You are viewing a Web site, archived on 23:59:29 Nov 17, 2004. It is now a Federal record managed by the National Archives and Records Administration.
External links, forms, and search boxes may not function within this collection.
Science Resources Studies Division
DATA BRIEF Directorate for
Social, Behavioral
and Economic

National Science Foundation
Vol. 1996 No.11, October 25, 1996

R&D; Growth Exceeded 1995 Expectations, but May Slow in 1996

By Steven

By preliminary estimates, R&D rose by 4 percent above inflation in 1995 - the largest increase since 1985.

According to projections, total R&D expenditures in the United States are expected to reach $184.3 billion in 1996 - a 3.2 percent increase over the $178.6 billion spent in 1995. The preliminary 1995 figure represents a 6-percent increase in R&D spending from its 1994 level. In inflation adjusted terms, total R&D expenditures rose by 4 and 1 percent in 1995 and 1996, respectively, with the 1995 increase being the largest since 1985. Last year about this time, R&D was expected to decrease by 2 percent in real terms, but much stronger than anticipated growth in industrial R&D performance led to this upward revision. However in 1996, R&D growth continues to be out paced by growth in the size of the economy, as measured by Gross Domestic Product (GDP). Preliminary estimates of GDP indicate a 2.7-percent growth between 1995 and 1996 in real terms - well over twice the expected growth in real R&D.

According to these projections, the United States will spend $29.8 billion on the performance of basic research in 1996 (16 percent of the total), $38.8 billion on applied research (21 percent), and $115.8 billion on development (62 percent). In comparison to 1995, R&D performance in 1996 will reflect a preliminary 0.9 percent real decrease in basic research; a 1.0 percent real increase in applied research; and a 1.5 percent real increase in development.

1996 Funding Patterns

Industry will continue to provide the largest share of total U.S. support for R&D, which will be $113.5 billion in 1996, by current projections (table 1). This funding represents a 3.5 percent increase in real terms over the preliminary level for 1995. Companies will fund most (83 percent and growing) of industry's expected R&D performance total; Federal funding is likely to account for the rest (17 percent). The Federal share of industry's performance total- including that in related FFRDCs-has fallen considerably; for example, it had been as high as 32 percent of the industry total in 1987.

In 1996, the projected share of Federal support for U.S. R&D- 33.6 percent- is the lowest ever reported in NSF's 44-year-old data series.

Federal R&D support in 1996 is expected to be $61.9 billion, a 3.0 percent decline in real terms from 1995. The Federal share of R&D funds first fell below 50 percent in 1978, and was consistently between 44 and 47 percent from 1980 to 1990. Since then, the Federal share has dropped steadily, rendering for 1996 the projected value of 33.6 percent, the lowest share reported in NSF's 44-year-old R&D data series.

Nearly all of the remaining R&D funds will come from universities and colleges and from State and local governments. In total, these remaining funds will reach $9.0 billion in 1996, by preliminary tabulations, which will be virtually unchanged in real terms (only 0.3 percent higher) from their 1995 total.

1996 R&D Performance Patterns

Industry, including industry-administered Federally Funded Research and Development Centers (FFRDCs) such as Sandia National Laboratory, is expected to account for 73 percent of the Nation's 1996 R&D performance total. The projected $134.2 billion in R&D performance by industry represents a 2-percent increase in real terms over its preliminary 1995 level. The Federal Government is expected to perform $16.2 billion of R&D in 1996, a real decline of 3 percent from 1995. Federal agencies will account for 9 percent of national R&D performance, reflecting, again, a continual decline in the relative Federal participation that began in the mid-1970s. Universities and colleges, excluding academically-administered FFRDCs, are expected to account for 12 percent ($22.4 billion) of the 1996 national R&D performance effort. By these preliminary findings, there will be virtually no change (less than 0.1 percent) between 1995 and 1996 in the amount of real R&D performance carried out in academia.

U.S. R&D Expenditure Trends

Growth in total U.S. R&D expenditures has been slow since the mid-1980s. From 1980 to 1985, R&D spending increased on average by 6.6 percent per year in real terms. From 1985 to 1996, by preliminary calculations, it slowed to 1.4 percent, in comparison to a 2.6 annual real growth in GDP. Slackening in both Federal and non-Federal support for R&D, as a proportion of GDP, has contributed to this slowing, though Federal support has been declining at a faster rate than non-Federal support (Chart 1). Consequently, the 4-percent rise in real R&D during 1995 was much more the exception than the rule. From 1985 to 1996, the proportion of GDP spent on R&D has fallen consistently, from 2.8 percent to 2.5 percent (based on current projections). On the other hand, the relatively high growth in 1995 may be indicative of some reversal in this downward trend.

International R&D Spending

The United States spends more on R&D activities than any other country, in fact, more than Japan, Germany, France, and the United Kingdom combined. In 1994-the latest year for which foreign data are available- the U.S. spent 2.49 percent of its GDP on R&D, in comparison to 2.69 percent spent by Japan, 2.38 percent by France, 2.33 percent by Germany, 2.19 percent by the United Kingdom, 1.57 percent by Canada, and 1.19 percent by Italy. The nondefense R&D/GDP ratio for the United States in 1994 (2.00 percent) was considerably lower than those for Germany (2.26 percent) and Japan (2.66 percent) (chart 2). France and the United Kingdom, which have substantial defense R&D efforts, reported nondefense R&D/GDP ratios closer to that of the United States, 2.09 and 1.88 percent, respectively. The ratio for Canada was 1.57 percent, and for Italy, 1.14 percent.

User Notes

U.S. national R&D expenditures data were assembled from several NSF surveys. Projections for 1996 and preliminary tabulations for 1995 are based on data provided by Federal R&D funding agencies, independent surveys of academic and industrial R&D performers, and time series modeling techniques. Foreign R&D expenditure data are derived from national and international sources.

For free printed copies of SRS Data Briefs call (703) 306-1773 or e-mail to pubs@nsf.gov. Users of the World Wide Web on the Internet can have access to publications from the Division of Science Resources Studies (SRS) of the National Science Foundation. Such access allows for viewing and printing the document, as well as downloading tables of data onto spreadsheet files (Microsoft Excel and Lotus 123). Web users should go to "http://www.nsf.gov/sbe/srs/stats.htm", click on "publications and data," after which they can obtain more information on National Patterns of R&D Resources by clicking on "Comprehensive and Special Analytic Reports on Science and Engineering" followed by National Patterns of Research and Development Resources.

For more information, contact

Dr. Steven Payson
National Science Foundation
Division of Science Resources Studies
Research and Development Statistics Program
4201 Wilson Boulevard, Suite 965
Arlington, VA 22230

Phone: (703) 306-1772, ext. 7209
Internet: spayson@nsf.gov

previous arrow up arrow