The year 2010 was a challenging one for economies around the globe, and the R&D landscape continued to change. Fortunately,
overall R&D funding stabilized, which marked an improvement over the volatility that characterized 2008 and 2009.

As you will see in the following pages, this year’s Forecast includes not only a country-by-country view of investment in R&D and our specific discussion of U.S. R&D funding and performance, but also a breakout of spending by six key, broadly defined industry segments – Life Sciences, Information Technology, Electronics, Aerospace/Defense/Security, Energy, and Advanced Materials. These critical industry segments will drive much of the future of global innovation, and though the recent economic volatility affected each one in different ways, they, along with overall global R&D, have stabilized and are now poised for continued growth in 2011.

Battelle’s organizational structure is designed to address many of these key segments as well as to leverage our capacity for innovation through the six national laboratories that we manage for the U.S. Department of Energy. As the world’s largest independent R&D organization, we have been dedicated to advancing science and technology to benefit mankind for over 80 years, and we bring together a world-class collection of human and technological assets to develop products, systems and services for global clients.

Although the volatility accompanying the recession has passed, current economic conditions still remain fragile. The impact of the overall economic climate in 2010 leads us to forecast a modest 2.4% growth forecast for U.S. R&D in 2011. This low growth rate assumes a likely decline in federal R&D funding in 2011, as many federal agency budgets are likely to be cut over the next year. The impact of these reductions could be greater if not for a continued expenditure stream resulting from previously awarded federal government “stimulus” funding. Without such resources, investment in the United States would actually decline in real terms in 2011.

This year’s Forecast also addresses the continuing rise of China as a global R&D powerhouse. Now second only to the United States in R&D funding, China is realizing the benefits of an unprecedented investment in education. As a result, highly skilled workers will substantially boost China’s annual GDP growth rate for a generation, to a level of more than $120 trillion by 2040.

In addition, the Forecast examines the global researcher community and provides a new perspective on the globalization of R&D. Both U.S. and non-U.S. researchers face many of the same concerns regarding their research challenges. Limited budgets and development times are affecting the entire global researcher community, and U.S. researchers in particular feel more challenged in these respects. When asked about the connections between global issues and their future R&D efforts, researchers identified areas including healthcare for the aging, demand for renewable energy, and global population growth as key concerns that the global research community must address.

In last year’s Forecast, I addressed the need for sustainable, positive change in STEM (science, technology, engineering, and math) at all levels of education. China’s investment in these areas is yielding great results, and the rest of the world would be wise to follow a similar course. Underinvestment in STEM, when coupled with a huge number of retiring “Baby Boomer” scientists and engineers, is creating a national “innovation crisis” for the United States and other nations in the years to come.

As we are always interested in providing the kind of data and other information that can help you, the readers of R&D Magazine, we
welcome your comments and suggestions.

In the meantime, we appreciate your continued interest in the Forecast, which is increasingly being referenced as a “must read” source for information on global innovation.

Jeff Wadsworth

President and CEO

Battelle