Businesses Reported an 11.8% Increase to Nearly a Half Trillion Dollars for U.S. R&D Performance During 2019

NSF 22-303

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November 18, 2021

Businesses spent $493 billion on research and development performance in the United States in 2019, an 11.8% increase from 2018 (table 1). Funding from the companies’ own sources was $429 billion in 2019, a 13.5% increase from 2018. Funding from other sources was $64 billion, about the same as in 2018. This is the second year that there has been double-digit annual growth in the level of national domestic R&D performance, which is especially notable because of the low rate of inflation during the period 2017–19. This robust rate of growth may continue based on the large increase in the amount that companies projected they would spend from their own funds for domestic R&D performance during 2020 despite the COVID-19 pandemic. Data for this InfoBrief are from the 2019 Business Enterprise Research and Development Survey (BERD), developed and cosponsored by the National Center for Science and Engineering Statistics (NCSES) within the National Science Foundation (NSF) and by the U.S. Census Bureau, which collected and tabulated data for the survey.

R&D Performance, by Type of R&D, Industry Sector, and Source of Funding

In 2019, of the $493 billion that companies spent on R&D, $32 billion (7%) was spent on basic research, $74 billion (15%) on applied research, and $387 billion (78%) on development. The distribution was similar to the 2018 distribution (7%, 15%, and 79%, respectively) (table 1). In 2019, companies in manufacturing industries performed $286 billion (58%) of domestic R&D, defined as R&D performed in the 50 states and Washington, DC (table 2). Most of the funding came from these companies’ own funds (87%). Companies in nonmanufacturing industries performed $207 billion of domestic R&D (42% of total domestic R&D performance), 87% of which was paid for from companies’ own funds.

The U.S. federal government was a large source of external funding for R&D (also referred to as R&D paid for by others) across all industries. Of the $64 billion paid for by others, the federal government accounted for $22 billion, most of which came from the Department of Defense ($15 billion). (Data are available in the full set of data tables.) Ninety-one percent of federal government funding went toward aerospace products and parts (North American Industry Classification System [NAICS] code 3364) ($8 billion), computer and electronic products (NAICS 334) ($6 billion), and professional, scientific, and technical services (NAICS 54) ($6 billion). Other large sources of external funding were other U.S. companies ($21 billion) and foreign companies—including foreign parent companies of U.S. subsidiaries ($20 billion). The distribution of this external nonfederal R&D funding was spread more broadly across multiple industries (table 2). (See “Survey Information and Data Availability” for information on the availability of data tables with full industry detail.)

Funds spent for business R&D performed in the United States, by type of R&D, source of funds, and size of company: 2017–19

(Millions of dollars)

i = more than 50% of the estimate is a combination of imputation and reweighting to account for nonresponse.

a Domestic R&D performance is the cost of R&D paid for and performed by the respondent company and paid for by others outside of the company and performed by the respondent company.
b R&D comprises creative and systematic work undertaken in order to increase the stock of knowledge and to devise new applications of available knowledge. This includes (1) activities aimed at acquiring new knowledge or understanding without specific immediate commercial applications or uses (basic research), (2) activities aimed at solving a specific problem or meeting a specific commercial objective (applied research), and (3) systematic work, drawing on research and practical experience and resulting in additional knowledge, which is directed to producing new processes or to improving existing products—goods or services—or processes (development).
c Includes foreign subsidiaries of U.S. companies.
d Includes companies located inside and outside the United States; U.S. state government agencies and laboratories; U.S. universities, colleges, and academic researchers; and all other organizations located inside and outside the United States.
e Includes only companies with 10 or more domestic employees.

Note(s):

Detail may not add to total because of rounding. Beginning in survey year 2018, companies that performed or funded less than $50,000 of R&D were excluded from tabulation. These companies in aggregate represented a very small share of total R&D expenditures in prior years. Had the companies under this threshold been included in the 2018 estimates, they would have contributed approximately $90 million to overall R&D expenditures. Excludes data for federally funded research and development centers.

Source(s):

National Center for Science and Engineering Statistics and Census Bureau, Business Enterprise Research and Development Survey.

Funds spent for business R&D performed in the United States, by source of funds, selected industry, and company size: 2019

(Millions of dollars)

D = suppressed to avoid disclosure of confidential information; i = more than 50% of the estimate is a combination of imputation and reweighting to account for nonresponse.

