Year-over-year increases in U.S. total R&D expenditures averaged $17.6 billion (4.0% Compound Average Growth Rate [CAGR]) over the 2010–15 period. Subsequent yearly increases have been more notable. The three years leading to 2020 saw increases of $50.6 billion (2017–18), $61.8 billion (2018–19) and $50.8 billion (2019–20), averaging a 7.7% rate for 2015–20. For 2021, business R&D and total R&D performance are estimated to increase by $69.2 and $74.9 billion, respectively (table 2).

Adjusting for inflation,^{​In this report, dollars adjusted for inflation (i.e., constant dollars) are based on the gross domestic product (GDP) implicit price deflator (currently in 2012 dollars) as published by the Bureau of Economic Analysis (BEA) at https://www.bea.gov/iTable/index_nipa.cfm. Note that GDP deflators are calculated on an economy-wide scale and do not explicitly focus on R&D.} growth in U.S. total R&D averaged 4.1% annually over the 2010–20 period. By comparison, average annual growth of U.S. total R&D in the prior decade (2000–10) was lower at 2.1%. The estimate for 2021 shows inflation-adjusted R&D growing at 5.7% from the 2020 level. Comparisons in constant dollars demonstrate the effect of recent increased inflation^{​Inflation measured by the Consumer Price Index (CPI) for 2014–20 ranged between 0.1% and 2.4%. In 2021, inflation was 4.7% (https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-price-index-1913-).} on real R&D performance. In constant dollar terms, business R&D performance is estimated to increase by $37.7 billion over the 2020 level, while performance in the government and higher education sectors is estimated to decline (table 2, figure 1).

The ratio of total national R&D expenditures to gross domestic product (GDP) (i.e., R&D intensity) is widely used by national statistical offices and other policy analysts as an overall gauge of the relative priority of a nation’s R&D effort among multiple investment and consumption options. In this edition of the National Patterns series, the ratio of U.S. R&D to GDP was 3.40% in 2020 and is estimated to remain at 3.40% in 2021 (figure 2). Prior to 2019 when R&D intensity reached 3.12%, the highest U.S. ratios recorded were 2.79% in 1964, 2.78% in 2009, 2.79% again in 2016, 2.84% in 2017, and 2.94% in 2018.^{​Due to sample variability in the data for the business R&D component, the calculated R&D-to-GDP ratios for 1964, 2009, and 2017 are not significantly different from one another at a 90% confidence level.} Reaching an R&D intensity level above 3.0% is widely regarded in the R&D policy community as a notable national achievement. U.S. R&D to GDP exceeded the Organisation for Economic Co-operation and Development average (2.67%). The U.S. ratio also exceeded that of other key R&D performing nations, such as China (2.40%), France (2.35%), and the United Kingdom (1.71% [​2019]). Israel (5.44%) and South Korea (4.81%) had higher ratios than the United States, whereas Germany (3.13%) and Japan (3.27%) had similar ratios to the United States.^{​See Organisation for Economic Co-Operation and Development, Main Science and Technology Indicators, 2022, Paris. Available at https://www.oecd.org/sti/msti.htm.}

The extent to which the rising ratio of U.S. R&D to GDP is attributable to increased business funding of R&D is clear. In the decade leading up to 2020, business funding grew at a 7.7% (CAGR) rate in 2010–20, while federal funding grew at a 1.5% rate and GDP grew at a 3.4% rate. Notably, the higher education sector’s funding of R&D grew at 6.6% over the same period.

Federally funded R&D as a percentage of GDP peaked in the 1960s at 1.86% in 1964 and generally has declined since. Even with the infusion of the American Recovery and Reinvestment Act (ARRA) funds, federally funded R&D did not rise higher than 0.87% of GDP in 2009. For the latter half of the past decade, federal funding for R&D remained at or below 0.70% of GDP. By contrast, business R&D funding in 2010 was 1.65% of GDP and increased to 2.47% by 2020.

The business sector is by far the largest performer of U.S. R&D. In 2020, domestically performed business R&D accounted for $543.2 billion, or 76% of the $717.0 billion national R&D total (table 1 and table 3). The business sector’s predominance in national R&D performance has long been the case, with its annual share ranging between 69% and 76% since 2000.

