R&D Within the National R&D Enterprise
Major Funding Sources
Funding by Institution Type
Distribution of R&D Funds Across Academic Institutions
Expenditures by Field and Funding Source
Federal Support of Academic R&D
Academic R&D Facilities and Equipment
Academic R&D is a significant part of the national R&D
To carry out world-class research and advance the scientific knowledge
base, U.S. academic researchers require financial resources and
research facilities and instrumentation that facilitate high-quality
work. Several funding indicators bear on the state of academic R&D,
- The level and stability of overall funding
- The sources of funding and changes in their relative importance
- The distribution of funding among the different R&D activities
(basic research, applied research, and development)
- The distribution of funding among S&E broad and detailed
- The distribution of funding among the various performers of
academic R&D and the extent of their participation
- The role of the Federal Government as a supporter of academic
R&D and the particular roles of the major Federal agencies
funding this sector
- The state of the physical infrastructure (research facilities
Individually and in combination, these factors influence the evolution
of the academic R&D enterprise and therefore are the focus of
this section. The main findings are continued growth in both Federal
and nonfederal funding of academic R&D, with a steady relative
decline in the role of the Federal government; a substantial increase
in funding by the National Institutes of Health (NIH) relative to
the other main Federal funding agencies; a relative shift in the
distribution of funds among fields, with increasing shares for the
life sciences, engineering, and the computer sciences; R&D activity
occurring in a wider set of institutions, but with the concentration
of funds among the top research universities diminishing only slightly;
and continuous growth in academic S&E research space, combined
with a large fraction of institutions reporting a need for additional
space based on current research commitments.
For a discussion of the nature of the data used in this section,
see sidebar, "Data Sources for Financial Resources
for Academic R&D."
Academic R&D Within the National R&D
The continuing importance of academia to the nation's overall R&D
effort is well accepted.
This is especially true for its contribution to the generation of
new knowledge through basic research. Since 1998, academia has accounted
for more than half of the basic research performed in the United
In 2002, U.S. academic institutions spent an estimated $36 billion,
or $33 billion in constant 1996 dollars, on R&D.
Academia's role as an R&D performer has increased during the
past 3 decades, rising from about 10 percent of all R&D performed
in the United States in the early 1970s to an estimated 13 percent
in 2002 (figure 5-1
(For a comparison with other industrial countries, see sidebar,
"Comparisons of International Academic R&D Spending.")
Character of Work
Academic R&D activities are concentrated at the research (basic
and applied) end of the R&D spectrum and do not include much
An estimated 96 percent of academic R&D expenditures in 2002
went for research (74 percent for basic and 22 percent for applied)
and 4 percent for development (figure
From the perspective of national research, as opposed to national
R&D, academic institutions accounted for an estimated 30 percent
of the U.S. total in 2002 (figure
In terms of basic research alone, the academic sector is the country's
largest performer, currently accounting for an estimated 54 percent
of the national total. Between the early 1970s and early 1980s,
the academic sector's share of basic research declined steadily,
from slightly more to slightly less than half of the national total.
In the early 1990s, its share of the national total began to increase
Over the course of the past 3 decades (19722002), the average
annual R&D growth rate (in constant 1996 dollars) of the academic
sector (4.5 percent) has been higher than that of any other R&D-performing
sector except the nonprofit sector (5.0 percent). (See figure
for time series data by R&D-performing sector.) As a proportion
of gross domestic product (GDP), academic R&D rose from 0.23
to 0.35 percent during this time period, about a 50 percent increase.
for GDP time series.)
Major Funding Sources
The academic sector relies on a variety of funding sources for
support of its R&D activities. Although the Federal Government
continues to provide the majority of funds, its share has declined
over the past 3 decades, with most of the decline occurring during
the 1980s. In 2001, the Federal Government accounted for 59 percent
of the funding for R&D performed in academic institutions, compared
with 68 percent in 1972 (appendix
and figure 5-4
Federal support of academic R&D is discussed in detail later
in this section; the following list summarizes the contributions
of other sectors to academic R&D:
- Institutional funds. In 2001, institutional funds from
universities and colleges constituted the second largest source
of funding for academic R&D, accounting for 20 percent, the
highest level during the past half century. Institutional funds
encompass three categories: separately budgeted funds from unrestricted
sources that an academic institution spends on R&D, unreimbursed
indirect costs associated with externally funded R&D projects,
and mandatory and voluntary cost sharing on Federal and other
grants. For more detailed discussions of the composition of institutional
funds, see sidebar "The Composition of Institutional
Academic R&D Funds."
