The U.S. R&D system consists of the R&D activities of a variety of performers and sources of funding. Included here are private businesses, the federal government, nonfederal government, higher education (universities and colleges), and other nonprofit organizations. The organizations that perform R&D often receive significant levels of outside funding; furthermore, those that fund R&D may also themselves be significant performers.

The main sources of data for the indicators and analyses discussed in this section come from annual R&D surveys of these performers and funders, sponsored by the National Center for Science and Engineering Statistics (NCSES) within the National Science Foundation.

U.S. Total R&D and R&D Intensity

In 2017, the R&D performed in the United States totaled $547.9 billion, up strongly from $493.7 billion in 2015 and $406.6 billion in 2010 (Table 4-1 and Figure 4-1). (Unless otherwise noted, all amounts and calculations are in current dollars.)

U.S. R&D expenditures, by performing sector and source of funds: 2010–17

(Millions of current and constant 2012 dollars)

FFRDC = federally funded research and development center.

a Some data for 2017 are preliminary and may later be revised.

b Includes expenditures of federal intramural R&D, as well as costs associated with administering extramural R&D procurements.

c Some components of the R&D performed by other nonprofit organizations are projected and may later be revised.

Note(s):

Data are based on annual reports by performers, except for the nonprofit sector. Expenditure levels for higher education, federal government, and nonfederal government performers are calendar year approximations based on fiscal year data.

Source(s):

National Center for Science and Engineering Statistics, National Science Foundation, National Patterns of R&D Resources (annual series).

Science and Engineering Indicators

U.S. R&D, by performing sector and source of funds: 1953–2017

Note(s):

Data for 2017 are preliminary and may later be revised. Some components of the R&D performed by other nonprofit organizations are projected and may later be revised. Federal performers of R&D include federal agencies and federally funded R&D centers. Performance by nonfederal government includes state governments (data in this series are not available before 2006). Other funding includes support from higher education, nonfederal (state and local) government, and nonprofit organizations.

Source(s):

National Center for Science and Engineering Statistics, National Science Foundation, National Patterns of R&D Resources (annual series).


Science and Engineering Indicators

The 2010–17 period has seen sizable year-over-year increases, averaging $20.2 billion annually—in contrast to essentially no change between 2008 and 2010, a period marked by the impacts of the Great Recession. This pattern of sustained annual increases since 2010 is due mainly to consistently growing levels of business R&D performance (Figure 4-2).

Year-to-year changes in U.S. R&D expenditures, by performing sector: 2010–17

FFRDC = federally funded research and development center.

Note(s):

Data are calculated from R&D expenditure data reported for performers in Table 4-1. Expenditures by nonfederal government performers are comparatively negligible, and specific bars for this sector are excluded.

Source(s):

National Center for Science and Engineering Statistics, National Science Foundation, National Patterns of R&D Resources (annual series).


Science and Engineering Indicators

Adjusted for inflation, growth in U.S. total R&D averaged 2.7% annually over the 2010–17 period, moderately faster than the 2.2% average pace of U.S. gross domestic product (GDP) (Table 4-2). By comparison, during the prior decade (2000–10, which included the Great Recession), the average annual rate of growth of U.S. total R&D was lower, at 2.1%, although it still outpaced the 1.7% rate of GDP expansion.

Annual rates of change in U.S. R&D expenditures, total and by performing sectors: 1990–2017

(Percent)

NA = not available.

FFRDC = federally funded research and development center.

a Includes expenditures of federal intramural R&D, as well as costs associated with administering extramural R&D procurements.

b Survey data on state intramural R&D performance were not available prior to 2006.

c Some components of the R&D performed by other nonprofit organizations are projected and may later be revised.

Note(s):

Longer-term trend rates are calculated as compound annual growth rates. Data for 2017 are preliminary and may later be revised.

Source(s):

National Center for Science and Engineering Statistics, National Science Foundation, National Patterns of R&D Resources (annual series).