R&D performed in the domestic United States by businesses occurs widely in manufacturing and nonmanufacturing. In 2020, companies in manufacturing industries performed 57% of business R&D. Among nonmanufacturing industries, information (including software publishing) and professional and scientific services accounted for 80% of the remainder.^{​Additional statistics on R&D performed in the United States by the business sector are available at https://www.nsf.gov/statistics/srvyberd/. See also Wolfe R; National Center for Science and Engineering Statistics (NCSES). 2022. Businesses Spent Over a Half Trillion Dollars for R&D Performance in the United States During 2020, a 9.1% Increase Over 2019. NSF 22-343. Alexandria, VA: National Science Foundation. Available at http://ncses.nsf.gov/pubs/nsf22343.}

R&D performed in the United States by the higher education sector totaled $80.8 billion in 2020, or 11% of U.S. total R&D (table 1 and table 3).^{​The data on higher education R&D reported by National Patterns differ from the underlying survey data in several respects. First, National Patterns translates the Higher Education R&D (HERD) Survey’s primary data in academic fiscal years to calendar year equivalents. Second, National Patterns reports higher education R&D expenditures that are adjusted to remove the double-counting of pass-through funding that are included in HERD Survey source data. For further details on this topic, see “Technical Notes” in the companion report National Center for Science and Engineering Statistics (NCSES). 2023. National Patterns of R&D Resources: 2020–21 Data Update. NSF 23-321. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf23321.} In the period 2000–20, the higher education share of U.S. total R&D ranged between 11% and 14%.

Adjusted for inflation, growth in this sector’s R&D performance averaged 1.6% annually during 2010–20, well behind U.S. total R&D (4.1%). For the preceding decade, growth in higher education R&D performance was a robust 4.6%. The annual percent change in 2010–20 varied; there was low growth or contraction in 2010–14 with a return to modest increases in 2015–20. The estimate for 2021 indicates a slight contraction (-0.5%) when measured in constant dollars as inflation outpaces a slight increase in the level of higher education R&D performance (table 2).

The federal government performed $64.2 billion of the U.S. R&D total in 2020 (table 1 and table 3). This amount included $40.4 billion (6% of the U.S. total) performed by the intramural R&D facilities of federal agencies and $23.9 billion (3%) performed by the 43^{​The number of FFRDCs reflects that NCSES was informed in June 2021 that the Green Bank Observatory separated from the National Radio Astronomy Observatory in October 2016 to become an independent institution; both retained FFRDC status. The Master Government List of FFRDCs was subsequently updated to reflect this change.} federally funded research and development centers (FFRDCs). The federal share of U.S. R&D performance ranged between 11% and 13% in 2000–10. Subsequently, the federal share declines to 8% in 2021. Much like recent R&D trends in the education sector, a modest 1.5% year-over-year increase in nominal federal R&D performance estimated for 2021 results in a 2.9% decline when measured in constant dollars (table 2).

State agency intramural R&D performance in 2020 totaled $683 million—a small share (about 0.1%) of the U.S. total (table 1 and table 3). This includes all 50 states and the District of Columbia.

R&D performed in the United States by nonprofit organizations (excluding higher education institutions and federal and nonfederal government) was $28.0 billion in 2020, based on a new annual survey of this sector (table 1 and table 3).^{​The most recent data on nonprofit organization R&D come from the FY 2020 Nonprofit Research Activities (NPRA) module of the ABS and the 2016 NPRA Survey. Data for nonprofit organization R&D, 2017–19 are estimated based on the 2016 and 2020 data. The availability of 2020 survey data allowed for improved measurement of nonprofit R&D performance over 2017–21 period, resulting in minor changes to previously published estimates. For 1998–2015, data for nonprofit organization R&D funded by the federal government come from the NCSES annual Survey of Federal Funds for Research and Development; data for that funded by businesses and by the nonprofit sector itself are estimated, based on parameters from the 1996–97 Survey of Research and Development Funding and Performance by Nonprofit Organizations.} This was 4% of U.S. total R&D, a share that has changed little since the early 2000s.

In 2020, basic research activities in all sectors accounted for $111.9 billion, or 16% of U.S. total R&D expenditures (table 4). Applied research was $133.3 billion, or 19% of the total. Most of the total of U.S. R&D expenditures was experimental development at $471.7 billion, or 66%.

The higher education sector accounted for just under half (45%) of basic research performance in 2020 (table 4). The business sector was the second-largest basic research performer (33%). Business was the majority performer (59%) of the $133.3 billion of applied research in 2020. Higher education was second at 17%; federal intramural performers plus FFRDCs accounted for 16% of the applied research total. Business continued to dominate development performance, accounting for 91% of the U.S. total $471.7 billion of that category in 2020.

Federal funding accounted for 41% of the $111.9 billion of basic research in 2020 (table 3). But federal funds were less prominent for applied research (33% of $133.3 billion) and experimental development (12% of $471.7 billion). The business sector provided the greatest share of funding for applied research (56%) and the predominant share for experimental development (86%). Interestingly, it also accounted for a sizable share (34%) of funding for basic research.