NAICS = North American Industry Classification System; nec = not elsewhere classified.

a All R&D is the cost of R&D paid for and performed by the respondent company and paid for by others outside of the company and performed by the respondent company.
b Includes foreign subsidiaries of U.S. companies ($27.1 billion).
c Includes foreign parent companies of U.S. subsidiaries ($17.6 billion) and unaffiliated companies ($2.0 billion). Excludes funds from foreign subsidiaries to U.S. companies paid for through intercompany transactions ($27.1 billion).
d Includes U.S. state government agencies and laboratories (< $0.2 billion); U.S. universities, colleges, and academic researchers ($0.05 billion); and all other organizations located inside (< $0.8 billion) and outside the United States (< $0.05 billion).
e Includes only companies with 10 or more domestic employees.

Note(s):

Detail may not add to total because of rounding. Beginning in survey year 2018, companies that performed or funded less than $50,000 of R&D were excluded from tabulation. These companies in aggregate represented a very small share of total R&D expenditures in prior years. Had the companies under this threshold been included in the 2018 estimates, they would have contributed approximately $90 million to overall R&D expenditures. Industry classification was based on the dominant business code for domestic R&D performance, where available. For companies that did not report business codes, the classification used for sampling was assigned. Excludes data for federally funded research and development centers. An estimate range may be displayed in place of a single estimate to avoid disclosing operations of individual companies.

Source(s):

National Center for Science and Engineering Statistics and Census Bureau, Business Enterprise Research and Development Survey, 2019.

Sales, R&D Intensity, and Employment of Companies That Performed or Funded R&D

U.S. companies that performed or funded R&D reported domestic net sales of $11 trillion in 2019 (table 3). For all industries, the R&D intensity was 4.4%; for manufacturers, 5.0%; and for nonmanufacturers, 3.8%. Manufacturing industries with high levels of R&D intensity in 2019 were pharmaceuticals and medicines (NAICS 3254) (16.3%), computer and electronic products (NAICS 334) (12.8%), and aerospace products and parts (NAICS 3364) (6.5%). Among the nonmanufacturing industries, industries with high levels of R&D intensity were scientific research and development services (NAICS 5417) (26.7%), software publishers (NAICS 5112) (17.7%), and computer systems design and related services (NAICS 5415) (10.7%).

Sales, R&D, R&D intensity, and employment for companies that performed or funded business R&D in the United States, by selected industry and company size: 2019

(Millions of dollars, percent R&D intensity, and thousands of employees)

i = more than 50% of the estimate is a combination of imputation and reweighting to account for nonresponse.

NAICS = North American Industry Classification System; nec = not elsewhere classified.

a Dollar values are for goods sold or services rendered by R&D-performing or R&D-funding companies located in the United States to customers outside of the company, including the U.S. federal government, foreign customers, and the company's foreign subsidiaries. Included are revenues from a company’s foreign operations and subsidiaries and from discontinued operations. If a respondent company is owned by a foreign parent company, sales to the parent company and to affiliates not owned by the respondent company are included. Excluded are intracompany transfers, returns, allowances, freight charges, and excise, sales, and other revenue-based taxes.
b All R&D is the cost of R&D paid for and performed by the respondent company and paid for by others outside of the company and performed by the respondent company.
c R&D intensity is the cost of domestic R&D paid for by the respondent company and others outside of the company and performed by the company divided by domestic net sales of companies that performed or funded R&D.
d Data recorded on 12 March represent employment figures for the year.
e Includes researchers, R&D managers, technicians, clerical staff, and others assigned to R&D groups.
f Includes only companies with 10 or more domestic employees.

Note(s):

Detail may not add to total because of rounding. Beginning in survey year 2018, companies that performed or funded less than $50,000 of R&D were excluded from tabulation. These companies in aggregate represented a very small share of total R&D expenditures in prior years. Had the companies under this threshold been included in the 2018 estimates, they would have contributed approximately $90 million to overall R&D expenditures. Estimates of aggregate sales and total domestic employment would have been similarly affected. Industry classification was based on the dominant business code for domestic R&D performance, where available. For companies that did not report business codes, the classification used for sampling was assigned. Excludes data for federally funded research and development centers.

Source(s):

National Center for Science and Engineering Statistics and Census Bureau, Business Enterprise Research and Development Survey, 2019.

