A nation’s innovative capacity is driven not only by development of a workforce equipped to perform technologically advanced activities but also by its investments in R&D. Global R&D expenditures tripled from $726 billion in 2000 to an estimated $2.4 trillion in 2019. Although the United States spent more on R&D than any other country in 2019, its global share has declined as R&D growth in several middle-income countries has outpaced that of the United States. Most growth in U.S. R&D performance and funding is attributable to the business sector. The U.S. government is the second-largest funder of R&D performance, but its proportion of total R&D has declined.

Based on R&D expenditures, a few countries perform most of the global R&D. In 2019, the United States (27% or $656 billion) and China (22% or $526 billion) performed about half of the global R&D (Figure 12).^{​Data for the United States in Figures 12 – Figures 15 reflect international standards for calculating gross expenditures on R&D, which vary slightly from the NCSES’s protocol for tallying U.S. total R&D.,​The section “Global R&D” draw on data and sources in the forthcoming Indicators 2022 report, “Research and Development: U.S. Trends and International Comparisons,”—refer to this report and the section on Research and Development at the NCSES website for the latest data as estimates in this section may be subject to revision.} These shares are markedly different from those reported in Indicators 2020 because of revisions to the estimates of purchasing power parities (PPP), a measure which enables direct comparisons of R&D expenditures across countries (see sidebar Revisions to Global Research and Development for more details). Japan (7%), Germany (6%), and South Korea (4%) were also substantial performers. Other top-performing countries—for example, France, India, and the United Kingdom—account for about 2% to 3% each of the global total. Many other countries also conduct R&D, with annual expenditures well below these top countries.

A notable trend over the past decade has been the growth in R&D spending in the regions of East-Southeast Asia and South Asia, compared with the other major R&D-performing areas. The United States contributed 23% to growth in global R&D performance from 2000 to 2019, whereas countries in the regions of East-Southeast Asia and South Asia, including China, Japan, Malaysia, Singapore, South Korea, Taiwan, and India contributed 46% to the growth in global R&D during this period. China alone contributed 29% to growth in global R&D, buoyed by its high annual R&D growth (Figure 13). The annual increase of China’s R&D, averaging 10.6% annually from 2010 to 2019, continues to greatly exceed that of the United States, with an annual average of 5.4% from 2010 to 2019. Consequently, the share of global R&D performed by the United States declined from 29% in 2010 to 27% in 2019, whereas the share by China increased from 15% to 22% (Figure 14). More recently, R&D growth in China has slowed to a rate that is similar to the United States.

Several countries with smaller economies, including Israel, South Korea, and Taiwan, have greater R&D intensities than the United States (see Glossary section for definition of R&D intensity). However, R&D intensity increased across several of the top R&D-performing countries from 2000 to 2019 (Figure 15). U.S. R&D intensity ranged from 2.5% to just under 3.0% for nearly 2 decades, with the most recent 2019 estimate exceeding 3.0% for the first time, based on a preliminary estimate of U.S. total R&D expenditures (Figure 15). From 2000 to 2019, South Korea and China had the most growth in R&D intensity, growing from 2.1% to 4.6% and from 0.9% to 2.2%, respectively. R&D intensity in Germany also grew from 2.4% to 3.2%.

Countries vary in the amount of R&D expenditures on basic research, applied research, and experimental development (see Glossary section for definitions of basic research, applied research, and experimental development). For example, the United States spends a higher share of R&D funding on basic research than does China, and China spends a higher share of R&D funding on experimental development than does the United States. In 2018, China spent 83% of its R&D expenditures on experimental development, compared with 64% in the United States. Although the shares spent on experimental development differed, the United States ($388.6 billion) and China ($387.9 billion) spent similar amounts. Overall, the United States spent $607.5 billion in R&D activity, with $101.1 billion (17%) of annual R&D spending classified as basic research, and China spent $26 billion (6%) of annual R&D spending on basic research. Other countries, such as France, spent a higher proportion of R&D funds on basic research, but none spend more than China or the United States in absolute amounts.

Within most of the top R&D-performing countries, the business sector funds the most R&D—60% or more in 2018. In each of the leading Asian countries—Japan, China, and South Korea—the business sector accounted for more than 75% of R&D funding. The business share of total R&D funding was lower but still more than 60% in the United States and Germany.