Science and Engineering Indicators

Regarding the status of investment in R&D in the national economy, between 2010 and 2017, the ratio of U.S. R&D expenditures to GDP (or R&D intensity) fluctuated within a relatively narrow range (from a low of 2.68% in 2012 to a high of 2.81% in 2017) (Figure 4-3). The ratio’s 2017 level is the highest it has been since the start of the time series in 1953. (It reached 2.79% in both 1964 and 2009.)

Ratio of U.S. R&D to gross domestic product, by roles of federal, business, and other nonfederal funding for R&D: 1953–2017

Note(s):

Data for 2017 are preliminary and may later be revised. The federally funded data represent the federal government as a funder of R&D by all performers and similar for the business-funded data. The other nonfederal category includes R&D funded by all other sources—mainly, higher education, nonfederal government, and other nonprofit organizations. The gross domestic product data used reflect the U.S. Bureau of Economic Analysis's comprehensive revisions of the national income and product accounts of July 2018 and the annual update of July 2019.

Source(s):

National Center for Science and Engineering Statistics, National Science Foundation, National Patterns of R&D Resources (annual series).


Science and Engineering Indicators

The broader trend since the mid-1990s has been a rising R&D-to-GDP ratio, albeit with some periods of decline. Most of the rise of this ratio over the past several decades resulted from increases in nonfederal spending on R&D, particularly by the business sector (Figure 4-3). This stems from the growing role of business R&D in the national R&D system, which in turn reflects the considerable increase of R&D-dependent goods and services in the national and global economies.

In contrast to the business R&D trend, the ratio of federally funded R&D expenditures to GDP declined from the mid-1980s to the late 1990s, notably from cuts in defense-related R&D. There was a gradual uptick in the ratio through 2009, the result of increased federal spending on biomedical and national security R&D and of the one-time incremental funding for R&D provided by the American Recovery and Reinvestment Act of 2009 (ARRA). Since 2010, the federally funded R&D-to-GDP ratio has returned to a path of decline (Figure 4-3).

Performers of R&D

Business Sector

The business sector is by far the largest performer of U.S. R&D. In 2017, domestically performed business R&D accounted for 73% ($400.1 billion) of the national R&D total (Table 4-1 and Table 4-3). The business sector’s status as the predominant player in national R&D performance has long been the case, with its annual share ranging between 69% and 73% over the nearly two-decade period of 2000–17 (Figure 4-1).

U.S. R&D expenditures, by performing sector, source of funds, and type of work: 2017

(Millions of dollars)

* = small to negligible amount, included as part of the funding provided by other sectors.

FFRDC = federally funded research and development center.

Note(s):

Data for 2017 include some estimates and may later be revised. Some components of R&D performance and funding by other nonprofit organizations are projected and may later be revised.

Source(s):

National Center for Science and Engineering Statistics, National Science Foundation, National Patterns of R&D Resources (annual series).

Science and Engineering Indicators

Adjusted for inflation, growth in business R&D averaged 3.6% annually over the period 2010–17 (Table 4-2), well ahead of the 2.7% annual average for total R&D and even further ahead of the 2.2% annual average for GDP.

Higher Education

At $71.3 billion, the higher education sector is a distant second to business in U.S. R&D performance. Universities and colleges annually performed between 11% and 14% of U.S. R&D from 2000 to 2017 (Figure 4-1 and Table 4-3). After adjusting for inflation, growth in this sector’s R&D performance averaged 1.3% annually over 2010–17, well behind the pace of both U.S. total R&D (2.7%) and GDP (2.2%).

Federal Agencies and Federally Funded Research and Development Centers

The federal government conducted $52.6 billion, or 10%, of U.S. R&D in 2017 (Table 4-1 and Table 4-3). This amount included $32.2 billion (6% of the U.S. total) for intramural R&D performed by federal agencies in their own research facilities and $20.3 billion (4%) of R&D performed by the 42 federally funded R&D centers (FFRDCs). The federal performance share of U.S R&D has declined slightly since 2000, from around 11% to about 10% in 2017.