Businesses that performed or funded R&D employed 21.2 million people in the United States in 2019 (table 3). Approximately 1.8 million (9%) were business R&D employees. Not surprisingly, industries with high levels of R&D intensity also had high numbers of R&D employees: computer and electronic products (NAICS 334) (264,000 R&D employees), pharmaceuticals and medicines (NAICS 3254) (139,000), and aerospace products and parts (NAICS 3364) (61,000). Nonmanufacturing industry groups with high numbers of R&D employees were software publishers (NAICS 5112) (109,000 R&D employees), and computer systems design and related services (NAICS 5415) (99,000), and scientific R&D services (NAICS 5417) (98,000).

Of the 1.8 million people working on R&D in companies that performed or funded business R&D in 2019, 1.3 million were men, and 0.5 million were women; 54% of the men and 49% of the women worked in manufacturing industries (table 4). Researchers—that is, scientists, engineers, and their managers—accounted for 1.2 million of the 1.8 million R&D workers (67%), and 130,000 (11%) of these held PhD degrees. R&D technicians numbered 426,000, and there were 174,000 grouped as other supporting staff.

Domestic employment, R&D employment by sex and work activity, R&D researchers by level of education, and full-time equivalent researcher employment for companies that performed or funded business R&D in the United States, by industrial sector: 2019

(Thousands of employees)

i = more than 50% of the estimate is a combination of imputation and reweighting to account for nonresponse.

NAICS = North American Industry Classification System.

a Data recorded on 12 March represent employment figures for the year.
b Includes R&D scientists and engineers and their managers.
c Includes clerical staff and others assigned to R&D groups.
d The number of persons employed who were assigned full time to R&D, plus a prorated number of employees who worked on R&D only part of the time.

Note(s):

Detail may not add to total because of rounding. Beginning in survey year 2018, statistics are representative of companies located in the United States that performed or funded $50,000 or more of R&D. These changes have affected the comparability of these estimates with estimates published for years prior to 2018. Industry classification was based on the dominant business code for domestic R&D performance, where available. For companies that did not report business codes, the classification used for sampling was assigned. Excludes data for federally funded research and development centers. Also available in the full set of detailed statistical tables are statistics on domestic R&D employment, by state; foreign R&D personnel headcounts, by country; and headcounts of leased (i.e., external) R&D personnel, by function.

Source(s):

National Center for Science and Engineering Statistics and Census Bureau, Business Enterprise Research and Development Survey, 2019.

The number of full-time equivalent (FTE) persons employed who were assigned full time to R&D plus a prorated number of employees who work on R&D only part of the time was 1.7 million, of which 1.1 million FTE employees were R&D researchers.

R&D Performance, by Company Size

Small- and medium-sized companies (10–249 domestic employees) performed 10% of the nation’s total business R&D in 2019 (table 1). For these companies as a group, the R&D-to-sales ratio (or R&D intensity) was 10% (table 1 and table 3). These companies accounted for 5% of sales and employed 7% of the 21.2 million employees who worked for R&D-performing or R&D-funding companies. They employed 18% of the 1.8 million employees engaged in business R&D in the United States.

Large companies with 250–24,999 domestic employees performed 52% of the nation’s total business R&D in 2019, and their R&D intensity was 4.8%. They accounted for 48% of sales, employed 46% of those who worked for R&D-performing or R&D-funding companies, and employed 52% of R&D employees in the United States.

The largest companies (25,000 or more domestic employees) performed 37% of the nation’s total business R&D in 2019, and their R&D intensity was 3.5%. They accounted for 47% of sales, employed 48% of those who worked for R&D-performing or R&D-funding companies, and employed 30% of business R&D employees in the United States.

R&D Performance, by State

Business R&D is concentrated in a relatively small number of states, and the state location where large amounts of business R&D is performed remains stable from year to year. In 2019, of the $493 billion of R&D performed in the United States, businesses in California alone accounted for 35% (table 5); they were responsible for 33% in 2018. Other states with large amounts of business R&D were Washington (8% of the national total in 2019; 7% in 2018), Massachusetts (6% in both years), Texas (5% in both years), Michigan (4%; 5%), New Jersey (4%; 5%), New York (4% in both years), Pennsylvania (3% in both years), and Illinois (3% in both years). In California, Illinois, Massachusetts, New Jersey, New York, and Pennsylvania, pharmaceuticals and medicines (NAICS 3254) was the largest R&D-performing industry group. Motor vehicles, bodies, trailers, and parts (NAICS 3361–63) had the highest share in Michigan; computer system design and related services (NAICS 5415) was largest in Texas, and software publishing (NAICS 5112) was highest in Washington.

