Industry Investment in R&D

Private sector investment in research and development as a share of Gross State Product.

WHY IS THIS IMPORTANT? Research and development (R&D), which yields new product innovations and adds to the knowledge base of industry and the marketplace as a whole, is a key driver of economic growth. Business provides more than two-thirds of all R&D funding. After steadily rising in the 1980s, and falling in the early 1990s, business-funded R&D as a share of GDP has recently resumed its upward climb, reaching its highest levels ever in 1997. However, most of that growth is in funding for development, with basic and applied research increasing little.

THE RANKINGS: Michigan leads the nation in corporate R&D —with well over twice the national average—much of which is automobile-related. In general, the states that are ranked the highest tend to be either high-tech states (such as Massachusetts, California, or Washington); states with significant corporate R&D laboratory facilities (like Michigan, Delaware, New Jersey, and Connecticut); or states with significant federal laboratory facilities (as in New Mexico, Idaho, and Rhode Island), which may further stimulate corporate R&D.

STATES BY RANK
Rank	State	Score
1	Michigan	4.9%
2	Delaware	4.0%
3	Massachusetts	3.8%
4	New Mexico	3.6%
5	Connecticut	3.3%
6	California	3.1%
7	New Jersey	3.1%
8	Idaho	3.1%
9	Washington	2.9%
10	Rhode Island	2.1%
11	Minnesota	2.0%
12	Indiana	1.8%
13	Vermont	1.8%
14	Utah	1.8%
15	Colorado	1.7%
16	Pennsylvania	1.7%
17	Illinois	1.6%
18	New Hampshire	1.5%
19	Missouri	1.5%
20	New York	1.5%
21	Iowa	1.4%
22	Ohio	1.4%
23	Arizona	1.3%
24	Wisconsin	1.3%
25	Florida	1.2%
26	Texas	1.2%
27	North Carolina	1.2%
28	Maine	1.0%
29	Oregon	0.9%
30	Kansas	0.9%
31	South Carolina	0.9%
32	Virginia	0.8%
33	Maryland	0.8%
34	Tennessee	0.7%
35	Alabama	0.7%
36	West Virginia	0.7%
37	Nevada	0.7%
38	Georgia	0.6%
39	Kentucky	0.5%
40	Oklahoma	0.4%
41	Nebraska	0.3%
42	Arkansas	0.3%
43	Wyoming	0.2%
44	Alaska	0.1%
45	Mississippi	0.1%
46	South Dakota	0.1%
47	Montana	0.1%
48	North Dakota	0.1%
49	Louisiana	0.1%
50	Hawaii	0.0%

	U.S. average	1.8%

ALPHABETICALLY
State	Rank	Score
Alabama	35	0.7%
Alaska	44	0.1%
Arizona	23	1.3%
Arkansas	42	0.3%
California	6	3.1%
Colorado	15	1.7%
Connecticut	5	3.3%
Delaware	2	4.0%
Florida	25	1.2%
Georgia	38	0.6%
Hawaii	50	0.0%
Idaho	8	3.1%
Illinois	17	1.6%
Indiana	12	1.8%
Iowa	21	1.4%
Kansas	30	0.9%
Kentucky	39	0.5%
Louisiana	49	0.1%
Maine	28	1.0%
Maryland	33	0.8%
Massachusetts	3	3.8%
Michigan	1	4.9%
Minnesota	11	2.0%
Mississippi	45	0.1%
Missouri	19	1.5%
Montana	47	0.1%
Nebraska	41	0.3%
Nevada	37	0.7%
New Hampshire	18	1.5%
New Jersey	7	3.1%
New Mexico	4	3.6%
New York	20	1.5%
North Carolina	27	1.2%
North Dakota	48	0.1%
Ohio	22	1.4%
Oklahoma	40	0.4%
Oregon	29	0.9%
Pennsylvania	16	1.7%
Rhode Island	10	2.1%
South Carolina	31	0.9%
South Dakota	46	0.1%
Tennessee	34	0.7%
Texas	26	1.2%
Utah	14	1.8%
Vermont	13	1.8%
Virginia	32	0.8%
Washington	9	2.9%
West Virginia	36	0.7%
Wisconsin	24	1.3%
Wyoming	43	0.2%

Source: National Science Foundation, 1995 data.

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Technology, Innovation, and New Economy Project
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