General Notes Highlights
General NotesThe National Science Foundation (NSF) sponsors a series of surveys to collect information on the financial and human resources devoted to research and development (R&D). In this report, NSF survey data on the various sectors of the U.S. economyindustry, Government, academia, and selected nonprofit organizationsare aggregated so that the components of the overall R&D effort are placed in a national context. Information presented in National Patterns includes the following:
- the level of R&D expenditures;
- the sources of such funds;
- the sector or organization performing the R&D;
- the character of work undertaken (i.e., whether it is basic research, applied research, or development);
- the States in which R&D is undertaken in the United States;
- the number of scientists and engineers employed in R&D; and
- international comparisons with the U.S. effort.
The national totals reported here incorporate data available from several Division of Science Resources Studies (SRS) surveys as of July 1, 1996, with projections to cover the remainder of the year 1996.
These notes provide a brief introduction to the concepts used in the report. Significant deviations from previous National Patterns reports are also highlighted. For complete definitions, descriptions of projection methodologies, and references to the underlying survey reports, see appendix A.
Performer Reporting Basis
SRS annually surveys Federal Government agencies, industry, and academia. Respondents in each sector indicate the amounts they spend on R&D in their own sector and the sources of these funds. National historical totals are based on data reported by performers because they are in the best position to (1) indicate how much they spent in the actual conduct of R&D in a given year, (2) classify their R&D by character of work, and (3) identify the sector of the economy in which their financing originated. The consistent reliance on performer reporting reduces the possibility of double-counting and conforms to international standards and guidance.
There are exceptions to the use of performer-reported data. The last complete survey of the nonprofit sector was conducted in 1973, although a survey of nonprofit R&D activity is planned for 1997. Since 1973, informal surveys of this sector have been undertaken periodically; nonetheless, the estimates of R&D performance by nonprofit organizations reported here are based generally on (1) Federal agency reporting of Federal funding to the nonprofit sector and (2) R&D performance trends in the other non-Federal sectors.
NSF conducts only occasional surveys of State government agencies; the last two surveys covered fiscal years (FYs) 1977 and 1987-88. Consequently, the national R&D time-series totals exclude estimates of State agencies' intramural R&D performance. State funds for R&D reported by other sectors of the economy, however, are included in the respective R&D performance totals.
One byproduct of the decision to use performer-reported data is that the federally funded R&D performance totals presented in National Patterns differ from the Federal R&D funding totals reported by the Federal agencies that provide the funds. One reason for these differences is that performers of R&D often expend Federal funds in a year other than the one in which the Federal Government provides authorization, obligations, or outlays. (For definitions of these terms, see appendix A.) During the past several years, the differences have widened between the Federal R&D funding reported by performers and that reported by funding agencies. These trends are documented in appendix A and tables B-1 and B-2.
Although respondents continually are given the opportunity to revise prior data, the R&D totals for 1994 reported here are considered to be actual expenditures. Data reported for 1995 and 1996 are preliminary, in the sense that 1995 data are based on preliminary reporting of information; and 1996 data are projections made during the summer of 1996 based on information available at that time. The series presented in this National Patterns updates projections for 1993 and 1994 that were reported in National Patterns of R&D Resources: 1994, includingin particularrevisions to industrial basic research data.
To the greatest extent possible, this report incorporates data for 1996 R&D programs contained in the administration's 1997 budget proposal. Where these data are used, it is explicitly noted in the text. The budget, however, does not contain estimates on the detailed disaggregation reported in National Patterns; most importantly, it includes very little information on the economic sectors receiving the Federal funds. Consequently, Federal agencies' R&D performance for 1995 and 1996 are derived from an NSF survey of 32 Federal agencies coinciding with the third quarter of FY 1995; therefore, the amounts reported for 1996 reflect congressional appropriations, apportionments, and reprogramming decisions as of that time.
Industry R&D performance for 1996 is derived from patterns observed in previous years, and from 151 company responses to a mail survey of the Industrial Research Institute's (IRI's) membership during August and September 1995. IRI, which annually conducts this survey, is an association of more than 260 R&D-performing companies, representing such industries as aerospace, automotive, chemical, computer, and electronics.
