Spending on Research and Development: We’re Number 4
President Dwight Eisenhower was a firm believer in Research and Development (R&D) investments and knew that private industry could not bear the burden of such expenditures by itself. R&D basically covers three types of activity: basic research, applied research, and experimental development. Simply put, R&D has been described as the “generation of new knowledge.” It was up to the federal government and Republican Eisenhower to push for more federal expenditures. As journalist David Leonhardt observed, the “Eisenhower investment boom has no peer in US history, at least outside a major war.” He was able to be both a “fiscal conservative and a president who nearly tripled R&D spending” between the early 1950s and the early 1960s.
In 1964, the US government provided about two-thirds of all domestic R&D funds; by the 2020s, that federal contribution had slipped dramatically, with just 21 percent of R&D funds. Nearly all the remaining R&D funds were provided by private business. In 2021, federal R&D funds account for less than 1 percent of GDP.
As a percentage of GDP, the United States ranks fourth in the world, after Israel, South Korea, and Taiwan in investing money in Research & Development.
Note: The OECD defines gross domestic spending on R&D as “the total expenditure (current and capital) on R&D carried out by all resident companies, research institutes, university and government laboratories, etc., in a country. . .This indicator is measured in USD constant prices using 2015 base year and Purchasing Power Parities (PPPs) and as percentage of GDP.”
Sources: “Gross Domestic Spending on R&D,” OECD, https://data.oecd.org/rd/gross-domestic-spending-on-r-d.htm (accessed October 30, 2023). Stephen James, “What is R&D? Its Role in Business and How It Relates to R&D Tax Credits,” ForrestBrown, October 13, 2009, https://forrestbrown.co.uk/news/what-is-r-and-d/; David Leonhardt, “Longer Commutes, Shorter Lives: The Costs of Not Investing in America,” New York Times, October 17, 2023, https://www.nytimes.com/2023/10/17/magazine/us-public-investment.html (accessed October 30, 2023). See, also, John Walsh, “The Eisenhower Era: Transition Years for Science,” Science 164 (3875) (April 4, 1969): 50-53, https://www.jstor.org/stable/1726957; Gary Anderson and Francisco Moris, “Federally-Funded R&D Declines as a Share of GDP and Total R&D,” National Center for Science and Engineering Statistics, NSF 23-339, National Science Foundation, June 13, 2023, https://ncses.nsf.gov/pubs/nsf23339#:~:text=The%20ratio%20of%20U.S.%20research,funding%20sources%20for%20domestic%20R%26D.
