American business firms spent $341 billion on research and development (R&D) performed in the United States in 2014, up 5.6 percent over 2013, and over 15 times higher than the total federal government spending on defense R&D.
Development accounted for the greatest share, 78 percent, of 2014 R&D spending, said a new report from the National Center for Science and Engineering Statistics (NCSES). Applied research accounted for 16 percent, while basic research accounted for 6 percent.
The NCSES InfoBrief focuses on business sector R&D spending. Other sectors, including higher education and federally funded research and development centers (FFRDCs), also contribute to total U.S. R&D spending.
Funding from companies' own sources rose by 6.7 percent to $283 billion from 2013 to 2014. Funding from other sources came to $58 billion.
The federal government was the largest of those other sources, accounting for $27 billion, of which $19 billion came from the Department of Defense. Of the federal funding, 92 percent went toward aerospace products and parts; professional, scientific and technical services; and computer and electronic products.
Small- and medium-sized companies performed 16 percent of the nation's business R&D in 2014, while companies with 500 to 24,999 domestic employees performed 48 percent.
Companies with 25,000 or more employees made up the other 36%. Businesses that performed or funded R&D employed 21.5 million people in the U.S., 1.5 million of which were R&D employees.
Business R&D is concentrated in a relatively small number of states.
California alone accounted for 30 percent of the $283 billion in R&D funded by companies' own sources in 2014. Other states with large investments in business R&D were: Massachusetts (6 percent), Michigan (5 percent), Washington (5 percent), Texas (5 percent), Illinois (4 percent), New Jersey (4 percent), New York (4 percent) and Pennsylvania (3 percent).