The next great thing

despite the economic woes in the country, investment in research and development continues to expand in all public, private, and nonprofit sectors, according to federal statistics.

Nowhere is that impact felt greater than in Massa­chu­setts, where more money is spent on business research and development than in any other state in the country except California, according to National Science Foundation surveys for FY2008, the most recent data available.

Massachusetts also ranks second overall nationally in total R&D expenditures as a percent of the state’s Gross Domestic Product. Only New Mexico, which has a GDP one-fifth the size of Massachusetts’s and where research and development spending was less than a quarter of the $24.6 billion spent in the Bay State, ranks higher.

“We have a lot of high tech and electronics here, so those folks are already invested in research and development,” says Charles Atherton, a professor of finance at Suffolk University. “It’s the technological advancement that enables businesses to grow. If you continue to make the same product you made in 1955, you’re probably not going to be a market leader anymore, no matter how much of a leader you were in 1955.”

California’s $77.4 billion in total R&D expenditure dwarfed all other states and accounted for 21.6 percent of all state spending on research and development. Massa­chusetts was a distant second to California, but it was the only other state to exceed $20 billion.

Businesses spent $19.5 billion on R&D in Massa­chu­setts. Surprisingly, given the state’s powerhouse educational institutions, only $2.2 billion was spent by the state’s colleges and universities, placing Massachu­setts sixth in that category. With its bevy of world-class research and teaching hospitals, Massachusetts ranked first in nonprofit R&D with $1.3 billion spent. California was second with $1 billion. No other state topped $400 million.