DOCUMENT RESUME HE 028 272 ED 382 085 El-Khawas, Elaine; Anderson, Charles J. AUTHOR Developing Our Future: American R&D in International TITLE Perspective. American Council on Education, Washington, D.C. Div. INSTITUTION of Policy Analysis and Research. PUB DATE 93 NOTE 14p. American Council on Education, One Dupont Circle, AVAILABLE FROM Suite 800, Washington, DC 20036 (single copy $10; 8-issue annual subscription $58). Collected Works PUB TYPE Serials (022) Research Briefs; v4 n7 1993 JOURNAL CIT EDRS PRICE MFO1 /PCO1 Plus Postage. Cross Cultural Studies; Economic Development; DESCRIPTORS Engineers; Federal Programs; Foreign Countries; Government Role; Higher Education; *Institutional Role; *Research; *Research and Development; Research Utilization; Scientists; Technology; *Universities Germany; Japan; United States IDENTIFIERS ABSTRACT This report offers a profile of the financial and human resources devoted to research and development (R&D) in the United States and other nations, focusing on the role of universities in carrying out R&D and in supporting the development of scientific and technical personnel needed for a competitive economy. It found that R&D expenditures in the United States in 1992 were an estimated $157.4 billion, making it the leading nation in total R&D expenditures. As a percentage of the nation's economy, however, U.S. R&D expenditures lag behind those of Japan and Germany. R&D expenditures represented 2.65 percent of U.S. gross domestic product (GDP) in 1990, compared with 3.07 percent for Japan and 2.81 percent for Germany. Only 16 percent of all R&D spending is for basic research, while 23 percent is for applied research and 61 percent is for developmental activities to produce useful products from the research findings. Although academic institutions conducted only 15 percent of all R&D activity in the United States in 1992, they conducted 49 percent of all basic research. (MDM) *********************************************************************** * * Reproductions supplied by EDRS are the best that can be made * * from the original document. *********************************************************************** RESEARCH . J. J. J. J. J. J. J. BRIEFS I I S III 8 8 8 J. J. J. J.. 4...1 Volume 4, Number 7 1993 J. J. . J. J. . J I 8 8 .J. J. J. J. J.. 8 8 1 o J. J. J. J. J. J. J. J.. 11 Division of Policy Analysis and Research I t I I 1 5 American Council on Education, Washington, D.C. Developing Our Future: Perspective American R&D in International Elaine El-Khawas and Charles J. Andersen EDUCATION U S DEPARTMENT OF "PERMISSION TO REPRODUCE THIS and Improvement calico of Edredrona, Research MATERIAL HAS BEEN GRANTED BY INFORMATION EDUCATIONAL RESOURCES CENTER (ERIC) reproduced as ACE This ocument has been organization received from the person or mating it o made to Minor changes have been quality improve reproductiba stated in this TO THE EDUCATIONAL RESOURCES Points of view or opinions represent document do not necessarily INFORMATION CENTER (ERIC)." policy official OERI position or AVAILABLE BEST COPY RESEARCH III a J. J. J....1. J. J. JO, 0 ISO BRIEFS . J. J. Jim J. J. J.0 . Volume 4, Number 7 1993 I s s J.. a .J. J.J. J III . .0 . aeim .J.J... .0.1.01.J...P.. .. S .....54.1.J.J...P.J..s... Division of Policy Analysis and Research American Council on Education, Washington, D.C. Developing Our Future: American R&D in International Perspective Maine EI- Khawas and Charles J. Andersen Expenditures for scientific research and development (R&D) have long been seen as a vital component indicator of a of a nation's economic strength and international standing. Such expenditures offer an innova- country's commitment to scientific and technological development and its readiness to invest in stimulus to a country's tion and improvement. Increasingly, R&D is recognized as a direct and potent overall rate of growth and its standard of living. performance The growing importance of international competitiveness has focused new attention on the of U.S. R&D of the U.S. in research and development. There is a new concern about the relative position that affect changes in compared to other industrialized countries and heightened awareness of the factors profile of the financial and human resources devoted to a country's standing. This research brief offers a is given to research and development in the United States