R&D performance estimates for 1996 for the other sectors of the economy are derived from regression and time-series modeling techniques. Inputs to these models are (1) the performer-reported actual R&D performance data and (2) information on Federal R&D funding of non-Federal sectors, as reported by Federal agencies in the third quarter of FY 1995.
Expanded Detail in R&D Time Series
This National Patterns is the first to contain 1955-to-present estimates for those federally funded research and development centers (FFRDCs) administered by industrial firms and nonprofit organizations. Previous National Patterns contained separate detail on only those FFRDCs administered by universities and university consortia.
- According to projections, total R&D expenditures in the United States are expected to reach $184.3 billion in 1996a 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 over the 1994 level. In inflation-adjusted terms, total R&D expenditures rose by 4 and 1 percent in 1995 and 1996, respectively; the 1995 increase was the largest since 1985.
- R&D growth continues to be outpaced by the growth of the economy as measured by gross domestic product (GDP). Preliminary measurement of GDP growth indicates a 2.7 percent increase between 1995 and 1996 after adjusting for inflationwell over twice the growth in inflation-adjusted R&D.
- Industry will provide $113.5 billion for R&D in 1996, by preliminary tabulations, representing a 3.5 percent increase over 1995 spending in real (inflation-adjusted) terms. Preliminary Federal R&D funding in 1996 is expected to be $61.9 billion (chart 1), a 3.0 percent decline in real terms from the preliminary 1995 level. Most of the remaining R&D funds is expected to come from universities and colleges and other nonprofit institutions, and the State and local governments supporting them. Their projected $9.0 billion in support in 1996 is virtually unchanged in real terms (only 0.3 percent higher) from the 1995 level. (These estimates are based on performer surveys and modeling techniques outlined in appendix A.)
- 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, it slowed to 1.4 percent, compared to a 2.6 annual real growth in GDP. Slackening in both Federal and non-Federal funding of R&D as a proportion of GDP has contributed to this slowing, though Federal funding has been declining at a faster rate.
- As a result of recent R&D trends, the proportion of GDP spent on R&D activities dropped to an estimated 2.48 percent in 1996, its lowest share since 1981.
- From 1980 to 1985, national expenditures on R&D activities were fueled largely by major increases in Federal funding for defense-related R&D programs. Defense R&D rose from 50 percent of the Federal R&D budget authority in 1980 to 68 percent in 1985. The defense share peaked at 69 percent in 1986 before declining fairly steadily to its preliminary 54.7 percent share of the 1996 Federal R&D budget authority (as proposed in the administration's 1997 budget).
- The Federal share of R&D funds first fell below 50 percent in 1978; between 1980 and 1988, the Federal Government consistently provided 45 to 47 percent of all funds spent on R&D in the United States. Its share has dropped substantially since then. Its preliminary share of 33.6 percent for 1996 is the lowest recorded since the present data series began in 1953.
- Non-Federal support for R&D fell from a 7.2 percent average annual real rate of increase over 1980-85 to a preliminary 3.3 percent growth rate for the 1985-96 period.
- The United States spends more money on R&D activities than does any other country. In fact, in 1994 it spent more than Japan, Germany, France, and the United Kingdom combined.
- In 1994the latest year for which foreign data are availablethe United States spent 2.49 percent of its GDP on R&D. In comparison, Japan spent 2.69 percent of its GDP; France, 2.38 percent; Germany, 2.33 percent; the United Kingdom, 2.19 percent; Canada, 1.57 percent; and Italy, 1.19 percent.
- The nondefense R&D/GDP ratio for the United States in 1994 was 2.00 percent; this was considerably lower than the ratios for Germany (2.26 percent) and Japan (2.66 percent). France and the United Kingdom, which have substantial defense R&D efforts, each reported nondefense R&D/GDP ratios closer to that of the United Statesroughly 2.09 for France (in 1993the figure for 1994 being unavailable) and 1.88 percent for the United Kingdom. The ratio for Canada was 1.53 percent, and Italy's was 1.14 percent.
