Innovation Lightbulb: A Trend in U.S. Research and Development Expenditure

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In this week's Innovation Lightbulb newsletter we discuss a historical trend in R&D funding in the United States.

Amid a flurry of recent legislation—including the CHIPS and Science Act, Inflation Reduction Act, Bipartisan Infrastructure Law, and the American Rescue Plan Act—policy makers have recommitted federal attention to investing in the United States' science and technology infrastructure.

However, as the data in the graph above shows, the federal share of total R&D expenditure reached its lowest point since recording began in 2020 according to data from the National Science Foundation, accounting for just under 23 percent of the nation's share.

Much of this is due to U.S. industry's increasing leadership in both the funding and performance of research and development, which has the added benefit of shortening the distance between where technology is developed and where it is commercialized.
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But this also reflects a degree of federal neglect of its science and technology activities and complacency about the country's competitive position in innovation. In years past, the federal share made up as much 67 percent of the nation's total, peaking during the height of the Space Race. When looking at raw expenditures, U.S. federal R&D spending fell for seven straight years (in constant 2012 USD) from 2009 to 2016, representing a nearly 17 percent contraction. There has been a modest turnaround in recent years, but foregone R&D is not easily recoverable, if at all.

Initiatives like those authorized under the CHIPS and Science Act are an important step in the right direction, but such efforts must be sustained over time. In today's geopolitical environment, leadership in technology and innovation is a strategic imperative. To compete globally, recent legislation cannot be "one-and-done" investments, but must be the beginning of a long-term recommitment to the country's science and technology enterprise.

Data visualization by Jaehyun Han

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Gregory Arcuri
Program Manager and Research Associate, Renewing American Innovation Project