COLUMBUS, OH., 22 December, 2009 - Global research and development (R&D) spending is expected to increase by 4.0 percent in 2010 to $1,156 billion, according to the closely watched Battelle - R&D Magazine 2010 Global R&D Funding Forecast released today.
The increase in spending mostly will be fueled by continued spending by China and India, two countries that will drive a 7.5 percent increase in Asian R&D. Meanwhile, United States R&D spending is expected to increase 3.3 percent to $401.9 billion. Europe is predicted to lag behind, by increasing spending by only 0.5 percent, to $268.5 billion in 2010.
The impact of U.S. stimulus funding on total R&D in 2009 and 2010 cannot be underestimated; without it, total U.S. R&D would have dropped below 2008 levels. Worldwide economic stimulus funding reached $1.92 trillion last year, with about 38 percent of that occurring in Asian countries. While having significantly positive short-term effects, the economic stimulus packages dramatically increased the debt loads of the countries implementing them and could take away from comparable R&D investments of the future, the forecast cautioned.
U.S. Industrial R&D funding (including funds to academia and non-profit institutions) will increase 2.85 percent over 2009 levels of $253.1 billion, to reach $260.3 billion in 2010. The sector comprises 64.8 percent of all U.S. R&D funding. Overall, industrial R&D performance will increase 2.80 percent to $283.0 billion in 2010, up from $275.3 billion in 2009, but still not reaching the $289.1 billion of R&D performed in 2008.
“Industrial R&D took a real hit in 2009 in both funding and performance,” said Marty Grueber, Battelle Research Leader and co-author of the report. “And while it’s forecast to rebound in 2010, it still won’t reach 2008 levels.”
To understand the health and future prospects for U.S. industrial R&D, two issues will be important to monitor in 2010 regarding industrial R&D performance. First, will significant industry segments such as electronics/computer hardware and biopharmaceuticals, which both saw declines in 2009, quickly return to a more robust R&D portfolio?
Second, as R&D budgets tighten, there tends to be a further shift of resources toward shorter-term, nearer-benefit development efforts at the expense of research with longer time horizons that seek transformational innovations and technologies. As the ability to expand R&D budgets returns, will these resources be used to re-engage with existing research areas?
Federally funded U.S. R&D is estimated to reach $114.1 billion in 2010, a 4.2 percent increase from 2009’s $109.5 billion. Federally funded R&D as a share of total U.S. R&D has steadily been dropping over the past 30 years, from as high as 45 percent in the 1980s to this year’s 26 percent.
The American Recovery and Reinvestment Act (ARRA) of 2009 added funds to both the U.S. Gross Domestic Product (GDP) and overall R&D investments. However, of the $18.1 billion that was dedicated to R&D investments, less than 20 percent actually will be spent in 2009, with the remaining funds spent in 2010 and 2011.
Other U.S. funding for R&D, including U.S. academia, non-profits and other government-affiliated entities, comprise the 7 percent of R&D funding that does not come from industrial and federal sources. Academic funding of R&D is expected to increase just over 5 percent, from $11.1 billion in 2009 to $11.7 billion in 2010. Meanwhile, non-profit organizations are expected to fund nearly $12.6 billion, a growth rate of 2.84 percent. Finally, in the “Other Government” category, typically state and local entities, R&D funding is expected to decline by 1.35 percent to $3.28 billion.
Global Trend: The 2010 Forecast notes a growing trend in which both the Americas (U.S., Canada, Mexico, Brazil, and Argentina) and Europe are falling behind the spending levels seen in some Asian countries. Even Japan, the second largest R&D spender in the world, is falling behind the level of spending by China and India.
The global recession of 2008-09 has accelerated this trend, as American and EC economies are not expected to return to their 2008 level of spending increases for several years, let alone begin to challenge the current level of spending increases by China and India.
“Even while China and India saw dampening impacts from the global recession, at no time did their growth rates actually go negative. The pace of their R&D growth just slowed, but it will heat right back up as we head into 2010,” co-author Grueber said. “The research engines in China and India are large and getting larger and are driven by a number of factors beyond traditional economic drivers.”
The Forecast includes survey results from a broad-based pool of R&D technology leaders. Energy, climate change, and healthcare are expected to be the top technology drivers of the future, with the specific trends noted below in key areas:
- Energy/Environmental: Significant investments in R&D put the U.S. in the lead on technologies involving carbon sequestration, smart grid, and clean coal/zero emission technologies—positions that are expected to hold during the next five years.
- Health and Biosciences: This area continues to be a high priority for current U.S. leadership in almost all categories, including targeted/nanotech drug delivery, medical biotechnology, and automated diagnostics/surgical methods. One area worth watching because of U.S. policy changes is stem cell development and related technologies.
- Defense and Security: The U.S. is expected to continue leadership positions over the next five years in Autonomous Unmanned Vehicles such as Unmanned Aerial Vehicles (UAVs) and Unmanned Underwater Vehicles (UUVs), stealth technologies, and chem/bio sensors.
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Headquartered in Columbus, Ohio, Battelle oversees 22,000 employees in more than 130 locations worldwide, including seven national laboratories for which Battelle has a significant management role on behalf of the U.S. Department of Energy and the U.S. Department of Homeland Security.
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