Science Resources Studies Division

DATA BRIEF

Directorate for

Social, Behavioral

and Economic

Sciences

National Science Foundation

Inflation-adjusted

decline in U.S. R&D

spending reflects

worldwide pattern

of constrained R&D

support.

Vol. 1995, No. 13, October 18, 1995

by John E.

Jankowski, Jr.

T

otal expenditures for research and development (R&D) performed in the

United States are expected to reach

$171 billion in 1995, 1 percent more than the

revised total for 1994 ($169 billion). After

adjusting for expected inflation, however,

this 1995 figure represents a 2-percent decrease in spending. As a proportion of gross

domestic product (GDP), R&D will account

for an estimated 2.4-percent share in 1995,

slightly lower than that estimated for 1994

(2.5 percent). Approximately 17 percent of

the Nation’s 1995 R&D total is to be expended on basic research activities, 23 percent on applied research, and 60 percent on

development. These and other R&D statistics are taken from the National Patterns of

R&D Resources series and are analyzed in

the forthcoming report, Science & Engineering Indicators—1995.

1995 R&D Funding Patterns

Industry and the Federal Government provide,

by far, the lion’s share of the Nation’s R&D

support. In 1995, industry will account for an

estimated 59 percent ($102 billion) of total,

most of which ($99.3 billion) is used to finance

R&D performed in-house or under contract to

other firms. The remaining $2.4 billion goes to

support research activities undertaken at universities and nonprofit organizations (table 1).

The Federal Government is expected to account

for 36 percent ($61 billion) of the U.S. 1995

R&D expenditure total. This Federal total

includes funds spent in intramural labs and

Federally Funded Research and Development

Centers (FFRDCs) ($25 billion), industry

($20 billion), and universities and colleges

($13 billion). Overall, industry support is

expected to increase 2 percent in 1995 and

Federal support to decline by 1 percent. In

constant-dollar terms, both industrial and

Federal support are expected to decline, by 1

percent and 3 percent, respectively. State

Governments, universities and colleges, and

other nonprofit organizations account for the

remaining 5 percent ($9 billion) of the U.S.

1995 R&D funding total. Their combined

support is estimated to increase 3 percent in

1995 and would remain flat after adjusting for

expected inflation.

1995 R&D Performance Patterns

In terms of performance, industry accounts for

70 percent ($120 billion) of the Nation’s estimated 1995 R&D effort, Federal labs—in cluding all FFRDCs—for 14 percent ($25 billion),

universities and colleges for 13 percent

($22 billion), and other nonprofit organizations

for 3 percent ($5 billion). Academia is the only

sector in which inflation-adjusted R&D performance is expected to increase in 1995, alU.S. R&D Spending Will Not Pick Up in'95

Electronic

Dissemination

SRS data—including this Data

Brief and the most current 1995

National Patterns R&D tables—

are available through the World

Wide Web (http://www.nsf.gov/

sbe/srs/stats.htm). For a summary of historical R&D trends,

see the report National Patterns

of R&D Resources: 1994, also

available through the Web. To

obtain SRS data through STIS,

NSF's online Science and Technology Information System, see

NSF flyer 95-64, "Getting NSF

Information and Publications."

For a paper copy of the flyer,

call 703-306-1130. For an electronic copy of the STIS User's

Guide, send an e-mail with the

phrase "get NSF9410.TXT" to

stisserv@nsf.gov. For NSF's

Telephonic Device for the Deaf,

dial 703-306-0090.

Table 1. National expenditures for research and development, by performing sector and

source of funds: 1995

Sources of R&D funds

R&D performers Total

Industry

Federal 

Government

Universities 

and colleges1

Other 

nonprofit 

institutions

Percent 

distribution, 

performers

Millions of dollars

 Total................................................. 171,000 101,650 60,700 5,500 3,150 100.0%

Industry.............................................................. 119,600 99,300 20,300 — — 69.9

Industry-administered FFRDCs......................................... 1,800 — 1,800 — — 1.1

Federal Government........................................ 16,700 — 16,700 — — 9.8

Universities and colleges.............................. 21,600 1,500 13,000 5,500 1,600 12.6

