Research and development: The United States, the leader

The United States became the world leader in Research and Development (R&D) in the 20th century, funding up to 69% of annual global R&D in the post-World War II period, according to a U.S. congressional analysis.

Thus, U.S. R&D in 2020 was 83 times higher than in 1956 in current dollars, and more than 11 times higher in constant dollars.

By sector, business-funded R&D grew the most during this period.

However, faster growth in total R&D spending by other countries reduced the U.S. share of global R&D to about 30.7% in 2020.

Two sectors-business and the federal government-have together accounted for more than 90% of U.S. R&D funding since 1955, although their combined share has fallen from a peak of 98% in 1956 to 93% in 2016.

Federal R&D spending as a percentage of total U.S. R&D spending peaked in 1964 at 66.8%, the same year that business R&D spending reached its lowest point at 30.8 percent.

Between 1964 and 2000, the federal government’s share declined and the business share increased.

Research and development

In 2000, businesses accounted for 69.4 percent of U.S. R&D spending and the federal government 25.1 percent.

This change in the composition of R&D funding was not due to a reduction in R&D spending by the federal government, but rather to more rapid growth in business R&D spending.

From 2000 to 2010, the share of business R&D declined from 69.4 percent to 61.0 percent, and has increased every year since, reaching an all-time high of 73.1 percent in 2020; from 2010 to 2020, the federal share declined from 31.1 percent to 19.5 percent.

In current dollars, federal R&D funding increased from $3.5 billion in 1955 to $137.8 billion in 2020, a compound annual growth rate (CAGR) of 5.3 percent.

In constant dollars, federal R&D grew 2.1 percent CAGR during this period.

However, between 2011 and 2014, federal R&D funding, measured in current dollars, fell for three consecutive years for the first time since these data have been collected; the total decline in federal funding in these years was $8.6 billion (6.8 percent).