Funds spent for business R&D performed in the United States, by state and source of funds: 2019

(Millions of dollars)

i = more than 50% of the estimate is a combination of imputation and reweighting to account for nonresponse.

a All R&D is the cost of domestic R&D paid for by the respondent company and others outside of the company and performed by the respondent company.
b Includes data reported that were not allocated to a specific state by multi-establishment companies. For single-establishment companies, data reported were allocated to the state in the address used to mail the survey form.

Note(s):

Beginning in survey year 2018, companies that performed or funded less than $50,000 of R&D were excluded from tabulation. These companies in aggregate represented a very small share of total R&D expenditures in prior years. Had the companies under this threshold been included in the 2018 estimates, they would have contributed approximately $90 million to overall R&D expenditures. Excludes data for federally funded research and development centers.

Source(s):

National Center for Science and Engineering Statistics and Census Bureau, Business Enterprise Research and Development Survey, 2019.

Survey Information and Data Availability

The sample for BERD was selected to represent all for-profit, nonfarm companies that were publicly or privately held, had 10 or more employees in the United States, and performed or funded R&D either domestically or abroad. Because the statistics from the survey are based on a sample, they are subject to both sampling and nonsampling errors. (See “Technical Notes” in the detailed statistical tables reports at https://www.nsf.gov/statistics/srvybrds/.)

Beginning in survey year 2018, companies that performed or funded less than $50,000 of R&D were excluded from tabulation. In prior years, companies that performed or funded any amount of R&D were tabulated. This change has affected the comparability of these estimates to those published in prior years. These companies in aggregate represented a very small share of total R&D expenditures in prior years, but they accounted for a larger share of the company count estimates. Had the companies under this threshold been included in the 2019 estimates, they would have contributed approximately $90 million to overall R&D expenditures and would have added around 7,500 to the estimated number of U.S. companies with R&D expenditures. (Company counts are available in the full set of data tables.) It is assumed that this group of companies would have contributed similar levels of R&D and number of companies to the 2019 estimates.

In this InfoBrief, money amounts are expressed in current U.S. dollars and are not adjusted for inflation. A company is defined as a business organization located in the United States, either U.S. owned or a U.S. affiliate of a foreign parent company, of one or more establishments under common ownership or control.

For 2018, a total of 45,806 companies were sampled to represent the population of 1,115,950 companies; for 2019, a total of 46,000 companies were sampled, representing 1,125,000 companies. The actual numbers of reporting units in the sample that remained within the scope of the survey between sample selection and tabulation were 42,426 for 2018 and 42,500 for 2019. These lower counts represent the number of reporting units that were determined to be within the scope of the survey after all data collected were processed. Reasons for the reduced counts include mergers, acquisitions, and instances where companies had fewer than 10 employees in the United States or had gone out of business in the interim. Of these in-scope reporting units, 73.0% were considered to have met the criteria for a complete response to the 2018 survey; 69.0% fulfilled the 2019 complete response criteria. Among the units with account managers—that is, the top R&D companies based on prior year reported or imputed data that were assigned an analyst to act as a single point of contact for all communications—80.9% met the 2018 complete response criteria, and 80.0% met the 2019 criteria. Coverage of the previous year’s known positive R&D stratum for 2018 was 85.2%; the coverage rate for 2019 was 83.0%. Industry classification was based on the dominant business activity for domestic R&D performance, where available. For reporting units that did not report business activity codes for R&D, the classification used for sampling was assigned.

The estimation methodology for BERD state estimates takes the form of a hybrid estimator, combining the unweighted reported amount, by state, with a weighted amount apportioned (or raked) across states with relevant industrial activity. The hybrid estimator smooths the estimate over states with R&D activity, by industry, and accounts for real observed change within a state. Table 5 shows the results of this estimation methodology for state estimates.

The full set of data tables from this survey will be available in the report Business Enterprise Research and Development: 2019. Individual data tables and tables with relative standard errors and imputation rates from the 2019 survey are available from the author in advance of the full report. Statistics for new items added to the survey for 2019 are available in the full set of data tables, including whether or not companies filed for a state tax credit for research activities, the amount spent on artificial intelligence R&D, and counts of temporary and leased employees working on R&D.