Over the 2010–20 period, the split of U.S. total R&D expenditures among the three types of R&D did not largely change. The share of applied research ranged between 19% and 21% throughout the period (table 4). Similarly, except for 2010 (possibly impacted by ARRA funds), the share of basic research remained in the 16%–17% range. Experimental development’s share was 62% in 2010 and remained at or below 66% through 2020. Adjusting for inflation, about $19 billion more in basic research was performed in 2020 than in 2010, $35 billion more in applied research, and $153 billion more in experimental development.

The shifting in the relative roles of performers and funders by sector—particularly among business, government, and higher education—are of great interest (table 4, figure 3). In 2010, businesses performed 21% of U.S. basic research, but the sector’s share of basic research rose to 33% by 2020. The share of U.S. basic research performed by higher education institutions—historically, the nation’s largest basic research performer—declined from 51% in 2010 to 45% in 2020, although in absolute terms higher education basic research performance increased from $39 billion to $51 billion during this period. Further, businesses funded 23% of U.S. basic research in 2010, rising to 34% in 2020 (figure 3). Over the same period, the federally funded share declined from 52% in 2010 to 41% in 2020. The increased relative performance of the business sector as a performer and funder of basic research is remarkable.

The statistics on U.S. R&D presented in this report derive mainly from integrating the data on R&D expenditures and funding collected by NCSES’s annual national surveys of the organizations that perform and fund the vast majority of U.S. R&D. These surveys cover each of four sectors of the economy: higher education, government, business enterprise, and nonprofit organizations.^{​For further details on the correspondence between sectors used to measure R&D and those used in the System of National Accounts, please see the Frascati Manual 2015: Guidelines for Collecting and Reporting Data on Research and Experimental Development.} In some cases, the primary data from these surveys are adjusted to enable consistent integration of the statistics across these separately conducted surveys. In addition, preliminary or otherwise estimated values may be used where final data from one or more of the surveys are not yet available but can reasonably be calculated. Estimates in this InfoBrief are based on census and sample survey data which are subject to nonsampling error. Sample-survey–based estimates are also subject to sampling error. All comparative statements in this InfoBrief have undergone statistical testing and are significant at the 90% confidence level except statements reliant on modeled estimates.

The R&D surveys include NCSES’s annual surveys of business R&D (the Business Enterprise Research and Development Survey for 2019–20, the preceding Business Research and Development Survey for 2017–18, the Business R&D and Innovation Survey for 2008–16, and the Survey of Industrial R&D for 2007 and earlier years). In addition, the business R&D totals include the R&D expenditures reported by “micro” companies (defined as companies with fewer than 10 employees) through NCSES surveys fielded for 2016 and forward (the 2016 Business R&D and Innovation Survey—Microbusiness and the Annual Business Survey (ABS) since 2017).^{​Estimates from the NCSES business R&D surveys mentioned are all derived from sample data and thereby contain sampling error. Consequently, estimates of total U.S. R&D also contain sampling error. For more information on this topic and other surveys used in the National Patterns tabulations, see the “Technical Notes” in the companion report available at https://ncses.nsf.gov/pubs/nsf23321.} Other NCSES survey data sources are the Higher Education Research and Development Survey (for FYs 2010–20), and the preceding Survey of R&D Expenditures at Universities and Colleges (FY 2009 and earlier years), the Survey of Federal Funds for Research and Development (FYs 2020–21 and earlier years), and the FFRDC Research and Development Survey (FY 2020 and earlier years). Amounts for the R&D performed by nonprofit organizations with funding from the nonprofit sector and from business sources are estimated based on data and parameters from the FY 2020 Nonprofit Research Activities (NPRA) module of the ABS, the 2016 NPRA Survey, and the 1996–97 Survey of R&D Funding and Performance by Nonprofit Organizations.

A full set of detailed statistical tables associated with the National Patterns data is available in the companion report: National Patterns of R&D Resources: 2020–21 Data Update, at https://ncses.nsf.gov/pubs/nsf23321. This supplementary report also provides further details on the nature of the data and the National Patterns methodologies. For further information and questions, contact the author.

Anderson G, Jankowski J, and Boroush M; National Center for Science and Engineering Statistics (NCSES). 2023. U.S. R&D Increased by $51 Billion in 2020 to $717 Billion; Estimate for 2021 Indicates Further Increase to $792 Billion. NSF 23-320. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf23320.

Gary Anderson
Acting Program Director
NCSES
Tel: (703) 292-9092
E-mail: ganderso@nsf.gov

John Jankowski
Senior Economic Advisor (retired)
NCSES

Mark Boroush
Senior Analyst (retired)
NCSES

National Center for Science and Engineering Statistics
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