Title : U.S. R&D Spending Will Not Pick Up in '95 Type : 1995 Data Briefs NSF Org: SBE / SRS Date : October 5, 1995 File : sdb95335 Note: The companion binary file to this text file is an Adobe Acrobat .PDF (Portable Document Format) file. In order to view and print this file, you must use the Adobe Acrobate Reader. The Acrobat reader is available from Adobe via Ftp. Ftp to ftp.adobe.com anonymous <------User email name <------Password Change the directory to: pub/adobe/applications/acrobat/Windows <----Windows reader or pub/adobe/applications/acrobat/mcintosh <----MacIntosh reader or pub/adobe/applications/acrobat/unix <----Unix reader Download the relevant Acrobat Reader file, entitled ACROREAD.EXE. You may freely distribute the reader program. U.S. R&D Spending Will Not Pick Up in '95 __________________ Inflation-adjusted decline in U.S. R&D spending reflects worldwide pattern of constrained R&D support. __________________ by John E. Jankowski, Jr. Total expenditures for research and development (R&D) performed in the United States are expected to reach $171 billion in 1995, 1 percent more than the revised total for 1994 ($169 billion). After adjusting for expected inflation, however, this 1995 figure represents a 2-percent decrease in spending. As a proportion of gross domestic product (GDP), R&D will account for an estimated 2.4-percent share in 1995, slightly lower than that estimated for 1994 (2.5 percent). Approximately 17 percent of the Nation's 1995 R&D total is to be expended on basic research activities, 23 percent on applied research, and 60 percent on development. These and other R&D statistics are taken from the National Patterns of R&D Resources series and are analyzed in the forthcoming report, Science & Engineering Indicators--1995. 1995 R&D Funding Patterns Industry and the Federal Government provide, by far, the lion's share of the Nation's R&D support. In 1995, industry will account for an estimated 59 percent ($102 billion) of total, most of which ($99.3 billion) is used to finance R&D performed in-house or under contract to other firms. The remaining $2.4 billion goes to support research activities undertaken at uni-versities and nonprofit organizations (table 1). The Federal Government is expected to account for 36 percent ($61 billion) of the U.S. 1995 R&D expenditure total. This Federal total includes funds spent in intramural labs and Federally Funded Research and Development Centers (FFRDCs) ($25 billion), industry ($20 billion), and universities and colleges ($13 billion). Overall, industry support is expected to increase 2 percent in 1995 and Federal support to decline by 1 percent. In constant-dollar terms, both industrial and Federal support are expected to decline, by 1 percent and 3 percent, respectively. State Governments, universities and colleges, and other nonprofit organizations account for the remaining 5 percent ($9 billion) of the U.S. 1995 R&D funding total. Their combined support is estimated to increase 3 percent in 1995 and would remain flat after adjusting for expected inflation. 1995 R&D Performance Patterns In terms of performance, industry accounts for 70 percent ($120 billion) of the Nation's estimated 1995 R&D effort, Federal labs--including all FFRDCs--for 14 percent ($25 billion), universities and colleges for 13 percent ($22 billion), and other nonprofit organizations for 3 percent ($5 billion). Academia is the only sector in which inflation-adjusted R&D performance is expected to increase in 1995, although by a mere 0.4 percent. Industry's R&D performance will decline 1 percent, as a result of slow growth in industry self-funding and reductions in Federal support to industry. R&D spending by Federal Government performers will decline an estimated 5 percent in real terms. Table 1. National expenditures for research and development, by performing sector and source of funds: 1995 ------Sources of R&D funds--------- Universi- Other ties non- Percent Federal and profit- distri- Govern- col- insti- bution, R&D performers Total Industry ment leges 1/ tutions performers -------------Millions of dollars---------- Total.............171,000 101,650 60,700 5,500 3,150 100.0% Industry.............119,600 99,300 20,300 -- -- 69.9 Industry-administered FFRDCs.......... 1,800 -- 1,800 -- -- 1.1 Federal Government... 16,700 -- 16,700 -- -- 9.8 Universities and colleges........... 21,600 1,500 13,000 5,500 1,600 12.6 University-admini- stered FFRDCs...... 5,300 -- 5,300 -- -- 3.1 Other nonprofit institutions....... 5,100 850 2,700 -- 1,550 3.0 Nonprofit-admini- stered FFRDCs...... 900 -- 900 -- -- 0.5 Percent distri- bution, sources.... 100.0% 59.4% 35.5% 3.2% 1.8% 1/ Includes an estimated $1.6 billion in State and local government funds provided to university and college performers KEY: FFRDC = Federally funded research and development center; "--" = Unknown but assumed to be negligible SOURCE: NSF/SRS, National Patterns of R&D Resources, annual series U.S. R&D Expenditure Trends The estimated reductions in 1995 R&D expenditures in the United States represent a continuation in the patterns of R&D leveling and decline that have developed during the past decade. In the early 1980s R&D spending grew by almost 7 percent per year after adjustment for inflation. Strong funding support was provided both by industry and Federal agencies. Increases in R&D support tapered off substantially in the mid- to late-1980s, before turning negative in the early 1990s (chart 1). Most of the national decline in inflation-adjusted R&D support stems from reductions in Federal spending, but growth in industry R&D support also slackened considerably. (Chart 1., Rates of change in U.S. R&D support, appears here in printed and Adobe Acrobat versions) International R&D Spending The slowdown in R&D spending has not been confined to the United States; R&D growth stagnated worldwide during the early 1990s. Notably, the dual effects of economic recession and general government budgetary constraint have adversely impacted R&D support in both Japan and Germany--the two largest R&D-performing countries following the United States. Although the timing and magnitude of changes within these three R&D-leading nations differ slightly, in each the R&D/GDP ratio has fallen from recent peaks to current lows (chart 2). The drop is most pronounced for the United States (2.4 percent, down from 2.8 percent) and Germany (2.5 percent, down from 2.9 percent) and reflects relative reductions in both defense and nondefense R&D. Even in Japan, however, R&D as a share of overall economic activity has been reduced somewhat, declining from a high of 2.9 percent in 1990 to 2.7 percent in 1993, the most recent year for which such international data are available. User Notes U.S. national R&D expenditures data were assembled from a number of NSF surveys. Estimates for 1995 are based on data provided by Federal R&D funding agencies, an independent survey of industrial R&D performers, and time series modeling techniques. (Chart 2., U.S., Japanese, and German R&D/GDP ratios: Selected years, appears here in printed and Acrobat versions) Foreign R&D expenditure data are derived from national and international sources. For more information, contact-- John E. Jankowski, Jr. Research and Development Statistics Program Division of Science Resources Studies National Science Foundation 4201 Wilson Boulevard, Suite 965 Arlington, VA 22230 phone: 703-306-1772 ext. 6930 Internet: jjankows@nsf.gov For free printed copies of SRS Data Briefs call 703-306-1773 or e-mail to databrief@nsf.gov. See "Electronic Dissemination" for electronic versions. --end--