Public research and development
File:1953- Funding for research and development - US.svg
Public research and development (Public R&D) refers to the R&D activities related to public sectors, including governments, colleges and non-profit organizations.{{Cite journal|author1=Chen, Sheng-Syan|author2=Yan-Shing Chen|author3=Woan-lih Liang|author4=Yanzhi Wang.|date=2020|title=Public R&D spending and cross-sectional stock returns.|journal=Research Policy|volume=49 |issue=1|pages=103887 |doi=10.1016/j.respol.2019.103887|doi-access=}} Public R&D include academic fundamental research, applied research and R&D grants and contracts to private sectors, where later two are known as 'R&D subsidy'. Public R&D could be understood as a funder or a performer of an R&D activity. According to National Science Foundation in U.S., in 2015, R&D expenditures performed by federal governments, local governments, colleges and non-profit organizations are 54, 0.6, 64, and 20 billions of dollars, respectively. Meanwhile, industries perform R&D expenditures of 356 billion dollars. Moreover, R&D expenditures funded by federal governments, local governments, colleges and non-profit organizations are 121, 4.3, 17, and 19 billions of dollars, respectively. R&D expenditures funded by industries are 333 billion dollars.{{Cite web|url=https://www.nsf.gov/statistics/2018/nsb20181/assets/1038/research-and-development-u-s-trends-and-international-comparisons.pdf|title=Research and Development: U.S. Trends and International Comparisons, National Science Foundation.}} In terms of R&D funders, public R&D to private R&D ratio is about 0.5.
Israel is the world leader as a percentage of GDP in public spending in research and development, the United States leads in total sums spent.
Economic impacts
Economists have made significant strides to understand the dynamics of public R&D, along with its cascading effects.
Productivity
Scholars generally propose that public R&D enhances industrial productivity (e.g., Levy and Terleckyj, 1983;{{Cite journal|author1=Levy, David M.|author2=Nestor E. Terleckyj|date=1983|title=Effects of government R&D on private R&D investment and productivity: A macroeconomic analysis.|journal=The Bell Journal of Economics|volume=14|issue=2|pages=551–561|doi=10.2307/3003656|jstor=3003656}} Nadiri and Mamuneas, 1994{{Cite journal|author1=Mamuneas, Theofanis P.|author2=M. Ishaq Nadiri|date=1996|title=Public R&D policies and cost behavior of the US manufacturing industries.|journal=Journal of Public Economics|volume=63|pages=57–81|doi=10.1016/S0047-2727(96)01588-5|url=http://www.nber.org/papers/w5059.pdf}}).However, the improvement of productivity could result in R&D spill-over of public sectors, researcher movements and co-operation between public and private sectors.
R&D investment of private sectors
Economists are particularly concerned about whether public R&D stimulates or crowds out the private sector R&D. It is generally known as a 'policy success', if the public R&D (especially the government R&D subsidy) could stimulate the R&D investment of private sectors. So far, there is no conclusive viewpoint in the literature (e.g., Toole, 2007;{{Cite journal|last=Toole, Andrew A.|date=2007|title=Does public scientific research complement private investment in research and development in the pharmaceutical industry?|journal=The Journal of Law and Economics|volume=50|pages=81–104|doi=10.1086/508314|s2cid=44436555 }} Cohen, Coval, and Malloy, 2011;{{Cite journal|author1=Cohen, Lauren|author2=Joshua Coval|author3=Christopher Malloy|date=2011|title=Do powerful politicians cause corporate downsizing?|journal=Journal of Political Economy|volume=119|issue=6|pages=1015–1060|doi=10.1086/664820|s2cid=3148523 |url=http://www.nber.org/papers/w15839.pdf}} Azoulay, Zivin, Li, and Sampat, 2018{{Cite journal|author1=Azoulay, P.|author2=Graff Zivin, J. S.|author3=Li, D.|author4=Sampat, B. N.|title=Public R&D investments and private-sector patenting: evidence from NIH funding rules|journal=The Review of Economic Studies|volume=86|issue=1|pages=117–152|doi=10.1093/restud/rdy034|pmid=31662587|pmc=6818650|year=2019}}).
Stock returns
Public R&D is also positively related to stock returns of industrial firms (Chen, Chen, Liang, and Wang, 2020). Although they show that abnormal returns based on public R&D ratio generate about 0.9% abnormal returns per month, and suggest that the positive relation could be interpreted by increased cash flow risks.
Government R&D programs
= European Union =
The EU spent €352 billion on R&D in 2022, 2.22% of EU GDP.{{Cite web |title=EU expenditure on R&D reaches €352 billion in 2022 - Eurostat |url=https://ec.europa.eu/eurostat/web/products-eurostat-news/w/ddn-20231201-2#:~:text=In%202022,%20the%20EU%20spent,2012%20(%E2%82%AC237%20billion). |access-date=2024-07-03 |website=ec.europa.eu}} R&D as a percentage of GDP was highest in Belgium (3.44%), followed by Sweden (3.40%), Austria (3.20%) and Germany (3.13%) as of 2022.
File:Secop_R&D_Center_in_Gleisdorf_Austria.jpg|Secop R&D Center in Gleisdorf Austria
File:IBM_Germany_Research_&_Development_Client_Center_03.jpg|IBM Germany Research & Development
= Israel =
{{See also|Science and technology in Israel}}
Israel leads the world in spending as a percentage of the economy on Research and development.{{Cite web |title=R&D as a percentage of GDP by country 2022 |url=https://www.statista.com/statistics/732269/worldwide-research-and-development-share-of-gdp-top-countries/ |access-date=2024-07-03 |website=Statista |language=en}} Israel spent 6.02% of its GDP on R&D.{{Cite web |title=R&D as a percentage of GDP by country 2022 |url=https://www.statista.com/statistics/732269/worldwide-research-and-development-share-of-gdp-top-countries/ |access-date=2024-07-02 |website=Statista |language=en}} Israel has focused on development on human capital investment with significant investment going toward knowledge based sectors of the economy.{{Cite web |title=השקעות במו"פ אזרחי בישראל: נתונים כבסיס לדיון לשם גיבוש מדיניות לאומית |url=https://www.neaman.org.il/Investments-Civilian-R-D-in-Israel-Background-Data-Development-National-Policy-HEB |access-date=2024-07-03 |website=www.neaman.org.il}}
File:Microsoft_Israel_R&D_Center_LTD._(4).jpg|Microsoft Israel R&D Center
File:General_Motors_R&D_center,_Herzliya.jpg|General Motors R&D, Israel
File:Technion_Computer_Science_Faculty.jpg|Technion, Computer Science faculty
File:Image-Weizmann_Institute_edit.jpg|Weizmann Institute, koffler accelerator
File:AstroRad_NASA.jpg|Israeli StemRad astronaut anti radiation suit, picture by NASA
= United States =
The United States spends the most on R&D in pure terms of investment. Federal research and development budget in the fiscal year of 2020 was $156 billion.{{Cite web |date=17 December 2020 |title=Federal Research and Development (R&D) Funding: FY2021 |url=https://crsreports.congress.gov/product/pdf/R/R46341 |access-date=20 February 2021}}
File:The_Jet_Propulsion_Laboratory_(9416811752).jpg|The Jet Propulsion Laboratory, California
File:Learning_Research_and_Development_Center,_Pitt.jpg|Learning Research and Development Center, Pittsburg
File:Mercedes_Benz_Research_Development_North_America_(13896049248).jpg|Mercedes Benz Research Development North America
File:National_Museum_of_the_U.S._Air_Force-Research_and_Development_Gallery.jpg|National Museum of the U.S. Air Force-Research and Development Gallery