thus, international data on academic R&D reflect not only relative international funding priorities but also funding mechanisms and philosophies regarded as the best methods for financing academic research.