Total US R&D expenditures increased an estimated 5.8% in 2007, or 3.1% when adjusted to 2000 dollars to exclude inflation, to $368,098 million, according to the latest data from the National Science Foundation (NSF). Industry was the primary source of the increase, continuing a trend evident since the 1980s that also reflects slower increases in federal R&D spending. The trend was borne out by university funding last year. Industry funding for science and engineering (S&E) R&D at US universities and colleges rose 11.2%, faster than expenditures by any other source.

Industry accounted for the majority of US R&D performed last year, as well as the majority of R&D funding. R&D performed by industry rose 6.6% to account for 72% of all US R&D conducted in 2007 (see table, page 6). Industrial funding for US R&D rose 7.2% to make up 67% of all R&D funding last year. Not surprisingly, the majority of industry-funded R&D was for development. In 2007, development, applied research and basic research accounted for 76%, 20% and 4% of industry’s funding for R&D. In fact, industry accounted for 91% of all developmental R&D performed last year and 67% of applied R&D that was conducted.

In contrast, R&D performed by the federal government fell 2.4% last year to $24,744 million, or 7% of all US R&D. However, R&D funding by the federal government rose 0.6% to make up 27% total US R&D funding in 2007. Interestingly, the US government’s share of funding for development was also notable. Development, applied research and basic research represented 35%, 26% and 39% of federal government–funded R&D last year. However, the US government performed only 8% of the US’s basic research last year and only 10% and 5% of applied research and development, respectively.

Universities and colleges accounted for 13% of all US R&D performed last year, a 3.9% increase. The share of R&D performed by US universities and colleges has gradually increased in the past 20 years. In inflation-adjusted 2000 dollars, universities and colleges performed 13% of all R&D in 2007, up from 11% in both 2000 and 1990. This corresponds to a declining share of R&D performed by the federal government, fluctuations in the industrial share, and an increase in the share performed by nonprofit organizations. R&D funding by universities and colleges also rose last year, growing 6.3%, but it made up only 3% of total R&D funding.

Nonprofit R&D funding, excluding universities and government, rose 10.5% last year to $11,647 million, its fastest growth since 2005. Nonprofit funding represented 3% of total US R&D funding last year among five categories (see pie chart above), up from 3.0% in 2006. By type of research, 60% of nonprofit funding went to basic research, 25% to applied research and 15% to development. Although nonprofit funding of R&D grew in double digits, the amount of R&D conducted by nonprofits increased only 5.5% in 2007 to make up 4% of all R&D performed in the US. Also picking up last year was R&D funding by nonfederal government sources, which increased 5.0% to $3,226 million. However, such funding accounted for less than 1% of total US R&D funding.

Universities’ growing role in US R&D, particularly industrial R&D, is evident in a separate NSF report examining S&E R&D expenditures by US universities last year. According to the NSF, S&E R&D expenditures by US universities and colleges rose 3.5% last year, or 0.8% when adjusted for inflation, to $49,431 million. At 62%, the federal government continued to account for the majority of universities’ S&E R&D expenditures, however, these expenditures rose only 1.1%. In contrast, industrial expenditures jumped 11.1% to make up 5% of total S&E R&D expenditures at US universities. Institutional funds (funds that are separately budgeted from “unrestricted sources, unreimbursed indirect costs associated with externally funded R&D projects, and mandatory and voluntary cost sharing on federal and other grants”) accounted for 20% of universities’ S&E R&D expenditures in 2007 and rose 6.6%, while state and local government accounted for 6% of such expenditures and rose 6.1%. Other sources accounted for 7% of expenditures and rose 10.0% .

Despite the increase in industry-funded research, universities’ S&E R&D expenditures for basic research increased faster than expenditures for applied research last year, rising 4.3% to $37,609 million. S&E R&D expenditures for applied R&D rose 1.2% to $11,822 million. Among the fields benefiting from the increase were bioengineering/biomedical engineering, for which expenditures for S&E R&D at universities rose 12.8% to $537 million, and chemical engineering, for which they increased 7.5% to $602 million. However, it was the life sciences that remained the largest field for S&E R&D expenditures at US universities and colleges, as they rose 3.3% to $29,764 million in 2007. Within the life sciences, S&E R&D expenditures for medical sciences grew the fastest, increasing 4.5%, followed by agricultural sciences and biological sciences, for which such expenditures increased 3.7% and 1.9%, respectively. However, expenditures for multidisciplinary life science projects fell 1.9%. S&E R&D expenditures for the physical sciences at US universities and colleges grew only 0.8% last year to $3,842 million, including 2.4% increase for chemistry expenditures and a 0.2% increase in expenditures for physics.

Among federal agencies, the Department of Health and Human Services (HHS) was responsible for the largest share of S&E R&D expenditures at universities and colleges last year, accounting for 56%, or $15,179 million. The life sciences received 89% of the HHS’s 2007 expenditures for S&E R&D at US universities. The second largest source of federally funded S&E R&D expenditures at universities and colleges in 2007 was the National Science Foundation (NSF), which was responsible for 12%. The physical sciences, environmental sciences and life sciences received the bulk of such NSF expenditures for 2007 at 22%, 17% and 16%, respectively.

As in 2006, the top five universities with the largest total S&D R&D expenditures in 2007, according to an NSF survey of 672 universities, were John Hopkins University ($49,431 million), the University of California San Francisco (UCSF) ($843 million), the University of Wisconsin Madison ($841 million), the University of California Los Angeles ($823 million) and the University of Michigan ($800 million). The only difference from fiscal 2006’s rankings was UCSF’s jump from number 5 to number 2, as its S&D R&D expenditures rose 6.5%. Only two universities among the top 20, Duke University at number 7 and Ohio State University at Number 9, posted double-digit increases in S&E R&D last year, as their expenditures rose 19.0% and 10.4%, respectively.

Life Sciences S&E R&D at Universities and Colleges, FY 2006–2007

Agricultural sciences 2,902

Biological sciences 9,218

Medical sciences 16,515

Life sciences, Other 1,130

S&E R&D at US Univ. and Colleges

FY02 FY03 FY04 FY05 FY06 FY07

Basic research 27,320 30,006 31,958 34,358 36,063 37,609

Applied R&D 9,085 10,094 11,300 11,434 11,680 11,822

FY 2007 Univ. and Colleges S&E R&D Expenditures in Biological Sciences

DOD DOE HHS NASA NSF USDA Other

145 64 4,942 36 422 183 310

Industry Federal Govt. Univ. and Colleges Nonprofits

2003 188.6 32.9 38.0 12.1

2004 190.3 3 2.6 39.4 11.8

2005 200.1 33.4 40.0 12.3

2006 212.5 33.2 40.3 12.4

2007 Est. 221.6 32.3 40.9 12.8