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Largest Single-Year Decline in U.S. Industrial R&D Expenditures Reported for 2002
According to estimates produced from the National Science Foundation's (NSF) annual Survey of Industrial Research and Development, companies spent $190.8 billion on research and development (R&D) they performed in the United States during 2002, compared with $198.5 billion spent in 2001 (table 1). This $7.7 billion (3.9 percent) decline is the largest single-year absolute and percentage reduction in the current-dollar cost of industrial R&D performance since the survey's inception in 1953. In inflation-adjusted dollars, the decline was $8.9 billion, the largest single-year reduction since the survey began and the second largest percentage reduction (4.9 percent); the largest occurred between 1969 and 1970 (6.3 percent). Sampling, however, may have an effect on year-to-year changes in the estimates (see "Limitations of the Data," below).Table 1 Source Data: Excel file
Contributions both from the company's own and other non-Federal sources (hereafter, company funding) and from Federal sources for R&D were lower in 2002 than in 2001. Company funding amounted to $174.4 billion, compared with $181.6 billion during 2001, and Federal funding was $16.4 billion, compared with $16.9 billion during 2001. This change in current-dollar expenditures represents declines in constant-dollar expenditures in both categories. This is noteworthy particularly for company-funded R&D. Since 1953, current-dollar company-funded R&D has declined only once (in 2001), and constant-dollar estimates have declined only six times (in 1970, 1971, 1975, 1987, 1993, and 2001).
R&D Funds by Sector
In 2002 manufacturing industries performed $98.2 billion (56 percent) of total company-funded and $10.7 billion (66 percent) of total federally funded industrial R&D in the United States. Companies classified in the nonmanufacturing industries sector performed $76.2 billion (44 percent) of company-funded and $5.7 billion (34 percent) of federally funded industrial R&D. Amounts of company and federally funded R&D reported by top R&D performing industries are given in table 2.Table 2 Source Data: Excel file
Sales and Employment of R&D-Performing Industries
Domestic net sales of companies that performed R&D in the United States were $4.9 trillion in 2002 (see table 1 for definition of terms). Manufacturers' sales were $3.0 trillion in 2002, and companies in nonmanufacturing industries reported sales of about $1.9 trillion. Sales estimates were about the same for 2001. For 2002, the R&D-to-sales ratio was 3.6 percent for manufacturers and 4.4 percent for companies in nonmanufacturing industries, yielding a 3.9 percent ratio for all industrial R&D performers. This compares to the overall ratio of 4.1 for 2001, the highest achieved since 1953, the first year for which statistics were prepared.
Domestic employment by companies that performed R&D in the United States during 2002 was 15.4 million, compared with 16.7 million for 2001. The number of people who were employed by R&D-performing manufacturing companies was 9.1 million in 2002, and R&D-performing companies in nonmanufacturing industries reported employment of 6.3 million. Of those, the number of full-time equivalent (FTE) scientists and engineers who performed industrial R&D in manufacturing industries was about 0.6 million and in nonmanufacturing industries was about 0.5 million.
Outsourcing, Technology, and Collaborative R&D
In NSF's continuing effort to maintain and improve the relevance of the statistics resulting from the Survey of Industrial Research and Development, several new items were added to the survey for 2001 and were retained for 2002. These included an item that asked for the sector identification of the performer of extramural or outsourced R&D and an item that asked how much R&D companies performed in the following technological areas: biotechnology, materials synthesis and processing, and software development, including the percentage of R&D attributable to nanotechnology in each area.
Preliminary statistics for 2002 indicate that 319 companies reported expenditures of $4.9 billion for the performance of R&D by other for-profit companies, 134 reported $0.3 billion for the performance of R&D by universities and colleges, and 47 reported $0.1 billion for the performance of R&D by nonprofit organizations other than universities and colleges. Preliminary statistics resulting from the 2002 technology area item indicate that 2,694 companies reported aggregate expenditures of $13.5 billion for performance of biotechnology R&D, 5,367 companies spent $14.6 billion for materials synthesis and processing R&D, and 10,238 companies spent $24.0 billion for software development R&D. Of the companies that reported expenditures for these technology areas, the following numbers of companies reported that 50 percent or more or the R&D was attributable to nanotechnology: 400 biotechnology R&D performers, 1,029 materials synthesis and processing R&D performers, and 989 software development R&D performers.
For 2002 a new item added to the survey asked for both the amount of R&D performed in collaboration with another organization and the sector identification of that organization. Preliminary statistics for 2002 indicate that 180 companies performed R&D in collaboration with other organizations: 152 reported aggregate expenditures of $3.9 billion for the performance of R&D in collaboration with other forprofit companies; 53 reported $57.0 million for the performance of R&D in collaboration with universities and colleges, 13 reported $22.0 million for the performance of R&D in collaboration with nonprofit organizations other than universities and colleges; and 13 reported $21.0 million for the performance of R&D in collaboration with Federal laboratories. Final, detailed statistics for these new items will be available later this year in Research and Development in Industry: 2002 at http://www.nsf.gov/statistics/industry/. It will contain the full set of tables available from the 2002 survey and will also provide historical trends.
Estimates in this report were derived from the annual Survey of Industrial Research and Development. The survey is a nationally representative sample of all forprofit U.S. based companies, publicly or privately held, with five or more employees (for detailed information, see http://www.nsf.gov/statistics/srvyindustry/). The primary focus of the survey is U.S. industry as a performer of, rather than a source of funds for, research and development. The sample design for the survey was redesigned in 2002 to better estimate year-to-year changes and to strengthen current-year state and detailed industry estimates; however, R&D is performed by about 2 percent of U.S. companies, and the estimates are subject to sampling error.
Limitations of the Data
The estimates reported here are subject to both sampling and non-sampling errors. The sample has been designed to provide reliable estimates of the overall total of R&D performed and to control the sampling error at both the industry and state level. Nonsampling errors may result from several conditions. (1) Assignment of a company's industrial classification: A company is assigned to one industry according to payroll activity, which may not be the same as the company's R&D activity. For example, if the majority of a company's payroll shifts from one activity to another from year to year, all of its R&D activity similarly shifts to the new activity from year to year. The U.S. Bureau of the Census, which collects and tabulates the survey, and NSF are conducting further research in this area. (2) Definitions of terms: Companies may define R&D activities differently or may interpret the definitions differently. (3) Data availability: Substantial variation in company accounting procedures exists, which affects the availability of the data requested.
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Raymond M. Wolfe
 Company is defined as a business organization of one or more establishments under common ownership or control.