In the U.S. Economy
- In 2018, the United States is estimated to have spent over half a trillion dollars ($580 billion) on R&D. The vast majority of those investments – $422 billion – came from the private sector.
- Overall, R&D investments represent over 2.8% of America’s GDP. Again, 70% of that figure – or nearly two percent of GDP – is funded by private business R&D investments.
- State-by-state GDP percentages can be found here.
- Manufacturers are America’s largest investors in R&D, accounting for roughly two-thirds of private-sector R&D spending in 2018. More than one-fifth of private R&D investments come from IT companies.
- About 15 percent of private U.S. R&D investments are made by small businesses with fewer than 500 employees.
Creating and Supporting Jobs
- R&D investments in the U.S. support millions of American jobs every year.
- Roughly 70 percent of all expenditures claimed under the R&D Tax Credit are for salaries of highly skilled employees.
Around the World
- The U.S. faces increasingly fierce competition for R&D investment dollars. In 2018, the U.S. share of global R&D investments was 29 percent. That share is down from 34 percent in 2008 and 39 percent in 2001.
- Meanwhile, China’s share of global R&D investment has grown steadily, from 15 percent in 2009 to over 23 percent in 2018.
Given the positive impact of R&D investments on our nation’s economy, America’s leaders – in both government and business – have an obligation to maintain a favorable environment for R&D spending in the United States. From a tax perspective, that means preserving existing incentives for R&D in the tax code and, more importantly, preventing the capitalization of R&D expenses which would erode businesses’ ability to invest in R&D.