University-administered FFRDCs.................................. 5,300 — 5,300 — — 3.1

Other nonprofit institutions............................. 5,100 850 2,700 — 1,550 3.0

Nonprofit-administered FFRDCs................................ 900 — 900 — — 0.5

Percent distribution, sources..................................... 100.0% 59.4% 35.5% 3.2% 1.8%

 1

 Includes an estimated $1.6 billion in State and local government funds provided to university and college performers

KEY: FFRDC = Federally funded research and development center; "—" = Unknown but assumed to be negligible 

SOURCE: NSF/SRS, National Patterns of R&D Resources , annual series
0.0

0.5

1.0

1.5

2.0

2.5

3.0

Nondefense Defense

United States Japan Germany

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Chart 2. U.S., Japanese, and German

R&D/GDP ratios: Selected years

SOURCE: NSF/SRS, National Patterns of R&D

Resources, annual series, and Organisation for Economic

Co-operation and Development Main Science and

Technology Indicators database

NOTE: Years are chosen to display recent peaks and the

latest data available.

2.8

2.4

2.7

2.5

'91 '95 '90 '93 '89 '93

2.9 2.9

inflation-adjusted R&D support stems

from reductions in Federal spending, but

growth in industry R&D support also

slackened considerably.

International R&D Spending

The slowdown in R&D spending has

not been confined to the United States;

R&D growth stagnated worldwide

during the early 1990s. Notably, the

dual effects of economic recession and

general government budgetary constraint have adversely impacted R&D

support in both Japan and Germany—

the two largest R&D-performing

countries following the United States.

Although the timing and magnitude of

changes within these three R&Dleading nations differ slightly, in each

the R&D/GDP ratio has fallen from

recent peaks to current lows (chart 2).

The drop is most pronounced for the

United States (2.4 percent, down from

2.8 percent) and Germany (2.5 percent,

down from 2.9 percent) and reflects

relative reductions in both defense and

nondefense R&D. Even in Japan,

however, R&D as a share of overall

economic activity has been reduced

somewhat, declining from a high of 2.9

percent in 1990 to 2.7 percent in 1993,

the most recent year for which such

international data are available.

User Notes

U.S. national R&D expenditures data

were assembled from a number o f

NSF surveys. Estimates for 1995 are

based on data provided by Federal

R&D funding agencies, an independent

survey of industrial R&D performers,

and time series modeling techniques.

though by a mere 0.4 percent. Industry’s

R&D performance will decline 1 percent, as a result of slow growth in industry self-funding and reductions in Federal support to industry. R&D spending

by Federal Government performers will

decline an estimated 5 percent in realterms.

NATIONAL SCIENCE FOUNDATION

ARLINGTON, VA 22230

U.S. R&D Expenditure Trends

The estimated reductions in 1995

R&D expenditures in the United States

represent a continuation in the patterns

of R&D leveling and decline that have

developed during the past decade. In

the early 1980s R&D spending grew by

almost 7 percent per year after adjustment for inflation. Strong funding

support was provided both by industry

and Federal agencies. Increases in

R&D support tapered off substantially

in the mid- to late-1980s, before

turning negative in the early 1990s

(chart 1). Most of the national decline in

Chart 1. Rates of change in U.S.

R&D support

(based on inflation-adjusted dollars)

-4

-2

0

2

4

6

8

Total Federal Industry

1980-85

1985-90

1990-95

5.9

-0.3

2.2

6.6

3.7

1.3

7.3

SOURCE: NSF/SRS, National Patterns of R&D

Resources, annual series

Foreign R&D expenditure data are derived from national and international

sources.For more information, contact—

John E. Jankowski, Jr.

Research and Development Statistics Program

Division of Science Resources Studies

National Science Foundation

4201 Wilson Boulevard, Suite 965

Arlington, VA 22230

phone: 703-306-1772 ext. 6930

Internet: jjankows@nsf.gov

For free printed copies of SRS Data

Briefs call 703-306-1773 or e-mail to

databrief@nsf.gov. See “Electronic

Dissemination” for electronic versions.

-0.2

-3.0