and in several other countries. Special attention the development the role of universities in carrying out research and development and, also, in supporting of the scientific and technical personnel needed for a competitive economy. plied research; the rest, 61 percent of the total, HIGHLIGHTS is for development activities to produce use- INTERNATIONAL COMPARISONS: ful products from research findings. R&D EXPENDITURES: In 1992, U.S. R&D expenditures were an esti- INTERNATIONAL COMPARISONS: mated $157.4 billion. The U.S. is the leading HUMAN RESOURCES IN R&D: nation in R&D spending, with more resources In the U.S., an estimated 949,300 scientists and devoted to R&D than the next four nations engineers were engaged in R&D activity in combined. 1989. This amounts to about 76 R&D scientists U.S. R&D expenditures represented 2.65 per- and engineers per 10,000 persons in the labor cent of the nation's gross domestic product in force. 1990. By this measure, comparing R&D activ- Japan is on a par with the U.S. on this measure ity to the size of a nation's economy, the U.S. of scientific capacity, with an estimated 74 currently lags behind Japan and Germany, its R&D scientists and engineers per 10,000 work- major global competitors. The U.S. had the ers. highest ranking on this measure in the mid- The comparable figures for Germany, France 1960s. and the United Kingdom are much lower, at Only 16 percent of all R&D spending is for 59, 50, and 36, respectively. basic research. Another 23 percent is for ap- Elaine El-Khawas is Vice President, Policy Analysis and Research at the American Council on Education. Charles I. Andersen is a Senior Staff Associate at the American Council on Education. 3 ters (FFRDCs) are included, universities ac- THE ROLE OF UNIVERSITIES IN R&D: counted for 59 percent of basic research. Academic institutions conduct only 15 per- R&D expenditures by universities have in- cent of all R&D activity. Academe's share of creased steadily in the last decade. Between R&D is similar in other leading OECD coun- 1985 and 1992, university R&D grew at an tries. In all countries compared, industry con- average of 6.3 percent annually. ducts the largest share of R&D. Industrial support for university R&D also Academic institutions are major contributors grew in the last decade. In 1992, industry pro- to basic research. Universities accounted for vided $1.35 billion for university R&D, or 7.1 49 percent of all basic research in 1992. When percent of all university R&D activity. university-administered federal research cen- National R&D Expenditures Major Components of R&D: In 1992, total expenditures in the United States Some Definitions for research and development were an estimated $157.4 billion. This includes $81 billion (51 percent of the total) invested directly by industry as well as Most policy debate and statistical reporting $68 billion for R&D provided by the federal govern- use three categories of research and develop- ment (43 percent of the total). Figure 1 offers a ment activity: general profile of research and development activ- ity in the U.S. (NSF, 1992). Basic Research: research directed toward in- To highlight academe's role in U.S. research and de- creases in fundamental concepts and knowl- velopment activities, two factors need to be understood: edge. A very large share of all R&D 70 percent in is performed W92, an estimated $110 billion Applied Research: research directed toward by industry to support its own needs for prod- the problems in utilizing concepts and uct improvement. Academe's share, in con- knowledge to address a recognized and spe- trast, is only 15 percent of all R&D activity. cific need or to meet specific commercial Eleven percent is performed by government objectives. agencies, and 3 percent by nonprofit institu- tions. Development: the systematic use of the knowledge gained from research to pro- 61 percent in 1992, an estimated Most R&D duce useful materials, devices, or methods. is defined as development, with $96 billion another 23 percent of expenditures ($37 bil- Data on R&D normally encompass the sci- lion) devoted to applied research and only 16 ences (including medical sciences and social sci- percent ($25 billion) devoted to basic research ences) and engineering, but not the humanities. (see definitions). Academic institutions therefore knntribute a For universities, R&D data are