Total Federal Spending on Research and Development Has Been Falling as a Share of GDP

• Back in the 1960s and 1970s, federal spending on research and development averaged one and a half percent of GDP.
  
• By the mid-1980s the U.S. government had already scaled back its relative commitment: research and development spending then was only about 1.15% of GDP.
  
• The macroeconomic policy mistakes of the early 1980s left the United States with huge federal budget deficits. As a result federal spending on research and development has come under further pressure.
  
• Today federal spending on research and development is only 0.8% of GDP.
  
• Only health and medicine have avoided stringent cutbacks.
  
• The extremely tight "discretionary spending caps" that will govern the congressional budget debate over the next five years will place enormous further downward pressure on federal research and development spending.
  
• Given the extraordinarily high returns earned by federal investments in research and development during the Cold War generation, is this really a sector of federal spending where we want to economize?

 

Source: Robert Atkinson and Ranolph Court (1999), "The New Economy Index" (Washington: PPI); http://www.neweconomyindex.org/