Connecticut Among Top States for R&D Spending

05.23.2024
Economy

Connecticut ranks among the top 10 states for research and development spending according to a new U.S. Bureau of Economic Analysis report.

The report—the BEA’s first examination of R&D spending—showed Connecticut spent 2.7% of its GDP on R&D activities in 2021.

That represents more than $7.9 billion in spending, an increase of 22% over the previous year and up 44% since 2017.

Massachusetts leads the New England region at 4.9%—third best in the country—followed by New Hampshire (3.5%), Connecticut, Rhode Island (1.8%), Vermont (1.5%), and Maine (0.7%).

R&D activity accounted for 2.3% of the U.S. economy in 2021, ranging from 0.3% in Louisiana and Wyoming to 6.3% in New Mexico.

Key Sectors

The BEA report described U.S. R&D activity as “highly concentrated,” with 10 states accounting for 70% of all spending.

California accounts for almost a third of U.S. R&D value-added activity, with Washington, Massachusetts, Texas, and New York all making significant contributions.

Eighty-five percent of R&D value added in the U.S. is generated by businesses, led by the professional, scientific, and technical services sector at 40%.

Connecticut R&D spending increased 22% in 2021 to more than $7.9 billion.

The information sector accounts for 15%, followed by chemical manufacturing (12%) and computer and electronic product manufacturing (11%).

In Connecticut, businesses accounted for 92% of R&D value added, with universities and colleges contributing 5% and 3% for state and local government.

The state’s manufacturing sector was responsible for $3.67 billion in activity in 2021 (46%), while professional, scientific, and technical services contributed $3.3 billion (42%).

Jobs

Connecticut R&D-related employment grew 24% in 2021 to 39,800, representing 2.4% of all non-farm jobs in the state for that year.

Businesses accounted for 32,600 of those jobs (82%), up 30% from the previous year as the overall labor market recovered from pandemic-driven job losses.

Manufacturing employed 17,800 people—45% of all R&D employment—with sector jobs growing 55% year-over-year.

Connecticut R&D-related employment grew 24% in 2021 to 39,800.

Colleges and universities employed 3,700 people in R&D activities (9%) and state and local government accounted for 2,800 jobs (7%).

CBIA president and CEO Chris DiPentima said R&D activities were crucial to driving innovation in high-growth industries, particularly the aerospace and bioscience sectors.

“Lawmakers must continue implementing policies that support and promote R&D investments across all sectors,” he said.

DiPentima cited successful legislation this session allowing net operating losses to be carried forward for up to 30 years as an example of policies “that attract investment and make Connecticut more competitive.”

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