for separately small share of all research and development activ- budgeted expenditures, and exclude research ity; their contribution is disproportionately in the time and expenses not specifically earmarked as area of basic research. R&D. Departmental research supported by gen- Universities and colleges, together with univer- eral university funds are excluded. sity-administered research centers (FFRDCs), per- form most of the nation's basic research. As of 1990, there were 40 FFRDCs, includ- FFRDCs ing 18 that are administered by universities. Federally-funded research and develop- Examples include: ment centers are R&D organizations that are Ames Laboratory (Iowa State University) exclusively or substantially financed by the federal government on a long-term basis. They Lawrence Livermore National Laboratory are supported by the government to meet a (University of California) particular R&D objective or to provide major Plasma Physics Laboratory (Princeton facilities at universities for research and train- University) ing purposes. Each center is administered by Software Engineering Institute (Carnegie an industrial firm, a university, or other non- Mellon University) profit institution. Figure 1 on R&D totalled Funds for R&D come mainly from Expenditures U.S. $157.4 billion in 1992. industry, secondly from the U.S. Government, 1992. In billions $100 $160 - ,--21:1 81 - a 80 140 - 682 --..-----44 ....° .11' 120 - 60 a 100 - 0-- Current Dollars ° 40 a . ----- Constant 1987 Dollars 80 - ° . 20 1 .1.1I. 1 .1 .1 .1 .1 82 60 . . 1 1 . 1984 1985 1986 1987 1988 1989 1990 1991 1992 19'32 1983 -s 0 Universities and Nonprofits Federal Govt. Industry R&D is directed toward Most Most R&D is conducted by industry. eeveloiment, not research. Other 16 Basic Research 4 ' Federal Govt. 11 23 Applied Research 15 Universities . a . 1111111 61 Develcpment 111111 70 Industry 60 70 40 50 30 20 10 0 70 50 60 40 30 20 0 10 Percent Percent National Patterns of R&D: 1992, pp. 18, 48, 49. Source: NSF, Figure 2 Percentage 4 - a Percentage of GDP: Nondefense R&D Spending as 1971-1990 U.S., Japan and Germany, 0-- U.S. --*-- Japan 3 - --11-- Germany 2 13---aocl--a-0--0--0--0"---4-42---43-3---3-43-13-1:1 III i i I . I I I i I 1 1 1 1 1 1 1 1 1 89 90 88 87 85 86 84 82 83 79 80 76 77 78 75 73 74 72 81 71 Year NSF, National Patterns of R,ii'D Resources, 1992, p. 68. Source: 5 3 International Comparisons Table 1 in Expenditure Patterns R&D Expenditures of In overall spending level, the United States is the Selected OECD Countries, 1990 leading nation in its investment in research and develop- ment. Table 1 shows national expenditures in 1990 for $149.2 billion U.S. the industrialized countries with sizeable levels of ex- penditure, expressed in U.S. dollars. In fact, the United $ 67.0 billion Japan States spends more on R&D than the combined total $ 32.3 billion Germany expenditure of the next four nations Japan, (West) $ 23.8 billion France Germany, France, and the United Kingdom. $ 20.2 billion U.K. International comparisons are usually made in terms $ 12.0 billion Italy of the share of each country's gross domestic product (GDP) that is devoted to research and development. 7.2 billion $ Canada GDP, the preferred statistic for such comparisons, mea- 4.8 billion $ Netherlands sures the value of the goods and services produced in 3.8 billion Sweden $ each country, regardless of ownership. International 3.8 billion comparisons rely on data compiled by the Organization $ Switzerland for Economic Cooperation and Development (OECD) Source: OECD, OECD in Figures, pp. 52-3. for its 24 member countries. OECD converts each country's currency to purchasing power parities (PPP) expressed in U.S. dollars, a way to adjust for differences in price levels between countries. The reader is cau- Table 2 tioned that, to provide comparative data, the latest avail- National Expenditures for R&D able figures sometimes are for 1989 or 1990; spending as a Percentage of GDP, 1982 - 1990 patterns by various nations have changed in some ways since 1990. Comparisons in this research brief focus on the first United West United five countries shown in Table 1, which comprise the =.49rmany France Kingdom States Year Japan main supporters of R&D activity. Each had at least $20 billion in R&D expenditures in 1990. Data from the Total R&D/GDP National Science Foundation are used because they make 3.07 2.40 2.65 1990 2.81 NA some adjustments to OECD-reported data. Inevitably, some inconsistencies remain in definitions and the year 2.27 2.88 2.34 2.68 1989 2.98 for which the most recent data is available. Data on other 2.23 2.86 2.28 2.73 2.86 1988 OECD countries can be found in OECD sources. 