States Vary Widely in Their Rates of R&D Growth
Richard J. Bennof and Steven Payson
New Hampshire had the highest growth rate in R&D in the 1987-97 period14 percent per year, adjusted for inflation.
New Mexico has the highest R&D intensity (R&D/GSP): 6.7 percent.
Research and development (R&D) activities in the United States are highly concentrated in a small number of states. In 1997, the 20 highest ranking states in R&D expenditures accounted for about 86 percent of the U.S. total, while the lowest 20 states accounted for only 4 percent. California, at nearly $42 billion, had the highest level of R&D expenditures in the Nation; it alone accounted for just about one-fifth of the $199 billion U.S. R&D total. California’s expenditures, plus those of the five states with the next highest levels of R&D spendingMichigan, New York, New Jersey, Massachusetts, and Texas (in decreasing order of magnitude)accounted for approximately one-half of the entire national R&D effort. The top 10 statesadding, in descending order, Pennsylvania, Illinois, Washington, and Marylandaccounted for nearly two-thirds of the national R&D (table 1).
Among these top 10 states, California’s R&D effort exceeded, by nearly a factor of three, that of the next highest state, Michigan, with $14 billion in R&D expenditures. After Michigan, R&D levels declined incrementally to approximately $7 billion for Maryland.
State Distribution of Sector-Specific R&D
There was less commonality with the top 10 for total R&D among those states that performed the most Federal intramural research. Only four states were found in both top-10 lists: Maryland, California, Texas, and New Jersey. The six additions to the Federal intramural list, in descending order of Federal R&D performance, were the District of Columbia, Virginia, Ohio, Alabama, Florida, and New Mexico. Maryland ranked first among Federal R&D performers, followed by the District of Columbia, Virginia, and California.
The placement of Maryland, the District of Columbia, and Virginia as the top three in Federal R&D performance reflects the concentration of Federal facilities and administrative offices within the national capital area. Alabama, Florida, and New Mexico rank among the highest in Federal R&D because of their relatively high shares of Federal space- and defense-related R&D.
Ten-Year State R&D Trends
As shown in figure 1, among the 51 regions examined, eight states were found to have statistically significant, real annual growth rates of over 3 percent between 1987 and 1997: Idaho, Montana, Nevada, New Hampshire, Oregon, Rhode Island, South Dakota, and Washington. Twenty-five other states had rates of real R&D growth that were positive with statistical certainty, but could not be said to be above 3 percent with statistical certainty. Another 13 states had growth or declines in real R&D, but which were not statistically different from no change in real R&D. Finally, five states had statistically significant declines in real R&D: Alabama, Missouri, New Mexico, North Dakota, and Vermont.
Among the top 10 states in R&D expenditures in 1997, Washington had the highest growth rate5 percent. The next highest growth rate among the top 10 was 3 percent for New Jersey; California’s R&D grew at a rate of 2 percent during the 1987-97 periodthe same rate as that of the nation as a whole.
In most cases, these differences in rates reflect the sharp decline in Federal R&D support and the simultaneous dramatic rise in industrial R&D support that occurred during the period. For example, much of Alabama’s decline in R&D could be attributed to a drop in Federal support for industrial R&D: over the decade, this support dwindled from $900 million (in current dollars) to $189 million. In New Hampshire, on the other hand, the sharp rise in R&D is due primarily to an increase in industrial R&D performance (which is funded predominantly by industry) from $94 million to $652 million.
For states that have relatively small levels of R&D expenditures (e.g., states that are not among the top 10 in R&D), these growth rates tend to be influenced significantly by particular events, such as an individual company or government agency expanding or contracting its R&D activities. Therefore, caution should be used in interpreting differences among states. Variations in rates may not reflect differences among states in their policies toward R&D; specific circumstances (other than state policy) may have been more responsible for the observed differences. Likewise, one should not assume that the rates observed between 1987 and 1997 will necessarily continue in later years.
Ratio of R&D to Gross State Product
Overall, the Nation’s total R&D to gross domestic product ratio was 2.6 percent in 1997. The top 10 rankings for R&D intensity in 1997 werein descending orderNew Mexico (6.7 percent), the District of Columbia, Michigan, Massachusetts, Maryland, Washington, Idaho, New Jersey, California, and Rhode Island (the last with an intensity of 3.7 percent). New Mexico’s high R&D intensity is largely attributable to Federal (specifically Department of Energy) support of Federally Funded Research and Development Centers (FFRDCs) in the state.
R&D concentration is relatively high in the Northeast and East North Central regions, with the exceptions of Maine, New York, and Wisconsin which had R&D/GSP ratios below 1.9 percent. R&D concentration is also relatively low in the West North Central and Southern regions, with the exceptions of Minnesota, North Carolina, and Virginia which have R&D/GSP ratios above 1.9.
The Mountain and Pacific regions are quite mixed in R&D concentration. In the former region, New Mexico and Idaho have the highest R&D/GSP ratios, which are above 4.0; and Wyoming and Nevada have ratios below 1.0. Similarly, in the Pacific, California and Washington’s ratios exceed 4.0, and Alaska’s and Hawaii’s ratios fall below 1.0.
In 1997, total R&D expenditures in the United States were $211 billion, of which $199 billion could be attributed to expenditures within individual states, with the remainder falling under an undistributed, “other/unknown” category. The statistics and discussion in this Data Brief refer to state R&D levels in relation to the distributed total of $199 billion. In addition to these state R&D statistics, SRS collects state-specific data in its surveys of science and engineering (S&E) personnel and institutions. These data and those assembled from non-SRS sources (e.g., data on population, patents, and GSP) are included in a set of 52 one-page S&E profiles available in hard copy or on the World Wide Web at http://www.nsf.gov/statistics/states/.
Data on U.S. and state R&D expenditures were assembled from ongoing National Science Foundation surveys. For information about, and copies of, S&E State Profiles, please contact:
 Because of the variability of estimates for many smaller area totals when data are acquired through survey sampling, the growth rates in R&D performance observed for some states are not precise enough for comparative use. Nevertheless, several useful observations can be made regarding cases in which there is statistical precision. For the purposes of this study, statistical significance was defined as occurring when there is no more than a 5 percent likelihood that differences were attributable only to randomness in survey sampling.
 These Federal R&D totals are based on reports by the performers of R&D and not by the Federal funding agencies.
 Note that data on industry R&Dand therefore on total R&Dperformance are not available for Puerto Rico.