In the U.S. Economy
- In 2017, the United States spent over half a trillion dollars ($548 billion) on R&D. The vast majority of those investments – $381 billion, or 73% of the total – came from the private sector.
- Overall, R&D investments represent over 2.7% of America’s GDP. Again, 71% of that figure – or nearly two percent of GDP – is from 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 2015. Nearly one-fifth of private R&D investments come from IT companies.
- About one-sixth 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 2017, the U.S. share of global R&D investments was 25 percent. That share is down from 30 percent in 2011 and 37 percent in 2001.
- Meanwhile, China’s share of global R&D investment has grown steadily, from 15 percent in 2011 to over 20 percent 2017.
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.