industryR&D in Texas is key to innovation and economic success

May 2026 | By Brenda Seis

In 1958, Texas Instruments engineer Jack Kilby developed the integrated circuit — what we know today as the microchip. The piece became essential to modern technology — including cellphones, televisions and transportation.

In the 1980s, University of Texas at Austin (UT Austin) student Carl Deckard and mentor Joe Beaman created selective laser sintering (SLS), an additive manufacturing process that uses a laser to fuse materials, supporting the first efforts in 3D printing. Today, the SLS process is used by the aerospace and health industries to print quality parts at lower costs.

These discoveries — and the findings that followed — were supported by research and development (R&D), a central factor of an economy’s ability to innovate.

R&D and the Texas economy

R&D plays a valuable role in the state’s economy. A study by the Federal Reserve Bank of Dallas found that government-funded R&D provides a steady growth in total factor productivity that can last up to 15 years, as spillovers from new knowledge and technologies increase output.

Texas is one of the top five states contributing to R&D, with high-performing sectors, such as higher education and businesses, participating extensively, according to the Bureau of Economic Analysis (BEA). In 2025, the BEA released statistics from the R&D Satellite Account that estimate R&D’s contribution to gross domestic product (GDP) after accounting for the resources used to produce goods and services, employment and compensation from 2012 to 2023.

According to these statistics, in 2023, R&D in Texas produced $34.9 billion in value added, nearly 5% of the $701.8 billion in R&D GDP produced nationally. R&D value added by Texas businesses reached $29.2 billion in 2023, a 130.8% increase from 2012. Texas’ higher education institutions followed, producing $4.6 billion in value added and growing 77.9% from 2012, while nonprofits, federal government and nonfederal government combined generated $1.1 billion (Exhibit 1).

Exhibit 1 Data

Value Added by R&D, by Sector, 2012-2023

Year	Business	Higher education	Nonprofits	Federal	Nonfederal
2012	$12,642.0	$2,593.2	$669.9	$493.6	$26.1
2013	$13,114.9	$2,662.6	$664.0	$680.7	$14.0
2014	$13,707.7	$2,731.5	$669.2	$620.9	$4.7
2015	$14,701.8	$2,836.9	$744.3	$598.4	$5.9
2016	$16,139.7	$2,924.0	$804.3	$434.5	$6.9
2017	$17,975.5	$3,014.7	$858.9	$335.2	$6.0
2018	$17,629.0	$3,150.0	$875.8	$417.6	$5.8
2019	$19,757.7	$3,391.3	$616.8	$679.7	$5.9
2020	$20,791.4	$3,602.8	$641.7	$547.9	$5.2
2021	$21,984.4	$3,812.4	$676.8	$535.6	$3.6
2022	$24,815.3	$4,231.4	$776.4	$280.7	$3.8
2023	$29,174.7	$4,613.2	$947.1	$151.0	$4.3

Source: Bureau of Economic Analysis, Research and Development Satellite Account

Industry-specific data shows that of the total value added by R&D from Texas businesses, $16.9 billion (58%) originated from nonmanufacturing sectors and $12.3 billion (42%) from manufacturing. Value added by nonmanufacturing and manufacturing R&D grew 2.8 times and 1.9 times, respectively, since 2012, revealing the increasing impact of tech. From 2012 to 2023, output by the computer and electronic product manufacturing sector doubled, professional scientific and technical services (a sector encompassing artificial intelligence) almost tripled and the information sector quadrupled (Exhibit 2).

2012 Manufacturing

2023 Manufacturing

2012 Nonmanufacturing

2023 Nonmanufacturing

Exhibit 2 Data

Texas Industry R&D Contribution to Texas GDP, 2012 and 2023

Sector	Industry	2012 (in millions)	2023 (in millions)
Manufacturing	Chemical	$557.1	$766.6
	Computer and electronic products	$3,743.2	$7,259.4
	Transportation equipment	$962.0	$1,907.0
	Other	$1,243.0	$2,322.7
Nonmanufacturing	Information	$1,272.2	$5,108.7
	Professional, scientific, and technical services	$3,232.6	$9,316.4
	Other	$1,631.9	$2,493.8

Source: Bureau of Economic Analysis, Research and Development Satellite Account

R&D in Texas supplied 194,900 jobs that included researchers, technicians and support staff, and $30.1 billion in wages, salaries and benefits in 2023, according to the BEA. Businesses employed 143,500 R&D personnel (73.6%) and paid $24.9 billion in compensation (82.8%), while about 43,400 were employed by higher education (22.3%) and received $4.2 billion in compensation (14%) (Exhibit 3).

