American businesses are focusing more than ever on research and development (R&D). For the past 50 years, the United States has lead the way in R&D investments. In 2017, the public and private sectors in the U.S. spent more than $530 billion on R&D, about 2.7% of the country’s total GDP. The forecast for 2018 predicts that R&D spending will increase to $553 billion, more than any other country in the world and an increase of 2.9% from the previous year.
But why? People often think of R&D as something primarily limited to large, multinational corporations. But in reality, research and development benefits businesses of all sizes, from small startups to established companies like General Electric and General Mills.
Experts agree that research and development is the foundation of a globally competitive, knowledge-driven economy. Investing in R&D can help companies of all sizes develop new products, processes, and technology to create more jobs, drive growth, and remain competitive in the global marketplace. Daniel Meckstroth, chief economist at the Manufacturers Alliance for Productivity and Innovation, makes this comparison: “R&D is like your seed corn … in order to be competitive, you’ve got to have products in the pipeline.”
R&D doesn’t just create jobs and help businesses grow. It also has the power to change lives. The Wounded Warrior Home Project is a great example. Through this effort, the U.S. Army has partnered with Clark Realty Capital, private design firms, and the University at Buffalo to improve the quality of life for some of the thousands of veterans returning from Iraq and Afghanistan. The design team worked closely with active duty and wounded soldiers to develop and refine housing prototypes that address a broad spectrum of needs. The result is the planned redevelopment of more than 2,000 housing units at Fort Belvoir, Arkansas, housing that is safe, comfortable, and accessible for this country’s wounded veterans.
Several states in the U.S. are leading the way with R&D investment. New Jersey is one of the top ten states for R&D spending. In 2016 alone, U.S. companies spent more than $12 billion on R&D initiatives in the Garden State, and New Jersey ranks fifth in the nation in software R&D spending, at $639 million dollars, and seventh in overall private-sector R&D spending. Changing tax laws are contributing to this growth, with federal tax credits for R&D expenditures and favorable laws in states like New Jersey helping to promote R&D spending. For instance, Johnson & Johnson, which is one of the world’s largest health-care firms and is based in New Jersey, has committed to more R&D spending; though he would not give specifics, company Chief Financial Officer Dominic Caruso announced in early 2018 that “we’re going to look at all of our opportunities, but it’s going to be a significant increase.”
From light bulbs and cereal to better housing for wounded veterans and breakthroughs in health care, R&D is helping companies all over the world to innovate, grow, and improve the quality of life for their customers.