Adjusted for inflation, this sector’s R&D performance over 2010–17 declined at an annual average rate of 1.1%—providing a sharp contrast to the faster growth in total U.S. R&D (2.7%) and GDP (2.2%) (Table 4-2). In the previous decade (2000–10), federal R&D performance grew an average of 3.8% yearly, well ahead of U.S. total R&D (2.1%). This reversal in the 2010–17 period reflects mainly the waning after 2010 of the incremental funding from ARRA and the more challenging environment for federal budget support after 2011.

Other Nonprofit Organizations and Nonfederal Government

R&D performed in the United States by other nonprofit organizations (which exclude universities and FFRDCs) was $23.3 billion in 2017 (Table 4-1 and Table 4-3). This was 4% of U.S. total R&D that year, a share estimated to have increased only slightly since the late 1990s.

NCSES started to track the annual intramural R&D performance of state agencies in 2006. The total for all 50 states and the District of Columbia in 2017 is estimated to be $641 million—a small share (about 0.1%) of the U.S. total (Table 4-1 and Table 4-3).

Sources of R&D Funding

R&D Funding by Business

Mirroring its predominant role in R&D performance, the business sector is also the leading source of funding for R&D performed in the United States. In 2017, business sector funding accounted for $381.1 billion, or 70%, of the total U.S. R&D performance (Table 4-3). Nearly all (98%) of the business sector’s funding for R&D that year supported business R&D performance—whether performed by the company itself or in support of the R&D performed by other companies. The remainder went to R&D performers in higher education, other nonprofit organizations, and FFRDCs.

The business sector’s dominant role in the nation’s R&D funding began in the early 1980s, when its support started to exceed 50% of all U.S. R&D funding (Figure 4-4). The business sector’s share reached 60% in 1995 and has remained above that level since that time.

U.S. total R&D expenditures, by source of funds: 1953–2017

Note(s):

Data for 2017 are preliminary and may later be revised. The other category includes nonfederal government, higher education, and other nonprofit organizations.

Source(s):

National Center for Science and Engineering Statistics, National Science Foundation, National Patterns of R&D Resources (annual series).


Science and Engineering Indicators

R&D Funding by the Federal Government

The federal government is the second largest source of funding for U.S. R&D, behind the business sector. It is a major resource for most of the U.S. R&D performer sectors, except the business sector, where the federal role, although far from negligible, is overshadowed by business’s own funds.

Funds from the federal government accounted for $121.0 billion, or 22%, of U.S. total R&D in 2017 (Table 4-1). Federal funding was directed mainly to R&D performance by the federal government, businesses, and higher education (Table 4-3). In 2017, federal funding supported about 51% of academic R&D performance; 6% of business R&D performance; 35% of nonprofit R&D performance; and almost all (98%) of FFRDC R&D performance.

Long ago, the federal government was the leading sponsor of the nation’s R&D—funding 67% of all U.S. R&D in 1964 (Figure 4-4). The federal share decreased to half (49%) of all funding in the late 1970s, to a little over a third (36%) in the mid-1990s, and to a quarter (25%) by the turn of the century. (Once the United States won the race to the moon, funding for space R&D declined sharply—which was a major factor in the overall decrease of federal R&D as share of the national R&D total. At largely the same time the business sector was rapidly expanding its own energy-related R&D in response to the world oil supply crises; see Jankowski [2001].) The share ticked up again after 2000, as changing business conditions and expanded federal funding for health, defense, and counterterrorism R&D (including ARRA funding) pushed the federal funding share to 31% in 2009 and 2010. The federal share, however, again declined in the subsequent years and stands at 22% in 2017. The recent decline reflects chiefly the waning of funding after the 2010 incremental funding from ARRA and the more challenging competition that has prevailed in the federal budgetary process for funding support since 2011.

R&D Funding from Other Sources

The remainder of R&D funding from other sources is a smaller component: $45.8 billion in 2017, or about 8% of all U.S. R&D performance (Table 4-3). Of this amount, $19.7 billion was from higher education’s own institutional funds, all of which remain in the academic sector; $4.6 billion was from state and local governments, primarily supporting academic research; and $21.5 billion was from other nonprofit organizations, the majority of which funds this sector’s own R&D. Of the estimated nonprofit total, some funds ($7.2 billion) support R&D in higher education, and small amounts support business ($0.8 billion) and FFRDC ($0.2 billion) R&D performance.