The share of support represented by institutional funds has been
increasing during the past 3 decades, except for a brief downturn
in the early 1990s. Institutional R&D funds may be derived
from (1) general-purpose state or local government appropriations
(particularly for public institutions) or Federal appropriations;
(2) general purpose grants from industry, foundations, or other
outside sources; (3) tuition and fees; (4) endowment income; and
(5) unrestricted gifts. Other potential sources of institutional
funds are income from patents or licenses and income from patient
care revenues. (See "Patents Awarded to
U.S. Universities" later in this chapter for a discussion
of patent and licensing income.)
- State and local government funds. State and local governments
provided 7.1 percent of academic R&D funding in 2001. Since
1980, the state and local share of academic R&D funding has
remained between 7 and 9 percent. This share, however, only reflects
funds directly targeted to academic R&D activities by state
and local governments. It does not include general-purpose state
or local government appropriations that academic institutions
designate and use to fund separately budgeted research or cover
unreimbursed indirect costs.
Consequently, the actual contribution of state and local governments
to academic R&D is not captured here, particularly for public
institutions. See chapter 8, "State
Indicators" for some indicators of academic R&D by state.
- Industry funds. In 2001, industry provided 6.8 percent
of academic R&D funding, a slight decline from its peak of
7.4 percent in 1999. Despite the recent decline, the funds provided
for academic R&D by the industrial sector grew faster than
funding from any other source during the past 3 decades. However,
industrial support still accounts for one of the smaller shares
of funding, and support of academia has never been a major component
of industry-funded R&D. In 1994, industry's contribution to
academic R&D represented 1.5 percent of its total support
of R&D, compared with 1.4 percent in 1990, 0.9 percent in
1980, and 0.7 percent in 1972. Between 1994 and 2000, this share
declined from 1.5 to 1.2 percent, before beginning to rise slightly
again in both 2001 and 2002. (See appendix
for time series data on industry-funded R&D and the sidebar
"Corporate R&D Strategies in
an Uncertain Economy" in chapter 4 for a discussion of how
companies intend to spend their R&D budgets.)
- Other sources of funds. In 2001, other sources of support
accounted for 7.4 percent of academic R&D funding, a level
that has stayed almost constant during the past 3 decades. This
category of funds includes grants for R&D from nonprofit organizations
and voluntary health agencies and gifts from private individuals
that are restricted by the donor to the conduct of research, as
well as all other sources restricted to research purposes not
included in the other categories.
Funding by Institution Type
Although public and private universities rely on the same funding
sources for their academic R&D, the relative importance of those
sources differs substantially for these two types of institutions
table 5-3 ).
In 2001, the most recent year for which data are available, just
over 9 percent of R&D funding for all public academic institutions
came from state and local funds, about 25 percent from institutional
funds, and about 52 percent from the Federal Government. Private
academic institutions received a much smaller portion of their funds
from state and local governments (about 2 percent) and institutional
sources (about 10 percent), and a much larger share from the Federal
Government (72 percent). The large difference in the role of institutional
funds at public and private institutions is most likely because
of a substantial amount of general-purpose state and local government
funds that public institutions receive and decide to use for R&D
(although data on such breakdowns are not collected). Both public
and private institutions received approximately 7 percent of their
respective R&D support from industry in 2001. Over the past
2 decades, the Federal share of support has declined, and the industry
and institutional shares increased for both public and private institutions.
Distribution of R&D Funds Across Academic
The nature of the distribution of R&D funds across academic
institutions has been and continues to be a matter of interest to
both those concerned with the academic R&D enterprise and those
concerned with local and regional economic development. Most academic
R&D is now, and has been historically, concentrated in relatively
few of the 3,600 U.S. institutions of higher education.