Although the U.S. business sector performs (or conducts) the most R&D, other sectors—including federal, state, and local governments; higher education institutions; and non-academic nonprofit organizations—also perform and fund domestic R&D.^{​Unless otherwise noted, the section “U.S. Performance and Funding Trends” draws on data and sources in the forthcoming Indicators 2022 report, “Research and Development: U.S. Trends and International Comparisons”—refer to this report and the section on Research and Development at the NCSES website for the latest data as estimates in this section may be subject to revision.} R&D performed in the United States totaled $606.1 billion in 2018, and according to preliminary estimates, $656 billion in 2019.^{​Data for the United States in Figure 16 and Figures 17 reflect NCSES’s protocol for tallying U.S. total R&D, which varies slightly from the international standards for calculating gross expenditures on R&D.} The business sector was the main driver of R&D performance, accounting for about 83% of the growth in R&D from 2010 to 2019 (Figure 16).^{​U.S. business R&D is the R&D performed by companies domiciled in the United States. It includes the R&D performed by the company and paid for by the company itself (from company-owned, U.S.-located units or from subsidiaries overseas). It also includes the R&D performed by the company and paid for by others, such as other companies (domestic or foreign, including parent companies of foreign-owned subsidiaries located in the United States), the U.S. federal government, nonfederal government (state and local or foreign), and nonprofit or other organizations (domestic or foreign).}

Similarly, the U.S. business sector funds (or pays for) most R&D, and nearly all (98%) of the business sector's R&D funding supports R&D performance by businesses. In contrast, the federal government, the second-largest source of R&D funding (21%) (Figure 17), supports R&D performed by all sectors. Based on preliminary 2019 estimates, the federal government funded 50% of the R&D performed by the higher education sector, 31% by nonprofits, and 6% by businesses.

The majority of R&D performance is in experimental development (65%) and applied research (19%), and the business sector dominates in both. With its focus on new and improved goods, services, and processes, the business sector performs 90% of experimental development, and 58% of applied research (Figure 18). Higher education institutions perform the largest proportion of basic research (46%). However, the share of basic research performed by the business sector increased from 18% in 2012 to an estimated 30% in 2019. Since 2010, a few industries—notably chemical manufacturing (including pharmaceuticals and medicine); computer and electronic products; transportation equipment; professional, scientific, and technical services; and information services—account for most R&D performed by the business sector.

Similar to its role in conducting R&D, the business sector funds most of applied research (55%) and experimental development (86%). The share of basic research funded by the business sector increased from 23% in 2010 to 31% in 2019 (preliminary). However, the federal government continues to be the largest source of funding of basic research (41%).

Although federal funding of R&D increased from $127 billion in 2010 to an estimated $139 billion in 2019, the share of total R&D funded by the federal government declined from 31% in 2010 to an estimated 21% in 2019. This decline occurred across all research types and sectors (Figure 19, Figure 20).

Higher education institutions rely heavily on federal support for R&D. Although federal funding of research performed by the higher education sector increased in dollar amount from 2010 to 2019, the proportion funded by the federal government declined from 60% in 2010 to an estimated 50% in 2019 (Figure 19). In contrast, the proportion funded by higher education institutions increased. This proportional decline in federal funding has potential implications for graduate student training because many students in S&E fields are supported by federal R&D funding. 

The federal government supported 15% of full-time S&E graduate students (mostly doctoral students) in 2019, down from 19% in 2010.^{​See data and sources in the Indicators 2022 report, “Academic Research and Development.” Because graduate students receive funding from a variety of sources, a decline in the percentage of S&E graduate students who receive federal funding does not equate to a decline in overall financial support for graduate students.} Numbers of full-time doctoral students varied across fields with the highest concentration of federally funded students in engineering and in biological and biomedical sciences (Figure 21).^{​Detailed notes for Figure 21 are available in Figure URD-24 in the Indicators 2022 report, “Academic Research and Development.”} Although NSF supported substantial numbers of students across a range of fields, over 60% of those supported by the National Institutes of Health were in biological and biomedical sciences, 60% who were funded by the Department of Defense (DOD) studied engineering, and more than 90% who were funded by the Department of Energy (DOE) were in earth and physical sciences or engineering.

In 2019, the DOD received 40% of the federal R&D budget and directed the bulk of that budget toward experimental development. Most of the remaining 60% of the federal R&D budget went to the Department of Health and Human Services (HHS), DOE, National Aeronautics and Space Administration (NASA), NSF, and the Department of Agriculture (USDA). Consistent with the different missions of the departments and agencies, NASA distributes its budget evenly, with 60% going to basic and applied research and 40% to experimental development, whereas HHS, DOE, NSF, and USDA focus primarily on basic and applied research.