R&D, by Type of Work

In 2017, basic research activities comprised $91.5 billion (17%) of the total of U.S. R&D expenditures, followed by applied research at $108.8 billion (20%) and $347.6 billion (63%) for experimental development (Table 4-3 and Table 4-4). (For definitions of these terms, see the Glossary section.)

U.S. R&D expenditures, by type of work: Selected years, 2000–17

(Billions of current and constant 2012 dollars; percent distribution)

a Some data for 2017 are preliminary and may later be revised.

Note(s):

Detail may not add to total because of rounding. Data throughout the time series reported here are consistently based on the Organisation for Economic Co-operation and Development's Frascati Manual definitions for basic research, applied research, and experimental development. Prior to 2010, however, some changes were introduced in the questionnaires of the sectoral expenditure surveys to improve the accuracy of respondents' classification of their R&D. Therefore, small percentage changes may not be meaningful when comparing data before 2010 with more recent data.

Source(s):

National Center for Science and Engineering Statistics, National Science Foundation, National Patterns of R&D Resources (annual series).

Science and Engineering Indicators

Basic Research

Higher education institutions continued to be the largest performer of U.S. basic research in 2017, while the federal government remained the largest source of funding for basic research. Higher education performed just under half (48%) of basic research, and the federal government funded about 42% of all basic research performed (Table 4-3). The business sector was also a substantial performer (27%) and funder (29%) of basic research. The federal government (agency intramural laboratories and FFRDCs) and other nonprofit organizations were smaller performers, accounting, respectively, for 11% and 13% of the U.S basic research performance total in 2017.

Applied Research

The business sector was both the largest performer (57%) and largest funder (54%) of applied research in 2017—accounting for over half of each (Table 4-3). Higher education (18%), the federal government (17%), and nonprofit organizations (7%) were the next largest performers of applied research.

The vast majority of business sector funding for applied research remained within the sector (Table 4-3). The federal government provided a third of applied research funding, with its funding spread broadly across different sectors; higher education and federal intramural laboratories and FFRDCs received the largest amounts.

Experimental Development

The business sector predominates in experimental development, performing 90% of the R&D in this category in 2017 (Table 4-3). The federal government accounted for another 7%, much of it defense related, with the federal government itself the primary user of the results. By contrast, higher education and other nonprofit organizations perform relatively little development (respectively, 2% and 1% of the total in 2017).

The business sector provided 85% of the funding for the experimental development performed in 2017, nearly all of which remained in that sector (Table 4-3). Federal funding accounted for about 13% of the development total, with the business sector (especially defense-related industries) and federal intramural laboratories as the largest recipients.

Trend in Shares, by Type of R&D

The shares of basic research, applied research, and experimental development have remained largely the same throughout the 2010–17 period (Table 4-4). These shares are also not dramatically different than those estimated in earlier years. Furthermore, adjusted for inflation, and despite occasional year-over-year declines, the overall trend has been substantial increases in the conduct of each of the three types of R&D. (While these key features of the data are noteworthy, care is needed in definitively identifying trends. Various methodological improvements in the R&D performer surveys have been made over time—particularly before 2010, with the net implication that small percentage changes in the reported shares may not be meaningful.)

Between 2010 and 2017, the most evident shifts in the relative roles of performers and funders concerned basic research. In 2010, businesses performed 22% of U.S. basic research, but the sector’s role rose noticeably to 27% in 2017 (due in part to substantial increases in basic research performed by the pharmaceuticals and medicines industries, as well as the professional, scientific, and technical [PST] services sector). Over the same period, the share of U.S. basic research performed by higher education institutions—historically, the nation’s largest basic research performer—declined from 50% in 2010 to 48% in 2017. Businesses funded 23% of U.S. basic research in 2010, rising to 29% in 2017. Over the same period, the federally funded share was 53% in 2010 but has declined each year since that time, falling to 42% in 2017. Further, in 2010, funding from higher education’s own funds accounted for 10% of the funding of U.S. basic research performance; in 2017, higher education’s funding share had increased to 13%.