When institutions are Federal ranked by their 2001 R&D expenditures,
the top 200 institutions account for about 96 percent of all 2001
R&D expenditures. (See appendix
for a more detailed breakdown of the distribution among the top
The historic concentration of academic R&D funds diminished
between the mid-1980s and mid-1990s but has remained relatively
steady since then (figure
In 1985, the top 10 institutions received about 20 percent of the
nation's total academic R&D expenditures and the top 1120
institutions received 14 percent, compared with 17 and 13 percent,
respectively, in 2001. There was almost no change in the share of
the group of institutions ranked 21100 during this period.
The composition of the universities in any particular group is not
necessarily the same over time, because mobility occurs within groups.
For example, only 5 of the top 10 institutions in 1985 were still
in the top 10 in 2001. The decline in the top 20 institutions' share
was offset by an increase in the share of those institutions in
the group not in the top 100. This group's share increased from
17 to 20 percent of total academic R&D funds, signifying a broadening
of the base. The discussion in "Spreading Institutional
Base of Federally Funded Academic R&D" later in this chapter,
under the section "Federal Support of Academic R&D," points
to an increasing number of academic institutions receiving Federal
support for their R&D activities during the past 3 decades.
Many of the newer institutions receiving support are not the traditional
research and doctorate-granting institutions.
Expenditures by Field and Funding Source
The distribution of academic R&D funds across S&E disciplines
often is the result of numerous, sometimes unrelated, funding decisions
rather than an overarching plan. Examining and documenting academic
R&D investment patterns across disciplines enables interested
parties to assess the balance in the academic R&D portfolio.
The majority of expenditures for academic R&D in 2001 went to
the life sciences, which accounted for 59 percent of all academic
R&D expenditures, 58 percent of Federal academic R&D expenditures,
and 59 percent of non-Federal academic R&D expenditures (appendix
table 5-5 ).
Within the life sciences, the medical sciences accounted for about
31 percent of academic R&D expenditures and the biological sciences
for about 18 percent.
The next largest block of academic R&D expenditures went to
engineering, with about 15 percent in 2001.
The distribution of Federal and non-Federal expenditures for academic
R&D in 2001 varied by field (appendix
table 5-5 ).
For example, the Federal Government provided about three-fourths
of the academic R&D expenditures in both physics and atmospheric
sciences but one-third or less of those in economics, political
science, and the agricultural sciences.
The decline in the Federal share of academic R&D support is
not limited to particular S&E disciplines. The federal share
of support for each of the broad S&E fields was lower in 2001
than in 1975 (appendix
table 5-6 ).
The most dramatic decline occurred in the social sciences, down
from about 55 percent in 1975 to about 38 percent in 2001. The overall
decline in Federal share also holds for all the reported S&E
detailed fields. However, most of the declines occurred in the 1980s,
and many fields did not experience declining Federal shares during
Although the total expenditures for academic R&D in constant
1996 dollars increased in every field between 1975 and 2001 (figure
table 5-7 ),
the R&D emphasis of the academic sector, as measured by its
S&E field shares, changed during this period (figure
Relative shares of academic R&D:
- Increased for engineering, the life sciences, and the computer
- Remained roughly constant for mathematics
- Declined for psychology; the earth, atmospheric, and ocean
sciences; the physical sciences; and the social sciences
Although the proportion of all academic R&D funds going to
the life sciences increased by only 3 percentage points (from 55.8
to 58.6 percent) between 1975 and 2001, the medical sciences' share
increased by more than 7 percentage points (from 23.8 to 31.1 percent)
during this period (appendix
table 5-7 ).
In the biological sciences, the share of funds was about the same
at the beginning and end of the period, whereas in the agricultural
sciences, the other major component of the life sciences, the share
decreased. Engineering's share of academic R&D increased by
about 4 percentage points (from 11.2 to 15.3 percent), whereas the
computer sciences' share more than doubled (from 1.3 to 2.9 percent).
The social sciences' proportion of all academic R&D funds
declined by more than 3 percentage points (from 7.5 to 4.4 percent)
between 1975 and 2001. Within the social sciences, R&D shares
for each of the three main fields (economics, political science,
and sociology) declined over the period. Psychology's share declined
from 2.4 to 1.8 percent. The earth, atmospheric, and ocean sciences'
overall share declined by about 2 percentage points (from 7.5 to
5.6 percent), with each of the three detailed fields (atmospheric
sciences, earth sciences, and ocean sciences) experiencing an individual
decline in share. The physical sciences' overall share also declined
during this period (from 10.3 to 8.6 percent). Within the physical
sciences, the shares of both physics and chemistry declined, although
astronomy's share increased.
