Blog

FACT: U.S. R&D spending approaching $1 trillion per year.

THE NUMBERS: U.S. share of world “knowledge- and technology-intensive” manufacturing and services –

National Science Foundation, 2024.  Manufacturing includes chemicals; pharmaceuticals; weapons and ammunition; computer, electronic, and optical; electrical equipment; machinery; automotive; aerospace; railroad and other transport; and medical devices.  Services include IT and information services, software, and research and development.

WHAT THEY MEAN:

President Biden in October delivered seven Medals of Science and nine Medals of Technology and Innovation:  Dr. Marder of Brandeis for analysis of brain biochemistry and neurocircuitry, Caltech’s Professor Barish for detecting gravitational waves from merging black holes, Mary-Dell Chilton of Syngenta for agricultural biotechnology, Roy Cooper from the VA for inventing improved wheelchairs, along with Internet pioneers, 3D printing founders, social neurologists and more.  He took some time to note administration science policy highlights –— the Cancer Moonshot, the CHIPS and Science Act, climate research — but could perhaps have said a bit more.  The individual achievements and the government policy look less like one-offs than or unusual cases, than especially strong examples of a remarkable if little-recognized Biden-era boom in American science. Two indexes and then some comparisons:

1. Research and Development: Each year the National Science Foundation publishes figures on research and development spending.  Their latest edition launched in March.  It shows U.S. R&D investment rising from $717 billion in 2020 to a likely $886 billion in 2022, with government support up from $65 billion to $73 billion, business commitments from $520 billion to $673 billion, and nonprofit and academic funding from $43 billion to $47 billion. The overall jumps of 10% and 12% in 2021 and 2022 appear to be the largest in the last thirty years.  This makes America’s “research intensity” — R&D spending divided by national GDP — 3.5% by the NSF’s count, or 3.6% according to the OECD.  This figure is up from 2.8% in 2012 and 3.2% in 2019; or in a longer perspective, from 2.4% at the launch of the World Wide Web in 1993 and 2.6% during the moon-landing year 1969. If this “intensity” level held up through 2023, total U.S. science commitment in 2024 would top $1 trillion.

2. Working Scientists: The Bureau of Labor Statistics, meanwhile, reports a 26% growth in the count of working R&D scientists in the last three years, from 796,000 at the beginning of 2021 to 956,000 as the NSF launched its March R&D report. To put this in perspective, total employment in the U.S. has grown by 10% in the last three years.  So the lab workforce is rising more than twice as fast as the general workforce.  From another perspective, the 3.3-year jump of 160,000 scientists compares to a rise of 290,000 in the entire twenty years from the turn of the century to the end of 2020 (and has nearby analogues in similar jumps of 140,000 in engineering, and 300,000 in computer systems design).

Now to the comparisons:

Measured by spending, NSF’s $886 billion R&D estimate places the U.S. first in the world, and makes up about 30% of known R&D worldwide.  Measured by “research intensity”, OECD’s 3.6% estimate puts the U.S. fourth, behind only Israel’s 6.0%, Korea’s 5.2%, and Taiwan’s 4.0%. Comparable figures for other big economies include 3.4% for Japan, 3.1% for Germany, 2.9% for the U.K. 2.9%, 2.4% for China, and 2.2% for France. Rounding out the G-7, Canada is a bit below at 1.7%, and Galileo’s Italy a comparatively anemic 1.3%. A table with the top countries and the world’s ten largest economies:

What about real-world output as opposed to spending and puttering about in labs?  In April, a few weeks after the R&D report, NSF’s busy editors put out another one looking at the world’s “Knowledge and Technology Intensive Industries”.  Complete with a new acronym, “KTI”, this examines production of a list of impressive things – aircraft and satellites, high-speed dental drills, self-guiding cars and computer software, digital technology, biologic medicines, etc. — and estimates world high-tech industry output at $11.1 trillion in 2022.  (This would be about 10% of world GDP.)  Here the U.S. has a peer — in fact, China’s $3.0 trillion shades America’s $2.9 trillion – while the EU comes in at $1.7 trillion, Japan $0.6 trillion, and Korea $0.4 trillion.  China’s leads show up in the manufacturing of computers, electronics, and optics, while the U.S. is top producer of medicines, medical devices, aerospace, software, and digital information.

And over time?  The American share of world “KTI” manufacturing, having fallen from 29.5% in 2002 to 20.1% in 2012, began a rebound during the Obama administration and has risen a bit to 20.5%.  Or, setting aside what other countries might be doing, the value of this output has grown from $1.3 trillion in 2020 to $1.6 trillion in 2022. The U.S. share of world “KTI” services production — the software, IT services, and research work noted above – has steadily risen, accelerated by the internet industry, from a world-leading 29.3% in 2012 to 39.7% in 2022. All of which suggests that Biden’s well-deserved praise for the individual neuroscientists, astronomers, wheelchair and Internet-backbone designers highlights not only exceptional personal achievement, but the fact that the administration deserves credit for some large-scale science policies and has reason to feel good about the last three years’ results.

FURTHER READING

Biden presents last year’s Medals of Science and of Technology and Innovation last October.

The White House’s Office of Science and Technology Policy.

… the Cancer Moonshot.

… and never out of fashion, Dr. Vannevar Bush’s original 1945 Endless Frontier report, arguing for a permanent government role in promotion of science and technology.

Assessment:

The National Science Foundation’s April 2024 Production and Trade of Knowledge- and Technology-Intensive Industries report.

And the American Association for the Advancement of Science reviews government policy.

And some data:

OECD’s estimates of R&D spending, GDP share, and science employment by country as of 2022.

And NSF’s State of U.S. Science and Engineering looks at American scientific research, education, workforce and more, with some international comparisons.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.