2.25 2.76 2.88 1987 2.27 2.82 In terms of R&D activity as a percentage of a country's 2.34 1986 2.80 2.75 2.73 2.23 total economic activity, the U.S. is not in a leading posi- 2.72 2.82 2.77 2.25 1985 2.31 tion (see Table 2). 2.68 1984 2.63 2.51 2.21 NA In 1990, the United States spent 2.65 percent of its gross domestic product on research and develop- 2.25 2.52 2.62 2.55 1983 2.11 ment. 2.54 1982 2.52 2.U6 NA 2.41 This puts the U.S. below both Japan and Germany, which spent an estimated 3.07 percent and 2.81 Nondefense R&D/GDP percent of their GDP on research and development in 1990. This represents some erosion from the 3.04 2.67 1990 1.93 1.83 NA situation in the early to mid-1960s, when the U.S. 2.74 1.85 1989 2.96 1.83 1.91 spent almost 3 percent of GDP on research and 2.73 1.77 1.81 1988 2.84 1.91 development activities. At that time the United 2.73 1.77 1.78 1.90 2.80 1987 States ranked highest among these countries in R&D spending as a proportion of gross domestic 2.59 1986 2.73 1.75 1.94 1.81 product. 2.58 1.72 1.98 2.76 1.78 1985 After 1964, U.S. spending for R&D slowed and the 2.40 1984 1.74 1.90 NA 2.61 ratio of R&D spending to GDP declined. By 1978, 1.66 1.66 1.89 2.53 1983 2.41 the U.S. ratio of R&D to GDP had reached a low 2.42 2.40 1.59 NA 1982 1.84 point, 2.1 percent. NA: not available During the same period, the ratios ir, -,ermany and Source: NSF, National Patterns of R&D Resources: 1992, Japan increased. In 1978, those nations spent 2.25 Table B-20 percent and 1.98 percent of GDP on R&D. 4 Figure 3 Nondefense R&D as a Percentage of All R&D, 1978-92 (In current dollars) Amount in Percentage of Billions All R&D Amount (Left Scale) Percentage (Right Scale) $120 78% 76% 100 74% 80 72% 70% 60 68% 66% 40 .. 64% 20 62% 60% 1992 1988 1990 1986 1982 1984 1980 1978 Source: NSF, National Patterns of R&D Resources, 1992, Tables B-2, B-21. allocated to defense-related R&D ($42 billion in The U.S. recovered much ground by 1Q90. How- 1992) will be directed toward federal nondefense ever, increases also continued in Germany and R&D activities. Japan, so that their ratios in 1990 still are higher than those of the U.S. In 1990, the university share of defense activity was relatively small. Department of Defense R&D obliga- When nondefense R&D is considered, the U.S. is well tions to academe amounted to $1.2 billion, 13 percent of behind its two leading competitors (see Figure 2). total federal R&D obligations to colleges and universities In 1990, the U.S. spent 1 93 percent of its gross and only 7 percent of all academic R&D that year. domestic product on nondefense R&D spending. This is considerably lower than the 1990 figures for Scientists and Engineers: R&D Japan :3.04 percent) and Germany (2.67 percent). International Comparisons In the United Kingdom and France, each of which have substantial R&D activity tied to defense, the Another measure of a nation's R&D capacity is the ratio of nondefense R&D to Gross Domestic Prod- number of highly trained persons in each country who 1.85 percent in the former and 1.83 in the uct are able to contribute to research and development ac- was quite close to the ratio for the U.S. latter tivities. A measure that is used in international compari- sons is the proportion of a country's total labor force that In 1990, about three-quarters of U.S. research and is engaged in R&D activity. Differences in how human development was directed to nondefense activities. In resources data are collected in various countries put contrast, Japan and Germany spent more than 90 percent these comparisons, however. limits on of their R&D for nondefense purposes. In the U.S., an estimated full-time equivalent of 949,300 However, the U.S. trend appears to be changing. scientists and engineers1 were engaged in R&D activity From 1987 to 1992, R&D devoted to nondefense were 77 percent during 1989. Most of these persons activity increased steadily, growing from $86 to employed in industry. Academic institutions employed $116 billion; nondefense activity has increased from 18 percent of the total number of R&D scientists and 69 to 74 percent of all U.S. R&D expenditures (see Figure 3). It remains to be seen whether these fig- ures will continue to increase as a result of the easing of international tensions. A major question but R&D, These are persons in professional positions engaged in ' is whether a larger portion of the billions currently not all hold doctorates. 