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Industrial R&D Employment in the United States and in U.S. Multinational Corporations
This InfoBrief provides employment estimates for industrial scientists and engineers who engage in research and development (R&D employees or R&D workers), using survey data from the National Science Foundation (NSF), U.S. Bureau of Economic Analysis (BEA), and U.S. Bureau of Labor Statistics (BLS). The combined data reveal that since 1994, industrial R&D employment has grown at a faster rate than overall industrial employment in the United States. R&D employment among U.S. multinational corporations (MNCs) is concentrated domestically, but between 1994 and 1999, overseas affiliates of MNCs increased their R&D workforce at a faster rate than did their U.S. parent companies. Overseas R&D employment of U.S. MNCs was concentrated in Europe, but growth was notable in some emerging markets.
NSF data are from the Survey of Industrial R&D, which collects data for all R&D-performing companies in the United States, regardless of ownership status. BEA data are from two international investment surveys, the Survey of Foreign Direct Investment in the United States and the Survey of U.S. Direct Investment Abroad, which collect selected R&D data from affiliates of foreign companies located in the United States, parent companies of U.S. MNCs, and their overseas affiliates. Selected aggregate data on industrial employment are from the BLS Survey of Current Employment Statistics. See Data Notes, below, for more detail on these surveys.
R&D employment data from both the NSF and the BEA surveys include scientists and engineers who perform R&D activities, whether or not the employee's college degree is in a science and engineering field. BEA R&D employment estimates are based on head counts for scientists and engineers that devote the majority of their time to R&D activities. NSF R&D employment estimates are based on full-time equivalent (FTE) R&D scientists and engineers. To report FTE counts, companies are asked to include scientists and engineers who perform R&D functions on a full-time basis plus an adjusted number of employees whose activities are not solely devoted to R&D (based on the proportion of their time devoted to R&D activities).
U.S. Industrial R&D Employment Trends
NSF data show that U.S. industrial R&D employment was nearly level in the early 1990s (figure 1). Since then, R&D employment strengthened, reaching one million workers for the first time in 1999. In 2001 there were 1.05 million FTE R&D workers in the United States compared to 109.01 million workers in industries other than agriculture (nonfarm workers) (NSF and BLS data; table 1).Figure 1 Source Data: Excel file
Table 1 Source Data: Excel file
Wages and related labor costs in the 1990s typically accounted for over 40 percent of U.S. industrial R&D expenditures. From 1994 to 2000 these expenditures grew annually an average of 7.0 percent (after adjusting for inflation), supporting an average annual growth rate of 5.4 percent in R&D employment, compared with 2.7 percent in total industrial employment. R&D employment changed little from 2000 to 2001 (table 1).
In 2001 R&D expenditures per R&D worker for the aerospace industry were almost twice as large as the average for all industries, followed by transportation equipment, pharmaceuticals and medicines, and scientific R&D services (table 2).
U.S. Affiliates of Foreign Companies
R&D employment in U.S. affiliates of foreign companies grew at an average annual rate of 4.4 percent between 1994 and 2001, comparable to the growth rate in all U.S. R&D performing companies (4.8 percent). Over the same period, R&D expenditures in U.S. affiliates of foreign companies grew at an annual average rate of 7.6 percent (after adjusting for inflation), higher than the growth rate in all U.S. R&D performing companies (5.5 percent).
Between 1994 and 2001 R&D employment as a percentage of total employment (R&D employment intensity) in U.S. affiliates of foreign companies was just above two percent (table 3).
Key Investing Countries and Industries
Manufacturers represented nearly 75 percent of both R&D employment and expenditures in 2001, dominating R&D activity by foreign-owned affiliates in the United States. Chemical manufacturers (including pharmaceutical and medicine manufacturers) and computer and electronic products manufacturers employed a combined 41 percent of R&D workers (table 5). The information industry employed about 8 percent of R&D workers, and its publishing component (which includes software services) had the largest R&D employment intensity among nonmanufacturing industries.Table 5 Source Data: Excel file
U.S. Multinational Corporations and Overseas R&D Employment
Domestic and Overseas Activity
Between 1994 and 1999 worldwide R&D employment in U.S. MNCs grew at an average annual rate of 1.2 percent, well below average annual growth in both their overall employment (4.9 percent) and their R&D expenditures (6.9 percent). Within U.S. MNCs, however, R&D employment growth differed between parent companies and their foreign affiliates over this 5-year period. Overseas R&D employment grew at an average annual rate of 3.9 percent, compared with just 0.7 percent domestically, an indication of the increasing globalization of innovation and knowledge-based competition.
