Useful Stats: R&D's contributions to state economies

Like the broader metric of R&D intensity, the prominence of R&D value added in a state’s economic output has shifted within several states over the past decade. Does it matter? For sustaining a state’s innovation competitiveness, it may, and subsequently it is important to know for many state and regional TBED initiatives. Proximity to the conduct of R&D has been well documented in empirical research to support strong regional innovation economies. Subsequently many TBED policies are designed to increase and maintain R&D activity within those boundaries as well as ensure the localized spillover effects are maximized. Determining where R&D activity is thriving and the size of its value added to the state’s GDP, particularly manufacturing-related R&D, may help inform those policy decisions. SSTI explores the latest data on state R&D value added in this Useful Stats article.

An introduction to the ‘R&D value added’ metric

Value added, as defined in the U.S. Bureau of Economic Analysis’ (BEA) technical documentation, is the difference between the gross output and intermediate inputs, measuring the contribution of an industry to GDP. In the context of R&D, value added is the value that an industry generates as part of R&D production minus its costs of energy, materials, and services expended for R&D production. Refer to the "About the Data" section at the end of this article for more detail on the sources and limitations of the data used.

Given this definition of R&D value added, it is important to note its difference with a similar metric, R&D intensity, which is calculated as R&D expenditures as a percentage of GDP. Unlike R&D intensity, R&D value added reflects the economic output generated through R&D activity after accounting for its costs.

Figure 1, below, presents a grouped column chart, where blue columns represent the overall R&D value added in current USD, and yellow columns represent the same metric adjusted for inflation, for the full span of the data.

R&D value added has increased across every year captured by the BEA’s experimental data set, both in current and constant USD.  

Figure 1: R&D value added in millions of current and constant 2012 USD, 2012-2023

R&D value added by state

Figure 2, below, includes a map of R&D value added by state for the span of available data. Note that the data is divided into five equal quantiles, with a different scale adjusted for each year—this layout allows for quick visual comparisons between states of the same year but is less helpful for quickly comparing the same state across different years (which we address later in this article).

SSTI has also prepared inflation adjustments of the BEA data using the Federal Reserve Bank of Minneapolis’ annual average CPI data. Each Figure, where applicable, includes both current USD and constant 2012 USD, which can be toggled by using the arrows in the top right of each applicable Figure. Inflation-adjusted values are extremely important to consider, as in some years it is possible to see increases in current dollars, but decreases in real dollars—in other words, while R&D value added may increase year over year, inflation may mitigate that increase, or even show a decrease, as inflation eats away at the value of those dollars.  

Figure 2: R&D value added in millions of current and constant USD, by state, 2012-2023

For an easier comparison of individual states’ values over time, Figure 3, below, includes column charts for each state and Washington, D.C., with a separate y-axis scaled for each jurisdiction. This chart is best used to compare changes within jurisdictions and general trends across jurisdictions.

Figure 3: State column charts of R&D value added (millions of current USD), 2012-2023

Over the past 10 years, from 2014 to 2023, R&D value added in all states increased, ranging from 11% in Missouri to 220% in Washington. Values in a total of 15 states more than doubled over the 10 years, while an additional 27 increased by at least 50%.

Adjusting for inflation, a different story is shown. Just four states (Washington, Oklahoma, Nevada, and Nebraska) more than doubled over the same period, while an additional 13 increased by more than 50%. R&D value added decreased in real dollars within five states (Missouri, Kentucky, West Virginia, Mississippi, and Alaska). Overall percent changes ranged from -14% in Missouri to 149% in Washinton.  

To view these trends and more, refer to Figure 4, below. Note that this Figure uses a single linear scale for the 10-, five-, and one-year percent changes.

Figure 4: Percentage change in R&D value added by state for selected periods

The BEA Research and Development Satellite Account also breaks down R&D value added data by source. Figure 5, below, includes a map that shows the percentage of R&D value added due to private manufacturing industries.

Any given state having a darker or lighter color is not necessarily positive or negative but illustrates its GDP’s dependance on the manufacturing sector R&D within its borders.

Geographically, in 2023, the Great Lakes region appears to have many of the states with the highest proportion of manufacturing R&D value added. This doesn’t necessarily mean they have the largest dollar amounts of manufacturing R&D value added, but the value is relatively higher than in other states.  

Referencing the prior figures, R&D value added in Washington was one of the largest, both in dollars and growth, but sits firmly in the lowest quintile of data for this manufacturing example, despite having the 10th largest manufacturing R&D value added of the states with available data in 2023. This suggests at first glance that Washington’s R&D may not be tied closely to its manufacturing capabilities. Washington policy makers may ask themselves: what might this hold for the competitiveness of the state’s large manufacturing sector in future years?

Figure 5: Manufacturing R&D value added as a percentage of total R&D value added by state, 2012-2023

About the Data

The above analysis draws from the newly updated BEA's newly updated Research and Development Satellite Account experimental data set, exploring the full breadth of the data set to cover R&D value added from 2012 to 2023.

Note that this is an experimental data set made possible with data and support from the National Science Foundation’s National Center for Science and Engineering Statistics (NCSES). The data was last updated September 3, 2025, and marks the second release of data (the initial release included data from 2017 to 2021). This update includes statistics from 2012 onward and new data for 2022 and 2023.

More details on the data set and its methodology and limitations are available on the data set’s BEA page and in its technical documentation.

This page 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.