Total R&D expenditures in the United States are expected to increase to more than $266 billion in 2000, according to the annual Battelle-R&D Magazine research and development forecast. That's almost 8 percent more than the $247 billion that the National Science Foundation estimates was spent in 1999.
"A combination of situations has created what could very well be the continuation of a major resurgence in R&D support and activity in the United States," said Jules J. Duga, a Battelle senior researcher and co-author of the report.
Industrial support continues to dominate both the amount and the growth of R&D spending with expenditures that are growing at a rate that significantly exceeds inflation.
The continued growth of R&D funding is largely the result of industry's growing realization that structural and operational changes are not the only road to profitability: continued investment in research-especially in development-will be required for long-term survival.
Major funding predictions for 2000 include:
- Federal spending will change very little. The forecast estimates that the federal government will spend $66.4 billion on R&D in 2000, only slightly more than the $65.9 billion spent in 1999.
- Industry will increase its R&D commitment, spending $187 billion in 2000, an increase of more than 10 percent from the $169 billion spent in 1999.
The remainder of R&D support-more than $12.6 billion-will be provided by universities and other nonprofit organizations, representing a more than 6 percent increase over 1999 funding.
Industrial support: Over the past few years, the R&D support by private industry has been growing steadily and, in fact, to a greater degree than had been accounted for in earlier surveys. There are now clear indications that the recent stronger commitment will continue. While much attention continues to be paid to the relatively short-term payoff of all manner of investments, there is an abiding concern for the establishment and fostering of those activities which will provide the platforms of the future.
This growth in industrial funding can be attributed to factors that generally influence technological growth: improved sales, earnings and stock prices, as well as expanding markets. As expected, the increases in industrial funding will not be uniform across all sectors. Significant increases are expected in electronic components, pharmaceuticals, office computing and accounting machines, and communications equipment.
Federal support: Once the dominant supporter of R&D, providing more than 50 percent of total funding, the federal government now contributes about 25 percent. There is little indication that this trend will be reversed in the near future.
In fact, the federal budget continues to give very mixed signals about its support of R&D, with major differences between budget authorization and actual expenditures of funds. Although present budget initiatives promote optimism relative to R&D support, the balance between short-term tax revenue enhancement and long-term R&D actions will influence the amounts and character of federal investment.
Major Trends and Conclusions:
- Industrial support of R&D will continue to increase, rebounding from a combination of cost-cutting and organizational structure modifications, and benefiting from the recent strong expansion of the national and international economy. However, significant upheavals in foreign economic or political stability could influence U.S. business positions and have an ancillary effect on R&D funding.
- Industry will continue to emphasize various forms of partnering and collaborations, including relationships with other industry, federal laboratories and offshore facilities. Such partnering will most likely concentrate on those aspects of basic and applied research which are necessary for the establishment of stronger platforms for future technology growth.
- The battles over the federal budget will continue to dominate, with major impacts on R&D through the negotiations within the bounds of discretionary spending. While increased revenues arising from a strong economy may alleviate some of the stress, there will likely be a movement toward reduction of national debt, reduction of taxes or bolstering the Social Security system. The use of surpluses to enhance R&D investment will not likely be supported broadly.
- The collaboration between industry and academia will proceed as a continuing experiment-in spite of the fact that there are many years of experience-emphasis will be on the manner in which the competing and sometimes conflicting goals of the two types of institutions can continue to be met. The trends that have been established over the past few years indicate that the U.S. R&D enterprise has worked its way out of its second peak-and-trough-and-recovery cycle in recent history. This latest move toward expansion in funding may be expected to last for several years, provided there are sufficient personnel available to pursue research careers.
"The shape of the R&D enterprise will continue to evolve, and the successful organization will seek both positions and procedures that will permit flexibility. No fixed recipe will suffice over the next decade," Duga said.
Battelle, headquartered in Columbus, Ohio, focuses on technology development and commercialization and product development. With 7,000 employees at more than 60 locations, Battelle develops technologies and products for industry and government. Annual revenues are approximately $1 billion.
For more information, call Jules J. Duga at Battelle, (614) 424-6512, or Tim Studt at R&D Magazine, (630) 320-7168. Reprints of the report can be obtained in mid-January from Battelle by calling Karen Taylor at (614) 424-5545.
Battelle, headquartered in Columbus, Ohio, focuses on technology development and commercialization and product development. With 7,500 employees at more than 60 locations, Battelle develops technologies and products for industry and government. Annual revenues are approximately $1 billion. For more information on Battelle and its technology forecasts, visit Battelle's web site at www.battelle.org, or contact Katy Delaney, Media Relations manager, (614) 424-5544.