Federal Support of Academic R&D
The Federal Government continues to provide the majority of the
funding for academic R&D. Its overall contribution is the combined
result of a complex set of executive and legislative branch decisions
to fund a number of key R&D supporting agencies with differing
missions. Some of the Federal R&D funds obligated to universities
and colleges are the result of appropriations that Congress directs
Federal agencies to award to projects that involve specific institutions.
These funds are known as congressional earmarks. (See sidebar, "Congressional
Earmarking to Universities and Colleges.") Examining and documenting
the funding patterns of the key funding agencies is key to understanding
both their roles and that of the Federal Government overall.
Top Supporting Agencies
Six agencies are responsible for most of the Federal obligations
for academic R&D, providing an estimated 96 percent of such
obligations in FY 2003 (appendix
table 5-8 ).
NIH provided approximately 66 percent of total Federal financing
of academic R&D in 2003. An additional 12 percent was provided
by NSF, 8 percent by DOD, 4 percent by the National Aeronautics
and Space Administration (NASA); 3 percent by the Department of
Energy (DOE); and 2.5 percent by the Department of Agriculture (USDA).
The concentration of Federal obligations for academic research is
similar to that for R&D (appendix
table 5-9 ).
Some differences exist, however, because some agencies place greater
emphasis on development (e.g., DOD), whereas others place greater
emphasis on research (e.g., NSF).
Between 1990 and 2003, NIH's funding of academic R&D increased
the most rapidly, with an estimated average annual growth rate of
7.2 percent per year in constant 1996 dollars, increasing its share
of Federal funding from just above 50 percent to an estimated 66
percent. NSF and NASA experienced the next highest rates of growth:
3.8 and 3.4 percent, respectively.
Agency Support by Field
Federal agencies emphasize different S&E fields in their funding
of academic research. Several agencies concentrate their funding
in one field. The Department of Health and Human Services (HHS)
and USDA focus on life sciences, whereas DOE concentrates on the
physical sciences. The funding patterns of other agencies, such
as NSF, NASA, and DOD, are more diversified (figure
table 5-10 ).
An agency may allocate a large share of its funds to one field
yet not be a leading contributor to that field, particularly if
it does not spend much on academic research (figure
In FY 2001, NSF was the lead funding agency in physical sciences
(30.6 percent of total funding), mathematics (60 percent), computer
sciences (56 percent), and earth, atmospheric, and ocean sciences
(40 percent). DOD was the lead funding agency in engineering (43
percent). HHS was the lead funding agency in life sciences (87 percent),
psychology (95 percent), and social sciences (39 percent). Within
S&E detailed fields, other agencies took the leading role: DOE
in physics (50 percent), USDA in agricultural sciences (99 percent),
and NASA in astronomy (81 percent) and astronautical engineering
(87 percent) (appendix
table 5-11 ).
Base of Federally Funded Academic R&D
The number of academic institutions receiving Federal support
for their R&D activities has generally increased during the
past 3 decades. However, between 1994 and 2000, the number receiving
support declined slightly before increasing again in 2000 (figure
The change in the number supported has occurred almost exclusively
among institutions of higher education with Carnegie classifications
of comprehensive; liberal arts; 2-year community, junior, and technical;
and professional and other specialized schools, rather than among
those classified as research or doctorate-granting institutions.
The number of such institutions receiving Federal support more than
doubled between 1973 and 1994, rising from 315 to 680, but then
dropped to 587 in 2000 (appendix
table 5-12 ).
These institutions' share of Federal support also increased between
1973 and 1994, from about 10 percent to above 13 percent. Their
share even continued to increase after 1994, reaching just over
15 percent in 2000.
Academic R&D Facilities and Equipment
The condition of the physical infrastructure for academic R&D,
especially the state of research facilities and equipment, is a
key factor in the continued success of the U.S. academic R&D
Total Space. The amount of academic S&E research space
grew continuously between 1988 and 2001. During this period, total
academic S&E research space increased by more than 38 percent,
from about 112 to 155 million net assignable square feet.
The distribution of academic research space across S&E fields
changed only slightly between 1988 and 2001 (appendix
table 5-13 ).
