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New Data Says U.S. R&D Has Topped 3% of GDP For the First Time Ever

The U.S. inches up a place in the international rankings for R&D intensity, while China also sets new highs.

New data indicates total U.S. R&D spending surpassed 3% of the American economy, as measured by gross domestic product or GDP, for the first time ever in 2019.

The new data set, released last week by the Organisation for Economic Co-operation and Development (OECD), an intergovernmental organization, indicates U.S. R&D stood at 3.07% of GDP in 2019, the most recent year available, representing an all-time high.

The news comes almost exactly ten years after President Obama's 2009 pledge to reach the symbolic milestone.

The United States has also inched up a place in the global rankings of R&D as a share GDP, a measure also known as "R&D intensity." In 2017, the U.S. ranked 10th in R&D intensity, but moved ahead of Denmark as of 2019. Switzerland, which also ranked ahead of the U.S. in R&D intensity in 2017, has not yet reported data for more recent years.

 

Israel and Korea expanded their global lead in R&D intensity in 2019 at 4.9% and 4.6%, respectively (see graph above). Taiwan has moved into third place at 3.5%. Sweden, Japan, Austria, and Germany also remain ahead of the U.S.

China also hit an all-time high in R&D intensity at 2.2%, moving up to 14th (or 15th including Switzerland, which as mentioned above has not yet reported newer data). China remains second in total R&D expenditures at $526 billion to the United States' $657 billion, but narrowed the gap somewhat in 2019. Chinese R&D grew by approximately 13% compared to U.S. growth of 8%.

Looking ahead, the Chinese government intends to grow R&D by at least 7% over the next five years, and basic research specifically by nearly 11%.

Basic research remains a relative U.S. strength. Though 2019 data is not yet available, in 2018 the U.S. ranked fourth in basic research at 0.49% of GDP, slightly behind Israel and France and four times ahead of Chinese investment. Korea leads in basic research intensity at 0.64% of Korean GDP.

The bulk of U.S. R&D growth was likely driven by industrial investment, which accounts for most R&D expenditures and has been surging since the 2008 financial crisis, as OECD analysts point out in a related research note (PDF). But U.S. federal R&D has also been surging in recent years, especially in energy and the life sciences, following years of suppressed expenditures under the Budget Control Act spending caps. Public R&D has similarly been growing elsewhere in the industrial world, according to OECD.