From 1994 to 1999, foreign affiliates of U.S. MNCs expanded their R&D workforce in some Asian emerging markets, including China, Hong Kong, Malaysia, Singapore, and South Korea, as well as in Israel and Mexico. During this period, R&D employment by U.S. MNCs in the Asia-Pacific region, excluding Japan, almost doubled to over 13,000 (see also NSB 2004:4-67 to 4-70; NSF 2004).Figure 2 Source Data: Excel file
Table 8 Source Data: Excel file
BEA international investment data from the Survey of Foreign Direct Investment in the United States (FDIUS) and the Survey of U.S. Direct Investment Abroad (USDIA) are obtained from a combination of censustype surveys in benchmark years (every 5 years) and sample-based surveys in nonbenchmark years. For a description of data and for survey methodology see http://www.bea.gov/bea/di/fddscrpt.htm (FDIUS) and http://www.bea.gov/bea/di/usdscrpt.htm (USDIA).
BLS data are from the Survey of Current Employment Statistics, which covers payrolls in nonfarm establishments in the 50 U.S. states and the District of Columbia. BLS data used in this InfoBrief exclude workers in government and in banks and other depository institutions. Employment is the total number of persons on establishment payrolls employed full or part time who received pay for any part of the survey reference period. See http://www.bls.gov/ces/home.htm for detailed information.
BEA international investment surveys define R&D employees as scientists, engineers, and other professional and technical employees, including managers, who spend all or a majority of their time engaged in scientific or engineering R&D work. Their R&D activities require knowledge of physical sciences, engineering, or mathematics at least equivalent to that acquired through completion of a 4-year college degree with a major in one of these fields (training may be either formal or by experience).
National Science Board (NSB). 2004. Science and Engineering Indicators 2004, Volume I, NSB 04-01. Arlington, VA: National Science Foundation.
National Science Foundation (NSF). 2003. U.S. Industry Sustains R&D Expenditures During 2001 Despite Decline in Performers' Aggregate Sales, NSF 04-301. By Raymond M. Wolfe. Arlington, VA.
National Science Foundation (NSF). 2004. U.S.-China R&D Linkages: Direct Investment and Industrial Alliances in the 1990s, NSF 04-306. By Francisco Moris. Arlington, VA.
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 For example, to report its FTE R&D scientists and engineers, a company with 60 scientists and engineers who devoted one-fourth of their time to R&D projects would add 15 to the number of scientists and engineers engaged in R&D activities on a full-time basis.
 R&D expenditures include costs related to wages, materials and supplies, and depreciation but do not include capital expenditures. See the NSF Industrial Research and Development Information System (IRIS), available at http://www.nsf.gov/statistics/iris/.
 BEA data in this section are for nonbank affiliates in the 50 U.S. states, the District of Columbia, Puerto Rico, and U.S. territories that are owned at least 10 percent by foreign companies. 2001 data are preliminary. Source: Survey of Foreign Direct Investment in the United States, http://www.bea.doc.gov/bea/di/di1fdiop.htm.
 Year-to-year changes in operational data of MNCs can result from cross-border mergers and acquisitions, establishment of new facilities, or activities in existing facilities.
 R&D employment data from the BEA Survey of U.S. Direct Investment Abroad are available only every 5 years from benchmark surveys, in contrast to R&D expenditure data, which are available annually. BEA data in this section are for nonbank U.S. parent companies and their nonbank majority-owned foreign affiliates (affiliates in which the combined ownership of all U.S. parents is more than 50 percent). Source: Survey of U.S. Direct Investment Abroad, http://www.bea.doc.gov/bea/di/di1usdop.htm.
 In 2001 U.S. MNCs performed $162,948 million in R&D activities: $143,546 million (88 percent) by parent companies domestically and $19,402 million (12 percent) by their overseas affiliates. 2001 data are preliminary.