Exhibit 3 Data

Share of R&D Contribution to Texas Employment and Compensation by Sector, 2023

Sector	Share of Employment	Share of Compensation
Business	73.6%	82.8%
Higher education	22.3%	14.0%
Nonprofits	3.5%	2.7%
Federal	0.6%	0.4%
Nonfederal	0.1%	0.0%

Source: Bureau of Economic Analysis, Research and Development Satellite Account

Innovation and collaboration

When businesses, government and other organizations partner with higher education to develop new products and technology, innovation is enhanced. Not only do colleges and universities conduct research necessary for product development, they also have renowned facilities and expertise. Inventions stemming from higher education labs are patented by universities and licensed to businesses for revenue. Some faculty and students even use their inventions to start their own businesses under their university, called spinouts. A report by the Texas Higher Education Coordinating Board (PDF) found that increasing structural and financial support for commercialization can strengthen the economic impact to the state by drawing in talent, businesses and associated startups, venture capital and licensing revenue.

Fernanda Leite, interim vice president for research at UT Austin, said, “This collaborative model creates high-paying jobs, launches new businesses, attracts world-class talent to Texas and positions our state as a global leader in semiconductor manufacturing, cancer research, health care treatment and more.”

Texas has 16 Tier 1 colleges and universities (or R1, as defined by the Carnegie Foundation for having very high research activity), the most in any state. The National Academy of Inventors placed seven of Texas’ public and private universities in the top 100 for most patents granted to U.S. higher education institutions. And the University of Texas and the Texas A&M University systems also ranked internationally at fourth and 49th, respectively, in 2025.

R&D patents

Patents are essential to indicating where R&D innovation occurs — they provide inventors with property rights that “exclude others from making, using, offering for sale, or selling” their inventions and offer opportunities to license them for revenue. After being patented, the microchip, for instance, provided millions of dollars in royalties to Texas Instruments.

In 2024, more than 11,800 patents were issued in Texas, the second highest in the U.S. after California. According to a Texas Comptroller of Public Accounts analysis of 2024 data by PatentsView, the Gulf Coast region received the most patents in the state; however, the Capital region had the most granted per capita (Exhibit 4).

Texas Patents by Economic Region, 2024

Regions	Patents	Patents per 100,000 residents
Alamo	675	22
Capital	3,298	123
Central Texas	150	11
Gulf Coast	4,114	52
High Plains	76	9
Metroplex	3,320	38
Northwest	17	3
South Texas	18	1
Southeast	17	2
Upper East	91	8
Upper Rio Grande	10	1
West Texas	31	5
Total	11,817	38

Sources: PatentsView; Texas Comptroller of Public Accounts

Aligned with their economic strengths, the Gulf Coast region received the most energy-related patents in the nation in fields such as civil engineering, while the Metroplex and Capital regions were heavily inventive in electrical engineering, including computer technology, digital communication and semiconductors. Transportation received the most innovation in the Metroplex region, thanks to Tarrant County, and cybersecurity patents were heavy in Bexar County in the Alamo region.

What’s next for Texas R&D?

State leaders continue to build on accomplishments such as the Cancer Prevention & Research Institute of Texas (CPRIT), which was created in 2007 with voter approval and is now the second largest cancer program in the world. As of February 2026, CPRIT’s accomplishments include recruiting nearly 350 researchers, carrying out 432 clinical trials and creating more than 8,000 jobs.

The 89th Texas Legislature in 2025 again passed laws that aim to expand R&D opportunities.

House Bill (HB) 4751 established the Texas Quantum Initiative, which can receive donations to provide grant funding to businesses, universities and other research entities to carry out quantum research and development, along with manufacturing. Quantum R&D uses the smallest particles of matter in computing, networking and sensing technology to advance their speed, capabilities and security. The industry is growing rapidly and anticipates a $97 billion global value by 2035, according to estimates by McKinsey & Company. This follows the 88th Legislature’s passage of similar initiatives for semiconductors with the Texas CHIPS Act (HB 5174) and space exploration with the Texas Space Commission and Texas Aerospace Research and Space Economy Consortium (HB 3447).

SB 2206 offers a different approach by increasing the franchise tax credit (PDF) for businesses with qualified research expenses and maintaining a larger credit when businesses contract with institutions of higher education.

“Strategic state investments like CPRIT and the Texas CHIPS Act accelerate scientific discovery and technological advancement,” said Leite. “They also serve as powerful catalysts for attracting federal funding.”

According to the National Center for Science and Engineering Statistics, federal funding for R&D in Texas reached $6.2 billion in 2023, and state funding reached $263.8 million in 2024.

“When investments are made in research, the returns multiply — strengthening our competitiveness, securing our future and improving the lives of all Texans,” said Leite.