Public R&D: A Key Public Investment Is Declining

WHY IS THIS IMPORTANT? Economists have shown that scientific and technological research is critical for economic growth, and that federal support for research has significant economic payoffs. Classic examples in terms of the New Economy have been the Internet and later the Web browser, which were both conceived and developed with government dollars and are now providing an entirely new realm for business opportunity.

THE TREND: () Federal support for non-defense R&D has been steadily dropping, from about 1 percent of GDP in the 1960s to less than half that percentage today (0.4 percent), and from 5.7 percent of the federal budget in 1965 to 1.9 percent in 1997. The decline is actually gaining steam, with all federal investments in research shrinking at an average annual rate of 2.6 percent in constant dollars between 1987 and 1995. Between 1993 and 1997, federal support for basic and applied research fell by 12 percent as a share of GDP. American investment in R&D relative to the size of its economy is lower than that of France and approximately equal to the U.K.

THE DATA:

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Index Home | Introduction
SECTION I | SECTION II | SECTION III
Productivity Paradox | Knowledge Economy
Nine Myths | Data Sources | Endnotes | The Authors

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