SCIENCE & ENGINEERING INDICATORS

One of the federal government’s most significant roles in supporting U.S. science and engineering (S&E) is the regular stream of funding it has provided for R&D performed by both federal entities (agency intramural laboratories and facilities and FFRDCs) and external, nonfederal organizations such as businesses and academic institutions. Fifteen federal departments and 17 other agencies perform or provide funding for R&D in the United States (Table 4-14). In recent years, the majority of the yearly federal R&D funding total is accounted for by a relatively small group of departments and agencies: the Department of Defense (DOD), Department of Health and Human Services (HHS, including the National Institutes of Health [NIH]), Department of Energy (DOE), National Aeronautics and Space Administration (NASA), National Science Foundation (NSF), Department of Agriculture (USDA), Department of Commerce (DOC), and Department of Transportation (DOT).

The data discussed throughout this section are the obligations of federal agencies for R&D and R&D plant by federal fiscal year. Obligations represent the amounts for orders placed, contracts awarded, services received, and other similar transactions, regardless of when the funds were appropriated and when future payments may be required. Obligations typically provide a better measure of actual agency spending than the budget appropriations granted to agencies by Congress in advance of agency spending actions.

In FY 2017, eight agencies each obligated near or well above $1 billion (current dollars) annually on R&D and R&D plant: DOD, HHS, DOE, NASA, NSF, USDA, DOC, and DOT (Table 4-14). These eight agencies accounted for about 96% of the federal R&D and R&D plant total that year. Another five agencies obligated funding in the $500 million–$900 million range: the Patient-Centered Outcomes Research Trust Fund, Department of Homeland Security, Department of the Interior, Department of Veterans Affairs, and the Environmental Protection Agency.

The level of overall federal support for R&D (including for both R&D conduct and R&D plant) has generally increased each year since the early 1950s (Figure 4-9 and Table S4-2).^{​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).} The $2 billion–$5 billion obligated to R&D in the mid-1950s increased to around $130 billion in FYs 2007 and 2008. The level moved higher still to historical peaks in FYs 2009 and 2010, largely a result of the $18.7 billion of incremental funding for R&D authorized by ARRA (Figure 4-9).

FYs 2011–15, however, exhibited a notably different trend, with federal R&D funding dropping each year (Figure 4-9). Adjusted for inflation, the FY 2015 level was 18% below the FY 2010 level. Some of this post–FY 2010 drop in federal R&D funding reflected the waning of the incremental funding provided by ARRA, which showed up as R&D obligations mainly in FYs 2009 and 2010. A portion of the decreased funding can also be attributed to the slow post–Great Recession expansion of the U.S. economy. The downward pressure on discretionary spending and the more challenging policy setting for federal budget decisions that emerged in 2011 and afterward also played roles. These factors all took a toll on the federal funding approved for R&D as part of the larger federal budget picture.^{​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.}

For FYs 2016–18, the agency-reported statistics suggest the post–FY 2010 decline in federal R&D funding has flattened in more recent years (Figure 4-9 and Table 4-14). However, gauging the trend in these recent fiscal years is confounded by an important change in the official data. Beginning in FY 2016, federal agencies reported R&D spending using a narrowed definition of development adopted by the Office of Management and Budget (OMB) (and consistent with international standards) (OMB 2018 and OMB 2016). The revised definition affected all agencies; as a practical matter, however, only several agencies experienced noticeable effects: NASA, in a modest way, with a decline in reported development (and, correspondingly, the R&D total) of $2 billion–$3 billion each year, and DOD, which was affected in a rather large way, with some $25 billion–$27 billion of formerly reported development excluded each year. No other agencies reported that the change in the official OMB definition of R&D resulted in any change in their reported R&D totals.

Figure 4-10 charts federal funding for R&D and R&D plant for each of the eight agencies from FY 2008 to FY 2018 (with the above-mentioned change in the official data also reflected in the FYs 2016–18 numbers). The decline in the total federal R&D obligations total in the FYs 2011–15 period was mainly due to a decline in DOD R&D funding—a result intended by the Budget Control Act and related agreements central to the policy debate surrounding the federal spending bills for FYs 2011–15. Against FY 2016 as a reset baseline, we see a rise in total federal R&D funding in FYs 2017 and 2018, particularly from repeated annual increases in DOD R&D and some also for HHS and DOE R&D; the levels for the other non-defense agencies remained more nearly flat.

Table 4-15 and Table 4-16 (and Table S4-3) provide breakdowns, by agency, of the $121.6 billion of federal dollars obligated for R&D and R&D plant in FY 2017 according to purpose (R&D conduct, R&D plant), performers funded (intramural, extramural), and type of R&D (basic research, applied research, experimental development).

For all the agencies together, nearly all of the obligated total was for the purpose of R&D conduct ($119.0 billion, 98%) (Table 4-15 and Table S4-3). Spending on R&D plant was just over 2% of the annual total ($2.7 billion), with most of the obligations in this category coming from a few agencies (mainly DOE, but also NSF, DOD, DOC, USDA, and HHS).

In 2017, the largest share of federal funding was for development (41%), next was applied research (31%), and then basic research (28%) (Table 4-16). These proportions vary widely, however, from agency to agency—mainly reflecting differences in agency missions and priorities. For example, basic research’s share for NSF in 2017 was 86% and was 49% for HHS, but its share was only 5% for DOD and nearly 0% for DOT.