57 Figure 4 Scientists and Engineers Engaged in R&D per 10,000 Persons in the Labor Force, 1989 Per 10,000 Labor Force 90 80 - 75.6 73.6 70 59.3 60 49.7 50 36.3 40 30 20 10- 0 U.K.* Japan France Germany U.S. Note: Data for the U.K. are for 1988. Source: NSF, National Patterns of R&D Resources: 1992, p. 69. Back in 1970, Japan had 33 R&D scientists and percent worked at federal government engineers. Six engineers engaged in R&D per 10,000 persons in agencies. the labor force. (The U.S. figure in 1970 was 64, then The number of U.S. scientists and engineers actively dropped to the low point noted above.) engaged in R&D has increased substantially in the last two decades. The total grew from 543,800 in 1970 to By 1980, the figure for Japan had grown to 54 per 949,300 in 1989, a 75 percent increase.This total number 10,000. (The U.S. figure in 1980 was 60, a slight of R&D personnel far exceeds the number so employed decline from 1970.) in other leading OECD countries. Other countries also have had substantial growth in In Japan, a total of 461,600 professionals were en- the number of R&D scientists and engineers over the last gaged in R&D in 1989. This figure is for total 20 years. persons, not full-time-equivalents. In 1989 (West) Germany had 59 R&D scientists and The comparable totals for (West) Germany and engineers per 10,000 in he labor force. Tais repre- France in 1989 are much lower, at 176,400 and sents almost a doubling since 1970, when the figure 120,700. A 1988 estimate for the United Kingdom is was 31. 102,600, although these persons are only from gov- In 1989, France had 50 R&D scientists and engi- ernment and industry. n^ers per 10,000 in the labor force, up substantially The U.S. R&D cadre is also substantial when mea- from 27 in 1970. sured as a proportion of the total labor force. In 1989, The United Kingdom had 36 R&D scientists and about 76 R&D scientists and engineers were engaged in engineers per 10,000 persons in the labor force in R&D in the U.S. per 10,000 persons in the labor force. This 1988, a small Increase over a 1972 estimate of 30. figure has increased steadily since the mid-1970s, when These data are an understatement compared to it was at a low of about 55 R&D professionals per 10,000 other countries, as they do not include scientists in the labor force. and engineers in universities. International comparisons are striking (see Figure 4). These figures will see dramatic supplementation in Notably, Japan has a similar rate: 74 R&D scientists and engineers per 10,000 persons in the labor force in 1989.2 The coming decade as data from Asian countries become available. In 1990 six Asian countries (China, India, This reflects rapid growth in the R&D cadre over the last Japan, Singapore, South Korea and Taiwan) reported the 20 years in Japan. award of three times as many bachelor's degrees in the natural sciences and engineering as the United States The data for the U.S. and Japan are not strictly comparable: the (514,200 vs. 169,700). Although the U.S. awarded more U.S. data are adjusted to be full-time equivalent, except for federql doctorates in these disciplines than the Asian countries government personnel, and include social scientists in govern- about 3,200 or 20 percent of the U.S. 16,300 vs. 9,700 ment and in universities. The data to.- Japan represent scientists doctorates in these disciplines went to students from and engineers working in R&D without a full-time-equivalent these countries. adjustment, excluding social scientists. 8 6 r Collaborative R&D activity between industry and The Role of Universities in R&D universities has been growing (see Figure 6). In 1992, universities in the U.S. accounted for an In 1992, industry provided $1.35 billion for estimated $19 billion in R&D activity (see Figure 5); R&D spending at universities, or 7.1 percent university-administered FFRDCs accounted for of all R&D expenditures by universities. another $5.1billion. Together, this constituted about Back in 1980, by comparison, industry sup- 15 percent of U.S. R&D in 1992. ported only 3.9 percent of R&D expenditures Academic R&D activity is relatively concentrated: at universities. 