Editor’s note: Robert D. Atkinson and Caleb Foote work with the Information Technology and Innovation Foundation, a non-partisan think tank in Washington, D.C.
WASHINGTON, D.C. – In 2013, ITIF found that America is no longer—and nowhere near—the lead nation in terms of funding university research, despite boasting world-leading research universities that have been key to driving American technological supremacy since World War II. At that time, the United States ranked 24th out of 39 nations in government funding of university research as a share of gross domestic product (GDP). Since then, according to data provided by the Organization for Economic Cooperation and Development (OECD), the United States has slid to 28th in government funding, with the 12 leading governments investing more than double the U.S. level. Indeed, many nations are increasing investments in university research precisely because they understand the critical role research universities play in generating innovation-based economic growth, both through the training of scientists and engineers and the generation and transfer of knowledge.
Research drives innovation, and innovation drives long-run economic growth—creating jobs and improving living standards in the process. University-based research is of particular importance to innovation, as the early-stage research that is typically performed at universities serves to expand the knowledge pool from which the private sector draws ideas and innovation. America’s failure to stay abreast—much less close the gap—with its economic competitors in university research funding hampers U.S. innovation and competitiveness.
Key findings of the report:
- Research universities play a critical role in generating innovation-based economic growth and driving U.S. global innovation leadership.
- According to the most recent OECD data, the United States has slid to 28th of 39 nations in government funding for university research as a share of GDP, with the 12 leading governments investing more than double the U.S. investment.
- Between 2011 and 2017, U.S. government funding for university research as a share of GDP fell by nearly a quarter—0.06 percentage points. On average, nations decreased 0.03 percent of GDP during that time.
- Congress should commit to increasing university research support by $45 billion per year, which would place the United States among the top seven nations in the world in funding for university research.
- Congress should also expand the energy-related collaborative research and experimentation tax credit to apply to any field of university research investment—not just energy research—made by businesses.
National economies increasingly compete on the basis of innovation, and in the “race for global innovation advantage,” the United States will continue to trail countries that have made support for university research a key part of their national innovation strategies. While our public research universities used to be the envy of the world, many foreign universities have gained ground. Twenty years of underfunding by state governments have led to a decline in many public research universities’ capabilities relative to private research universities.1 And a long-term decline in federal funding for research and development (R&D) as a share of GDP, to the point federal funding levels fell to 1957 levels—when the Russians launched Sputnik—have also contributed to America’s decline. And while U.S. research universities, both public and private, are still a key strength, absent increases in state and federal funding, their future strength is uncertain.2
If the United States is to regain some edge in the race for global innovation advantage, it will need to reverse these trends and significantly increase university research funding, while at the same time providing stronger incentives for businesses to invest in university research. To do that, Congress should commit to increasing university research support by $45 billion per year, which would place the United States among the top seven nations in the world. In addition, Congress should expand the energy-related collaborative research and experimentation tax credit to apply to any field of research investment—not just energy research—at universities made by businesses.
(C) ITIF