Corresponding data tables in earlier editions of Science and Engineering Indicators (e.g., the 2014, 2016, and 2018 editions, accessible at https://www.nsf.gov/statistics/seind/) show largely the same picture for these distributions of federal funding by agency, performer, and type of R&D.

The basic research and applied research conducted or funded by the federal government spans a full range of S&E fields: computer sciences and mathematics, environmental sciences, life sciences, physical sciences, psychology, social sciences, engineering, and other S&E fields. Experimental development cannot easily be classified by S&E field, so the available data cover only research.^{​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.}

In FY 2017, funding for basic and applied research combined accounted for $69.9 billion of the $119.0 billion total of federal obligations for R&D (Table 4-16). Nearly half of this amount, $34.1 billion, supported research in life sciences (Table S4-4). The fields with the next largest amounts were engineering ($13.2 billion, 19%) and physical sciences ($6.6 billion, 9%), followed by environmental sciences ($4.5 billion, 6%) and computer sciences and mathematics ($3.9 billion, 6%). The balance of federal obligations for research in FY 2017 supported psychology, social sciences, and all other sciences ($7.6 billion overall, or 11% of the total for research).

The differences in federal funding for research across agencies and fields reflect the differences in agency missions (Figure 4-11). HHS accounted for the largest share (48%) of federal obligations for research in FY 2017 (Table S4-4). Most of this amount funded research in life sciences, primarily through NIH. The six next largest federal agencies for research funding that year were DOE (14%), DOD (10%), NASA (8%), NSF (8%), USDA (3%), and DOC (2%).

DOE primarily funded research in engineering ($4.5 billion), physical sciences ($2.8 billion), and computer sciences and mathematics ($1.1 billion). DOD’s research focuses included engineering ($2.8 billion), computer sciences and mathematics ($1.2 billion), physical sciences ($0.7 billion), and life sciences ($0.6 billion). NASA focused primarily on engineering ($2.1 billion), physical sciences ($1.6 billion), and environmental sciences ($1.3 billion).

NSF is charged with “promoting the progress of science.” As such, it had a comparatively diverse $5.5 billion research portfolio that allocated about $0.6 billion–$1.1 billion to each of the following fields: environmental sciences, life sciences, computer sciences and mathematics, physical sciences, and engineering. Smaller amounts were allocated to psychology, social sciences, and other sciences. USDA’s $2.2 billion was directed primarily at life (agricultural) sciences ($1.8 billion). DOC’s $1.3 billion was distributed mainly in the fields of environmental sciences, physical sciences, engineering, and computer sciences and mathematics.

Adjusted for inflation, the total of federal funds obligated for research across all S&E fields grew, on average, by 3.8% annually over 1990–2000 and by 3.0% over 2000–10 (Table S4-5). More recently, however, the research obligations total has slowed noticeably; over the 2010–17 time period, research obligations declined, on average, 0.3% annually, adjusted for inflation.

OECD countries report statistics on government funding of R&D through the “government budget allocations for R&D” (GBARD) indicator, which distinguishes more than a dozen differing socioeconomic objectives.^{​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).} Defense is an objective for government funding of R&D for all the top R&D-performing countries, but the shares vary considerably (Table 4-17). Defense accounted for 44% of U.S. federal R&D support in 2017, while the United Kingdom and South Korea were a distant second, with 15% each supporting R&D for defense.^{​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.} The remaining countries’ shares were 8% or lower.

Nondefense R&D priorities also vary by country. For the United States and the United Kingdom, health and the environment have been the largest shares of nondefense spending, at 56% and 34%, respectively. These shares have increased markedly since 2000.

South Korea has consistently allocated about half of its nondefense R&D support to economic development programs, which encompass agriculture, energy, fisheries and forestry, industry, transportation, telecommunications, and other infrastructure. The shares devoted by other countries are markedly less.

The civil space objective accounted for about 14% of nondefense federal R&D funding in the United States in 2017. The share was 21% in 2000 and declined to 13% by 2010, but this objective has experienced increases more recently. The corresponding share in France was about 4% for 2017, well down from 13% in both 2000 and 2010. The space share has been well below 10% for the rest of the top R&D-performing countries.

Both the non-oriented research funding and general university funds (GUF) objectives reflect government support for R&D by academic, government, and other performers that is directed chiefly at the “general advancement of knowledge” in the natural sciences, engineering, social sciences, humanities, and related fields. For some of the countries, the sum of these two objectives represents by far the largest part of nondefense GBARD: in 2017, Japan (59%), Germany (59%), France (51%), the United Kingdom (37%), and South Korea (23%). While the corresponding 2017 share for the United States (16%) was substantially smaller, it requires interpretive caution. Cross-national comparisons of these particular indicators can be difficult because some countries (notably the United States) do not use the GUF mechanism to fund R&D for general advancement of knowledge or do not separately account for GUF (e.g., South Korea); more typically, these countries direct R&D funding to project-specific grants or contracts, which are then assigned to more specific socioeconomic objectives.^{​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.}

Finally, the education and society objective represents a comparatively small component of nondefense government R&D funding for the top R&D-performing countries. This objective comprised 3% of nondefense GBARD in the United States in 2017, compared to a lower share in Japan (1%) and to higher shares in Germany (5%), the United Kingdom (5%), and South Korea (9%).