40 universities accounted for half of all academic In 1991, for example, the Massachusetts Institute R&D expenditures in the U.S. in 1990. Over the last of Technology received $45.7 million from industry decade, some dispersion of funding across a wider to support R&D, more than any other university. number of universities has taken place; in 1980, half MIT was followed by Pennsylvania State Univer- of academic R&D was conducted by 35 universities sity and the universities of Michigan, Washington (Feller and Geiger, 1993). However, from an overall perspective, academic R&D activity is still quite (Seattle), and Illinois at Urbana. concentrated. Of 2,100 baccalaureate-granting in- University-industry cooperation takes many stitutions in the U.S., only 104 carry the Carnegie forms, including industry-sponsored contract re- classification of "research university." These 104 search focused on specific outcomes, major multi- institutions devoted approximately 16 percent of year university-industry research agreements, per- their expenditures to research in contrast to the 5 sonnel exchange programs, research consortia, and percent reported for all other baccalaureate-grant- cooperative research centers (BHEF, 1988). ing institutions. In 1991, 70 research universities Another change during this period was a gradual received 70 percent of the $10 billion provided by increase in investment in R&D from universities' the federal government to all institutions for sci- own funds or from state/local government. ence and engineering R&D (NSF, 1993). In 1992, universities spent $5.3 billion of their Total R&D activity by universities (excluding own funds or of state/local government funds FFRDCs) has steadily increased in the last decade for R&D activity. This constituted 28 percent (see Eigure 5). Between 1980 and 1985, inflation- of academic R&D expenditures. adjusted growth was 3.6 percent annually; between 1985 and 1992, university R&D grew even more Back in 1983, institutional or state funds pro- rapidly, at an average of 6.3 percent annually after vided somewhat less, 24 percent, of academic inflation. R&D. Figure 5 Most university R&D is in University R&D has increased steadily basic research. in the last decade. Development 7% In billions $20 - 15 - 10 - 0-- Current Dollars Applied Research ---- Constant 1987 Dollars 5 28% 0iii Basic Research 65% 84 85 86 87 88 89 90 91 92 80 81 82 83 Source: NSF, National Patterns of R&D Resources 1992, pp. 18, 49. 7 Figure 6 Industry-sponsored R&D Spending at U.S. Universities, 1982 to 1992 (In current dollars) In billions 1.8 0-- Total 1.6 For Basic Research a For Applied Research 1.4 1.2 1.0 i" 0.8 1- 0.6 0.4 0.2 - 0.0 84 86 82 83 85 87 88 89 90 92 91 Year Source: NSF, National Patterns of R&D Resources 1992, pp. 47-55. Figure 7 Where R&D Activity Is Located, 1989 U.K. France Government Industry Germany El Universities 0 Other Japan U.S. 40 60 80 20 100 0 Percentage Source: NSF, Science and Engineering Indicators: 1991, Appendix Table. 4-28. The Role of Universities: much higher rates of 20 percent in Germany and 28 International Comparisons percent in Japan. comparisons help give perspec- Several international Substantial country differences exist in the way R&D tive on the R&D role of U.S. universities. activity is distributed across sectors (see Figure 7). In 1989, higher education (including FFRDCs) in Industry is the primary focus of R&D activity in the United States accounted for 14 percent of all each country, but the industry proportion in 1989 U.S. R&D expenditures. ranged from 72- percent in the U.S. and Germany down to 60 percent in France. Other leading OECD countries report a very simi- lar university share (see Figure 7). Governmental bodies carry out a ioderate pro- portion of R&D, although the country-to-country The share of R&D performed by universities is range is quite wide. France has the highest figure, highest in Japan, at 18 percent. with 24 percent of R&D conducted by governmen- The range among countries for university-based tal research units. Japan had only 8 percent of R&D R&D was much wider in 1975, from a low of 8 conducted by government in 1989, close to the U.S. percent in the U.K. and 13 percent in the U.S. to the figure of 11 percent. 8 10