Three significant factors have combined to exert influence on the state of R&D funding for the upcoming year.

The three factors include the change in presidential administration, the faltering economy and the events and aftermath of the Sept. 11 terrorist attacks.

"The effects of these are not simply isolated and cumulative,'' said Dr. Jules Duga, a Battelle senior researcher and co-author of the report. "It is clear that there are interactions among the three, and-when superimposed upon what one might consider a 'normal' set of circumstances of change-their effects are somewhat more difficult to deal with."

Highlights from the forecast are:

The impact of significant external forces cannot be underestimated. "In previous years, the analysis of the emerging patterns of R&D could readily accommodate almost any singular disruption and could present a reasonable picture of the anticipated effects," Duga said. "However, the concurrent triple-whammy experienced over the past few months creates a degree of uncertainty that is higher than usual and adds a layer of complexity to the forecast."

The federal outlook: Government commitment to R&D before Sept. 11 was beginning to show signs of growth driven largely by proposed expansions of programs in defense and health. As a result of Sept. 11 events, federal expenditures on R&D will be even greater, especially in the areas of intelligence information and improved methods for the interpretation of such information. Other areas include electronics for computers and telecommunications; and pharmaceuticals and medical delivery systems using specialized capabilities in vaccine development and administration.

The industrial outlook: While the total amount is significant, the rate of increase is somewhat less than has been experienced in recent years and is a reflection of the economic factors that have emerged in the last year. The economic downturn that is partially related to the stock market, to cash flow, to discounted interest rates, and to the perception and anticipation of difficult times will have an adverse effect upon both the funding of R&D and the distribution of that funding across different performing sectors. Historically, inflation-adjusted reductions in R&D funding have resulted in periods of retrenchment that lasted over a few years. However, this coming year's change in industrial support is primarily a change in the rate of growth, and a period of adjustment.

" 'All else being equal…' is perhaps the simplest and most common phrase used by forecasters and futurists, and the first to succumb to the types of changes we have witnessed over the past year," Duga said. "This year is significantly different."

Battelle serves industry and government in the areas of technology development, laboratory management, and technology commercialization. Headquartered in Columbus, Ohio, Battelle has annual revenues of $1 billion, has operations at more than 70 locations and clients in 30 countries. It counts as its successes the development of the office copier machine (Xerox), pioneering work on the compact disc, medical technology breakthroughs, and fiber optic advancements for telecommunications. For more information contact Media Relations Manager Katy Delaney at (614) 424-5544 or at delaneyk@battelle.org.

The complete Battelle-R&D Magazine forecast is published annually in the January issue of R&D Magazine. Reprints of the full report can be obtained in late January by calling Karen Taylor at Battelle, (614) 424-5545, or by e-mail at taylorks@battelle.org.