About 90 percent of current academic research space continues to
be concentrated in six S&E fields:
- Biological sciences (21 percent in 1988 and 2001)
- Medical sciences (17 percent in 1988 and 18 percent in 2001)
- Agricultural sciences (16 percent in 1988 and 17 percent in
- Engineering (14 percent in 1988 and 17 percent in 2001)
- Physical sciences (14 percent in 1988 and 12 percent in 2001)
- Earth, atmospheric, and ocean sciences (6 percent in 1988 and
5 percent in 2001).
Adequacy. Survey respondents were asked to rate the adequacy
of their research space in 2001.
Slightly less than 30 percent of S&E research space was rated
as adequate (table 5-3
However, the adequacy of this space differed across S&E fields.
The fields with the largest proportion of research space reported
as adequate were mathematics (69 percent); social sciences (39 percent);
earth, atmospheric, and ocean sciences (38 percent); and psychology
(37 percent). Those with the smallest proportion were engineering
and medical sciences (each with about 23 percent).
Of the institutions reporting research space in 2001, more than
80 percent reported needing additional space in at least one field.
More than 60 percent reported needing additional space in the biological
sciences (both in universities and colleges and medical schools),
the medical sciences (but only in medical schools), and engineering.
In all of these fields (as well as some others), more than 38 percent
of these institutions reported needing additional space equal to
more than 25 percent of their current research space (table
Only in mathematics did less than half of the institutions report
needing any additional space, although, as noted below, those that
reported a need for space needed a relatively large quantity of
space as compared with their available space.
For all fields combined, the additional space reported as needed
was more than one-fourth of available S&E research space in
2001. For most fields, the additional space needed was between 25
and 35 percent of currently available research space (table
For computer sciences and mathematics, however, it was approximately
109 and 69 percent, respectively. For the agricultural sciences,
the additional space reported as needed was about 11 percent of
Expenditures. In 2001, slightly less than $1.5 billion
in current funds was spent for academic research equipment. About
83 percent of these expenditures were concentrated in three fields:
life sciences (45 percent), engineering (22 percent), and physical
sciences (16 percent) (figure
table 5-14 ).
Current fund expenditures for academic research equipment grew
at an average annual rate of 4.1 percent (in constant 1996 dollars)
between 1983 and 2001. Average annual growth, however, was much
higher during the 1980s (7.8 percent) than it was after 1990 (1.9
percent). The growth patterns in S&E fields varied during this
period. For example, equipment expenditures for engineering (5.5
percent) and biological sciences (5 percent) grew more rapidly during
the 19832001 period than did those for the social sciences
(0.6 percent) and psychology (1.7 percent).
Federal Funding. Federal funds for research equipment are
generally received either as part of research grants, thus enabling
the research to be performed, or as separate equipment grants, depending
on the funding policies of the particular Federal agency involved.
The importance of Federal funding for research equipment varies
by field. In 2001, the social sciences received slightly less than
40 percent of their research equipment funds from the Federal Government;
in contrast, Federal support accounted for more than 60 percent
of equipment funding in the physical sciences; computer sciences;
earth, atmospheric, and ocean sciences; and psychology (appendix
table 5-15 ).
The share of research equipment expenditures funded by the Federal
Government declined from about 62 to 55 percent between 1983 and
2001, although not consistently. This overall pattern masks different
trends in individual S&E fields. For example, the share funded
by the Federal Government actually rose during this period for both
the social and the earth, atmospheric, and ocean sciences.
R&D Equipment Intensity. R&D equipment intensity
is the percentage of total annual R&D expenditures from current
funds devoted to research equipment. This proportion was lower in
2001 (4.6 percent) than it was in 1983 (5.7 percent), although it
peaked in 1986 (7 percent) (appendix
table 5-16 ).
R&D equipment intensity varies across S&E fields. It tends
to be higher in the physical sciences (about 9 percent in 2001)
and lower in the social sciences (1.2 percent) and psychology (2.4
percent). For the two latter fields, these differences may reflect
the use of less equipment, less expensive equipment, or both.
There has been recent congressional interest in this issue. Congress
has asked NSF to reinstate the National Survey of Academic Research
Instrumentation, last conducted in 1994, to determine the extent
to which a lack of equipment and instrumentation prevents the academic
research community from undertaking cutting-edge, world-class science.