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Innovation Fact of the Week: U.S. IT Companies Contribute Outsized Share of U.S. and Global R&D Investment

ICT Investment

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Companies invest in research and development activities to remain at the forefront of technology, stay ahead of their competitors, and create new waves of innovations—and by these measures, the U.S. information technology sector is intensely focused on maintaining its global leadership position. A report from the European Commission’s Joint Research Centre underscores the point. It found that in 2014, the world’s 2,500 largest companies together invested $810 billion in R&D. One-third of those companies were based in the U.S., yet they accounted for approximately 40 percent of the global R&D figure. Why the outsized share? A big reason was that 286 of those U.S. companies were in the R&D-intensive information technology sector.

Not surprisingly, those 286 large IT companies also accounted for an outsized share of total business R&D in the United States—46 percent. This was a far higher percentage than the equivalent share of contributions that the largest IT companies made in other countries and regions. For example, the Chinese IT companies that made the global 2,500 list contributed 23 percent of China’s business R&D output; the European IT companies in the global 2,500 contributed 13 percent of business R&D in Europe; and the Japanese IT companies in the global 2,500 contributed 10 percent of business R&D in Japan.

The R&D intensity of U.S. IT companies is a sign they are well positioned to continue developing and supplying many more innovations in the years ahead for such fields as the heavily IT-dependent Internet of Things.

Read last week’s Innovation Fact of the Week

Photo Credit: Steve Johnson via Flickr

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About the author

John Wu is an economic research assistant at ITIF His research interests include green technologies, labor economics, and time use. He graduated from the College of Wooster with a bachelor of arts in economics and sociology, with a minor in environmental studies.