Investment in research and development (R&D) lays the foundation for the successful evolution of the innovation economy. By investing in R&D, science is advanced, fresh ideas are generated, technologies are developed, and new products, services, and processes emerge. But while business R&D investment in the United States jumped by two-thirds on an inflation-adjusted basis from $328 billion in 2000 to $458 billion in 2016, the rate of R&D growth as a share of GDP over the same period has been anemic—inching up from 2.61 percent to 2.74 percent.
Moreover, businesses are investing a much smaller share of their revenues in riskier early stage basic and applied research than in later-stage development, and the global share of business R&D performed in the United States has fallen significantly in the last decade. In order for the United States to continue expanding its innovation economy, it must enact stronger policies that support both business R&D—such as more generous R&D-specific tax incentives and expansion of the science, technology, engineering, and math (STEM) workforce—and federal R&D, as every dollar of federal R&D spurs an additional 30 cents in business R&D. This report briefly describes how business R&D leads to greater productivity, Read the full report here.