For eighty years, research and scientific advancement funded by the U.S. government has been a critical source of America’s global leadership in technology and innovation. Federal R&D investment has supported large-scale national achievements like winning World War II, splitting the atom, and landing men on the moon, and has fueled the development of advanced technologies that spawned new industries like digital computing, telecommunications, and, most recently, genome-based pharmaceuticals. Such innovations helped drive post-war economic growth and job creation, and the expansion of a prosperous American middle class.
In recent decades, however, the federal government’s commitment to research and development has waned dramatically. After peaking in 1964, federal R&D investment as a percent of GDP has plunged to the lowest level in 60 years, undermining America’s technological edge and raising alarming strategic challenges, particularly from China. To preserve its global leadership position and accelerate post-Covid economic growth and job creation, America must renew its commitment to research and scientific inquiry.
An excellent first step would be to enact the Endless Frontier Act, bipartisan, bicameral legislation introduced last May by Sens. Charles SchumerChuck SchumerDemocrats wrangle to keep climate priorities in spending bill Coons says White House could impose border fee for carbon-intensive products The Hill's Morning Report - Presented by Facebook - The omicron threat and Biden's plan to beat it MORE (D-N.Y.) and Todd YoungTodd Christopher YoungOvernight Defense & National Security — Presented by Boeing — Senators to take up defense bill Wednesday Schumer: Time is 'now' to repeal Iraq War resolution It's time to give Medicare beneficiaries the opportunity and choice of recovery in the home MORE (R-Ind.), and Reps. Ro KhannaRohit (Ro) KhannaKhanna advocates for 'honest and reflective patriotism' in America Democrats call on Education secretary to address 'stealthing' at federal level Showdown: Pelosi dares liberals to sink infrastructure bill MORE (D-Calf.) and Mike GallagherMichael (Mike) John GallagherHuman rights groups sound alarm over Interpol election China denies it tested missile, says it was space vehicle Biden slips further back to failed China policies MORE (R-Wis.). The Act would significantly augment federal R&D investment and establish innovation centers across the country. Its immediate passage would help restore America’s leadership position regarding science and technology.
Under the leadership of Vannevar Bush, science advisor to President Franklin D. Roosevelt and the first Director of the Office of Scientific Research and Development established in 1941 (later replaced the National Science Foundation), the U.S. government funded wartime research that led to critical breakthroughs that helped win World War II, including advances in radar technology, computers, cryptography, and the Manhattan Project. Following the successful launch of the “sputnik” satellite by the Soviet Union in 1957, federal R&D spending increased quickly, peaking at 2 percent of GDP and 10 percent of total federal outlays in 1964, after President John F. Kennedy set America’s sights on the moon. At that time, the federal government funded two-thirds of all R&D conducted in the United States — an amount greater than the R&D spending by the rest of the world’s governments and businesses, combined.
Over subsequent decades, however, growth in federal R&D spending slowed. R&D outlays grew at an average annual rate of 5.6 percent between 1953 and 1985, then fell to an average annual rate of just 0.4 percent between 1990 and 2016. By the mid-1990s, federal R&D investment had fallen below 1 percent of GDP, where it has remained ever since. As Goldman Sachs pointed out in a May 2020 report, “In FY 2019, federal R&D spending equaled 0.6 percent of U.S. GDP and 2.8 percent of total federal outlays, the lowest in over 60 years.” U.S. R&D investment as a percent of GDP now ranks 10th in the world, behind major economic competitors such as Japan, South Korea, Taiwan, and Germany.
Particularly alarming is the decline in federal funding of basic research. Basic or pure research is conducted to gather general information and to expand existing knowledge and understanding, whereas applied research is conducted for more targeted purposes — to resolve a particular question or to achieve a specific commercial objective. In this sense, basic research is the foundation for applied research, establishing the context of knowledge and understanding within which additional progress can be made regarding specific inquiries. While businesses conduct some basic research, they are not well suited for such projects, given the scale and risk that basic research entails together with the unknown practical outcome of such inquiry.
Government funding of basic research has played a critical role in driving many technological breakthroughs that have helped U.S. industry become a global technology leader, and in the creation of iconic America companies — including Sun Microsystems, Pfizer, Genentech, Cisco, and Google — which trace their origin back to federally funded basic research. In fiscal year 2017, the federal government funded $40.2 billion in basic research, down 13 percent from 2005 in inflation-adjusted terms. This decline followed more than 50 years of steady increases.
As the United States has reduced its commitment to R&D, other nations have dramatically expanded theirs. Over the period 2000 to 2017, India increased domestic R&D spending at an average annual rate of 8 percent, South Korea by 10 percent, and China by nearly 20 percent.
The competitive threat from China is of particular concern. In recent years, China has targeted critical industries like petrochemicals, electronics, metals and materials, machinery and equipment, pharmaceuticals and biotechnology, information technology, and artificial intelligence. China’s Belt and Road global infrastructure initiative, the Made in China 2025 plan regarding advanced manufacturing, and the China Standards 2035 blueprint are key aspects of China’s ambition to dominate the 21st century economy — all supported by robust research and development. According to the National Science Board, China likely surpassed the United States in R&D funding for the first time in 2019.
But renewing America’s commitment to research and scientific inquiry is about more than competing with China. As Jonathan Gruber, co-author of the book “Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream” has pointed out, science policy is economic policy — investments in science lead to innovations that drive economic growth and job creation.
The Endless Frontier Act would address this national priority in several important ways. The Act would expand the National Science Foundation (NSF), to be renamed the National Science and Technology Foundation (NTSF); establish a new Technology Directorate within the NTSF; authorize $100 billion for the new directorate to reinvigorate American leadership in the discovery and application of ten key technology areas that will define global competitiveness; authorize an additional $10 billion for the Commerce Department to designate at least 10 regional technology hubs; and fund programs to accelerate the transfer of new technologies from the lab to the marketplace.
If America is to retain its status as the world’s innovation leader, the multi-decade decline in the federal government’s commitment to scientific research must be reversed. Doing so will not be easy given current fiscal circumstances, but there is little doubt that America’s economic and strategic future depends on such a commitment.
John R. Dearie is president of the Center for American Entrepreneurship.