Executive Summary

Key takeaways:

  • The U.S. research and experimental development (R&D) performance reached $667 billion in 2019 and an estimated $708 billion in 2020, reflecting increases in all sectors (business, higher education, the federal government, nonprofit organizations, and others) but mostly in the business sector.
  • Adjusted for inflation, growth of the U.S. R&D total averaged 3.8% annually from 2010 to 2019, well above the 2.2% growth of U.S. gross domestic product (GDP) over the same period.
  • The U.S. national R&D intensity (R&D-to-GDP ratio)—a key measure of R&D investment—has also increased, from the highs of recent years of 2.79% in 2016 and 2.95% in 2018 to 3.12% in 2019 and then to an estimated 3.39% in 2020.
  • The United States remains the global leader in R&D performance (28% of global R&D in 2019), followed by China ($526 billion, or 22% of global R&D). China’s current average annual rate of increase (2010–19), however, is almost double the U.S. rate.
  • Global R&D performance is concentrated in a few countries. The United States, China, Japan, Germany, South Korea, France, India, and the United Kingdom jointly accounted for about 75% of global R&D performance in 2019. The global concentration of R&D performance continues to shift from the United States and Europe to East-Southeast and South Asia.
  • Businesses are the predominant performers (75% in 2019) and funders (72%) of U.S. R&D. This sector performs most of U.S. R&D classified as experimental development, more than half of applied research, and a sizable (and increasing) share of basic research (32% in 2019).
  • Higher education institutions (12% in 2019) and the federal government (9%) are the second- and third-largest performers of U.S. R&D. Higher education institutions are the largest performers of basic research. Both have experienced declines in their shares of the U.S. performance total since 2010.
  • The federal government continues to be an important source of support for all R&D-performing sectors and remains the largest funder of basic research. The share of federally funded R&D, however, has been on a path of decline since 2010 (from 31% in 2010 to 20% in 2019), and the share of federally funded basic research has also consistently declined (from 52% in 2010 to 41% in 2019). These declines stem, in part, naturally from the large increases in R&D funding and performance by the business sector in recent years. This trend, however, indicates that federal funding has not kept up with the increases in other sectors.

Scientific discoveries, new technologies, and inventive applications of cutting-edge knowledge are essential for success in the competitive global economy and in addressing challenges and opportunities in diverse societal areas such as health, environment, and national security. Consequently, the strength of a country’s overall R&D enterprise—both the public and private sectors—is an important marker of current and future national economic advantage and of the prospects for societal improvements at the national and global levels.

The U.S. R&D enterprise comprises the R&D efforts of various sectors, including businesses, the federal government, nonfederal governments, higher education institutions, and nonprofit organizations. U.S. R&D performance totaled $667 billion in 2019 and an estimated $708 billion in 2020, compared to $407 billion in 2010. (All amounts are reported in current dollars, unless otherwise noted.) These most recent increases in the performance total ($50 billion or more each year in 2018 and 2019) are much larger than the average annual increases over the 2010–16 period ($19 billion each year). The main driver of these sizable increases is business R&D performance. Adjusted for inflation, average annual growth in the U.S. R&D total has outpaced average GDP growth for nearly two decades—3.8% compared to 2.2% average growth in GDP from 2010 to 2019, and 2.1% compared to 1.8% growth in GDP in the prior decade. As a result, the national R&D intensity has been on a rising path, from 2.79% in 2016 (a high point at the time) and 2.95% in 2018 to 3.12% in 2019 (the first time the U.S. exceeded 3.0%), and it is estimated to be 3.39% in 2020.

Globally, R&D expenditures have risen substantially since 2000 to an estimated $2.4 trillion in 2019—a more than threefold increase from $725 billion in 2000 (not adjusted for inflation). This expansion reflects the increasing importance of R&D in contributing to economic growth and competition as well as the significant role of R&D in addressing national and global challenges. Global R&D performance, however, is concentrated in a few countries. The United States leads the world’s nations in R&D performance with a 28% global share in 2019, followed by China (22%). Together with Japan (7%), Germany (6%), South Korea (4%), France (3%), India (2%), and the United Kingdom (2%), these top eight R&D-performing countries account for about 75% of the global total R&D. Other countries with sizable R&D performance are (in decreasing order) Russia, Taiwan, Italy, Brazil, Canada, Spain, Turkey, the Netherlands, and Australia.

In this report, a larger gap is evident between the U.S. and China R&D totals than reported in earlier editions. Science and Engineering Indicators 2020 puts China’s R&D at 90% (and increasing) of the U.S. level in 2017. Updated data in this report show China’s 2019 R&D total at 79% of the U.S. level, and the 2017 comparison has been revised downward to 76%. These changes resulted primarily from a comprehensive update, released in May 2020, of the purchasing power parity ratios used to convert a country’s R&D expenditures to U.S. dollar expenditures as a common measure across all countries. These latest revisions had a more sizable effect on China than on other major R&D-performing countries.

Even so, the average annual rate of increase in China’s R&D total (10.6% from 2010–19) continues to greatly exceed that of the United States (5.6%) and the European Union (EU-27) (5.6%). China’s notable rise in R&D performance and the strong R&D performance by other Asian countries—Japan, South Korea, India, and Taiwan—are the drivers behind the sustained rise of R&D performance in East-Southeast and South Asia. The combined R&D performance across these Asian regions rose from 25% to 39% of the global total from 2000 to 2019, while the U.S. and EU-27 shares declined from 37% to 28% and from 22% to 18%, respectively. These broad trends in the global geography of R&D have been noted in earlier editions of this report and are reinforced by the latest data, indicating that the prospects for a further global shift remain strong.

In the United States, the business sector is the predominant force behind the R&D enterprise (75% of performance and 72% of funding of U.S. R&D in 2019). Since 2010, about 80% or more of the increase in the U.S. total R&D each year is attributable to businesses. Consequently, annual changes in business R&D greatly influence the overall U.S. R&D total. Business R&D performance is concentrated in five industries: chemicals manufacturing; computer and electronic products; transportation equipment; information services; and professional, scientific, and technical services. Businesses perform most of the R&D classified as experimental development (90% in 2019) and more than half of the applied research (58%). The business share of basic research has been increasing significantly in recent years (from 21% in 2010 to 32% in 2019).

The other sectors also make important contributions to the U.S. R&D enterprise but represent a fraction of the spending by the business sector. Higher education institutions and the federal government are the second- and third-largest performers of U.S. R&D. In 2019, higher education institutions performed 12% of the U.S. R&D total, over 60% of which was basic research. That same year, federal intramural R&D—through federal agencies and federally funded R&D centers—accounted for about 9% of the U.S. total R&D. Both, however, have experienced declines in their shares since 2010. (Higher education institutions performed 14%, and the federal government 13%, of U.S. total R&D in 2010.)

The federal government plays a larger role in R&D funding compared to performance and supports all sectors, particularly higher education institutions and federal intramural R&D. The federal government remains the largest source of support for the nation’s basic research, although the share has dropped from 52% in 2010 to 41% in 2019. The federal government is also a sizable supporter of the nation’s applied research—32% in 2019, compared to 56% of the support from the business sector. Despite its widespread role of funding, the share of federally funded R&D has been in decline for most of the past decade. In 2010, federal funding supported 31% of the total of U.S. R&D performance but dropped to 20% in 2019—and is estimated to drop further in 2020. This decline is, in part, a consequence of the large increases in R&D funding from the business sector in recent years, indicating that federal funding has not kept up with increases in other sectors.