R&D Performance by Sector
- Industry 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 real increase over the preliminary 1995 total. Most (83 percent and growing) of industry's expected R&D performance total, including industry-administered FFRDCs, will be company funded; Federal funding is likely to account for the rest (17 percent). The Federal share of industry's performance total has fallen considerably; it had been 33 percent of the industry total in 1987.
- The Federal Government will perform an estimated $16.2 billion of R&D in 1996 (in current dollars). This figure is slightly lower than the preliminary level for 1995, $16.4 billion, which reflects a real decline of 3.3 percent. Federal agencies account for 9 percent of the projected national R&D performance effort; this reflects a continuation in the gradual decline of Federal funding as a percentage of total R&D that began in the mid-1970s. These statistics are exclusive of the R&D performance undertaken by FFRDCs, which are included in the totals of the administering sectors.
- Universities and collegesexcluding academically administered FFRDCsaccount for 12 percent ($22.4 billion) of the projected 1996 national R&D performance effort. According to these preliminary findings, there has been virtually no change (less than 0.1 percent) between 1995 and 1996 in the amount of real R&D performance carried out at universities and colleges.
R&D Performance by State
- Data are available on the State distribution of 1993 R&D performance by industry, academia, and Federal agencies, and the federally funded R&D activities of nonprofit institutions. The distribution of R&D performance by State, not unlike the distribution of gross state product (GSP) by State, is highly concentrated.
- Six States (California, New York, Michigan, Massachusetts, New Jersey, and Pennsylvania, in decreasing order of R&D performance) accounted for roughly one-half of the U.S. total R&D in 1993; 10 States (adding Maryland, Texas, Illinois, and Ohio) accounted for approximately two-thirds. In each of these 10 States, at least $6 billion (in constant 1993 dollars) was spent on R&D.
- The highest 24 States in R&D, plus the District of Columbia (which would rank 20th in R&D performance if it were ranked as a State), collectively accounted for approximately 91 percent of the R&D conducted nationwide in 1993.
- As a percentage of GSP, R&D performance in New Mexico was largest8.1 percent. California, which led the Nation in terms of total R&D performance ($33.7 billion in constant 1993 dollars), had an R&D/GSP ratio of 4.3 percentseventh highest among the States.
Character of R&D Work
- Preliminary findings indicate that, in 1996, the United States will spend $29.8 billion on the performance of basic research (16 percent of total R&D expenditures), $38.8 billion on applied research (21 percent), and $115.8 billion on development (63 percent).
- Compared to 1995, R&D performance in 1996 reflects a projected 0.9 percent decrease, in real terms, for basic research; a 1.0 percent real increase for applied research; and a 1.5 percent real increase for development.
- The Federal Government provides the majority of funds for basic research. Its share of basic research support has dropped over time as a percentage of all supportfrom 70 percent in 1980 to a preliminary 58 percent in 1996.
R&D Scientists and Engineers
- The estimated number of scientists and engineers (S&Es) employed in 1993 on R&D activities in the United States was approximately 962,700. This figure reflects virtually no change (a 0.2 percent increase) from the 1991 level of 960,400. It reflects a 20 percent increase over the 1985 figure of 801,900, the first year for which revised national tabulations are derived.
- In 1993, industry employed 79.4 percent of these R&D personnel. The industrial classification with the largest share of these employees was the nonmanufacturing sector, which accounted for 25.3 percent of industry R&D employment. This finding illustrates a dramatic change from only 6 years earlier, when the transportation equipment industry had nearly twice as many R&D personnel as the nonmanufacturing sector (187,800 employees versus 99,200, respectively).
- There were 463,000 employed doctoral scientists and engineers in the United States in 1993; 41 percent of these reported R&D as their primary work activity. Teaching as a primary activity accounted for 22 percent; management/sales/administration, 18 percent; computer applications, 4 percent; and other professional services, 15 percent.