Notes

1See Wolfe R; National Center for Science and Engineering Statistics (NCSES). 2020. U.S. Businesses Reported $441 Billion for R&D Performance in the United States During 2018, a 10.2% Increase from 2017. InfoBrief NSF 20-316. Alexandria, VA: National Science Foundation. Available at http://ncses.nsf.gov/pubs/nsf20316.

2When responding to the 2019 survey, companies projected they would spend $461 billion of their own funds for R&D performance in the United States during 2020. For more information about recent trends in national R&D, see Boroush M; National Center for Science and Engineering Statistics (NCSES). 2021. U.S. R&D Increased by $51 Billion, to $606 Billion, in 2018; Estimate for 2019 Indicates a Further Rise to $656 Billion. InfoBrief NSF 21-324. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf21324/.

3NCSES and its predecessor agencies has cosponsored an annual business R&D survey since 1953. The Survey of Industrial Research and Development (SIRD) collected data for 1953–2007, and its successor, the Business R&D and Innovation Survey (BRDIS), collected data for 2008–16. Beginning with 2017, the collection of innovation data was moved to the Annual Business Survey (ABS), another survey cosponsored with the U.S. Census Bureau, and BRDIS became the Business Research and Development Survey (BRDS). Beginning with 2019, the business R&D data collection reported here was renamed the Business Enterprise Research and Development Survey (BERD) for international comparability.

4Determining the amount of domestic net sales and operating revenues was left to the reporting company. However, guidance was given to include revenues from foreign operations and subsidiaries and from discontinued operations and to exclude intracompany transfers, returns, allowances, freight charges, and excise, sales, and other revenue-based taxes.

5Company size classifications changed for 2017 and subsequent years in response to the revised Frascati Manual; see Organisation for Economic Co-operation and Development (OECD). 2015. Frascati Manual: Guidelines for Collecting and Reporting Data on Research and Experimental Development. The Measurement of Scientific, Technological, and Innovation Activities. Paris: OECD Publishing. Available at https://www.oecd-ilibrary.org/science-and-technology/frascati-manual-2015_9789264239012-en. Anderson and Kindlon (2019) provide estimates of R&D performance and employment using these new classifications over 2008–15. The authors also compare the trends to those observed in SIRD for the time prior to 2008. The ABS, also cosponsored by NCSES and the Census Bureau, collects R&D data from companies with fewer than 10 employees for 2017 and beyond. See Anderson G, Kindlon A; National Center for Science and Engineering Statistics (NCSES). 2019. Indicators of R&D in Small Businesses: Data from the 200915 Business R&D and Innovation Survey. InfoBrief NSF 19-316. Alexandria, VA: National Science Foundation. Available at https://www.nsf.gov/statistics/2019/nsf19316/.

6Employment statistics in this InfoBrief are head counts unless they are designated as FTE estimates. R&D employees include researchers (defined as R&D scientists and engineers and their managers) and the technicians, technologists, and support staff members who work on R&D or who provide direct support to R&D activities.

7In addition to statistics for all states and for all states by industry, below-state level statistics are available in the full set of data tables and in other InfoBriefs; see Shackelford B, Wolfe R; National Center for Science and Engineering Statistics (NCSES). 2019. Over Half of U.S. Business R&D Performed in 10 Metropolitan Areas in 2015. InfoBrief NSF 19-322. Alexandria, VA: National Science Foundation. Available at https://www.nsf.gov/statistics/2019/nsf19322/. Also see Shackelford B, Wolfe R; National Center for Science and Engineering Statistics (NCSES). 2020. Businesses Performed 60% of Their U.S. R&D in 10 Metropolitan Areas in 2018. InfoBrief NSF 21-331. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf21331.

Suggested Citation

Wolfe R; National Center for Science and Engineering Statistics (NCSES). 2021. U.S. Businesses Reported Nearly a Half Trillion Dollars for R&D Performance in the United States During 2019, an 11.8% Increase from 2018. InfoBrief NSF 22-303. Alexandria, VA: National Science Foundation. Available at http://ncses.nsf.gov/pubs/nsf22303.

Contact Us

Report Author

Raymond M. Wolfe
Survey Manager
Research and Development Statistics Program, NCSES
Tel: (703) 292-7789
E-mail: rwolfe@nsf.gov

NCSES

National Center for Science and Engineering Statistics
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National Science Foundation
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