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Industry News

R&D Funding Forecast Predicts Modest Increases in 2004

April 27, 2004
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Total R&D expenditures in the US are expected to increase about 2.5 percent from the $283.8 B spent in 2003 to nearly $291 B in 2004, according to Battelle–R&D Magazine’s annual funding forecast.

Government funding of scientific research and development will see the largest increase, while industrial support of R&D will increase only slightly in 2004, according to the closely watched forecast.

The forecast, based on data supplied by the National Science Foundation, predicts:

  • Federal spending on R&D is expected to be $89.4 B — an increase of 4.8 percent.
  • Industrial spending on R&D for 2004 is expected to increase less than a percentage point at 0.85 percent for a total of $181 B.
  • Academia, and other non-profit R&D funding, is expected to increase an average of 7.6 percent to $20.3 B.

‘The focus area of R&D appears to be shifting in the first half of the 21st century,” said Jules Duga, a Battelle senior researcher and co-author of the report. “R&D research now has a significant focus on nanotechnology, biotechnology and support of defense and homeland security. This is a shift from growth drivers in the mid- to late-1990s when R&D was dominated by pharmaceutical, software, telecommunications and semiconductor technologies.”

The federal outlook:

  • Defense and homeland security will be the major drivers in the increase in federal R&D spending with the primary focus on developing tools for the war on terrorism and products and systems for soldiers.
  • The effects of September 11, 2001, continue to have a major influence in the character of current federal R&D.
  • Much of the new growth in biotechnology spending is focused on support of bioterrorism defense applications.
  • After adjusting for inflation, the $181 B that will be spent by the industrial sector is slightly less than what was spent in 2003. This marks the fourth consecutive year of decreases in industrial spending on R&D.
  • Industrial support of R&D is marked by an increasing trend to outsource R&D programs and activities to other companies, organizations and offshore facilities.
  • The globalization of industry and technology has complicated the task of tracking regional R&D activities.
  • A negative balance of trade position in the US and the shifting of its manufacturing base to foreign suppliers will influence the extent to which US industry will support a strong R&D base.

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