Useful Stats: BERD intensity on the rise, a decade-long look at the nation and states, 2013-2022

While both gross domestic product (GDP) and population have steadily increased across the United States over the last decade, the growth of business enterprise R&D (BERD) expenditures has surged ahead at an even faster pace. Nationwide, BERD as a percentage of GDP has jumped over 0.75 percentage points over the past decade, rising from 1.91% in 2013 to 2.66% in 2022, while BERD per capita has more than doubled from approximately $1,020 to $2,075 over the same time. This edition of Useful Stats will explore in depth the varied changes in BERD intensity metrics at the national and state levels over the most recent decade of available data.

The data used in this article is from the most BERD survey for business R&D values and the U.S. Bureau of Economic Analysis for GDP and population.

National overview of BERD intensity metrics

While prior SSTI analysis of BERD survey data has found large increases in domestic business R&D performance over the past decade, it is important to contextualize this growth within the bigger picture of the U.S. economy. Just because a given metric is on the rise does not necessarily mean that it is becoming more prevalent or becoming a larger contributor to the ecosystem and economy as a whole.

Indexing BERD values to key metrics like GDP and population can measure growth at a higher level.

When measuring BERD against GDP, as seen in Figure 1, BERD expenditures have increased three-quarters of a percentage point, from 1.91% in 2013 to 2.66% in 2022, with the largest increases going into 2018, 2019, 2020, and 2022. While two of these years coincide with the COVID-19 pandemic, BERD expenditures grew at some of the fastest historical rates.

 When measuring BERD against the population, we can see that BERD intensity has grown even faster. Per capita, BERD expenditures have more than doubled from approximately $1,020 in 2013 to $2,075 in 2022, as shown in Figure 1. By exploring the underlying data, it can be seen that population, while having grown over the 10 years , has done so relatively slowly compared to BERD, leading to a large increase in their proportions.

Figure 1: Domestic BERD intensity by metric, 2013-2022.

State-level overview of BERD intensity metrics

BERD and GDP

As with most metrics, moving from the nation to the state level reveals a much larger variance within the data. For example, BERD as a percentage of GDP in Washington, Massachusetts, and California are each more than approximately four percentage points higher than the national value in 2022, with values of 7.71%, 7.15%, and 6.44%, respectively, compared to the national value of 2.66%. In addition to these three states, just six others are above the national value.

Nineteen states’ and Washington, D.C.’s BERD values as a percentage of their GDPs, however, are below a single percentage point in 2022.

Figure 2 maps out each state’s and Washington, D.C.’s BERD expenditures as a percentage of their GDPs for each year from 2013 to 2022. The data is separated into five quintiles, with each color representing an equal share. Each year operates on a different scale to allow for better comparison between states for each year.

Figure 2: BERD as a percentage of GDP by state and Washington, D.C., 2013-2022.

Between 2013 and 2022, all but seven states had increases in BERD expenditures as a percentage of their GDP. Washington (+4.15 percentage points), Massachusetts (+3.31 points), California (+2.42 points), Delaware (+1.19 points), and Oregon (+1.09 points) each increased by over a whole percentage point and were the only states to do so. An additional three states—Alabama, New Jersey, and New Mexico—were the only other states with percentage point increases larger than that of the national value (+0.75 points).

Of the seven states that decreased, Missouri (-1.17 percentage points) and Utah (-0.64 points) had the largest relative decreases. Kentucky, Minnesota, and Rhode Island each decreased by approximately one-quarter of a percentage point, and South Dakota and Illinois by less than a tenth of a percentage point each.

BERD and population

On a per capita basis, Washington and Massachusetts lead the nation in domestic BERD expenditures, both topping $7,000 per capita in 2022. California follows with a per capita value of approximately $6,030. At the same time, six additional states—Delaware, Connecticut, Oregon, New Jersey, Michigan, and New Hampshire—have BERD per capita expenditures greater than that of the national value of $2,075, ranging from just under $4,500 in Delaware to approximately $2,350 in New Hampshire.

The remaining 41 states and Washington, D.C. all have lower per capita values than the U.S. as a whole, with 23 falling below $1,000. The bottom four states, Louisiana, Wyoming, Mississippi, and Arkansas, each have under $200 per capita of domestic BERD expenditures.

Figure 3 shows a map of each state’s and Washington, D.C.’s BERD expenditures per capita for each year from 2013 to 2022. The data is again separated into five quintiles, with each color representing an equal share of the data. Each year operates on a different scale to allow for better comparison between states for each year.

Figure 3: BERD per capita, 2013-2022.

From 2013 to 2022, while the national value increased (by approximately $1,060 per capita), so did that of seven states: Washington (+$5,230), Massachusetts (+$4,550), California (+$3,700), Delaware (+$1,960), Oregon (+$1,550), New Jersey (+$1,300), and New York (+$1,030).

An additional 14 states and Washington D.C. increased by over $500 per capita, while five increased by under $100 per capita.

Two states, Kentucky and Missouri, decreased BERD expenditures per capita over the decade of available data, dropping approximately $56 and $300 per capita, respectively.

This article was prepared by SSTI using Federal funds under award ED22HDQ3070129 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.