Research Shows Research on Decline

A colleague sent me this article from the Wall Street Journal [Research Spending Expected to Take Hit By Gautam Naik]. Apparently someone conducted a research study to show that research spending it expected to take a hit in 2008.

The slowing U.S. economy is expected to damp spending on research and development in 2008, according to a report being published today.

Total spending on U.S. R&D is projected to rise about 3% to $367 billion from $355 billion, before accounting for inflation, according to a report by Battelle Memorial Institute, a nonprofit trust in Columbus , Ohio , that does scientific research for the government and industry. After accounting for inflation, the growth rate would be about 1.3%.

"The overall slowing of the economy is much more than it had been last year. So I'm a little more cautious about R&D spending in the U.S. ," said Jules Duga, a senior researcher at Battelle and co-author of the report. The report, based on data from a wide range of government and industry sources, is being published in R&D Magazine.

Since the late 1990s, R&D investment in the U.S. has increased annually at rates of between 1% and 2%, after accounting for inflation. A year ago, Mr. Duga estimated that spending would grow at 3% and maybe 4% annually. He now predicts "2% growth on the optimistic side," for each of the next three years.

America's vast research-and-development enterprise is being reshaped in significant ways. Corporations -- the biggest spenders on R&D -- are increasingly outsourcing research and development overseas. Many U.S. companies have sharply cut their funding of "basic," or fundamental, research in favor of shorter-term projects that could provide a quicker financial payoff.

U.S. corporate investment in R&D is expected to grow 3.6% to $239.7 billion in 2008 from $231.3 billion last year, not including the effects of inflation. According to data from another research firm, incorporated into the Battelle report, the drug, chemical and medical-diagnostic industries will see big increases in R&D support, while R&D spending is expected to decline in the areas of automotive, electronics and electronic testing and agricultural chemicals.

Global rivalries are getting more intense. China spends more on R&D than any other country, except for the U.S. China has been increasing its R&D spending by 15% to 20% each year as it sprints to catch up with Western countries and Japan .

The priorities of the U.S. government have also shifted. Federal support of R&D investment is expected to rise 2.5% to $102 billion in 2008 from $99.5 billion last year. More of the government's R&D funds are expected to go toward war- and defense-related projects, antiterrorism technology and alternative energy.

R&D spending for the U.S. Department of Homeland Security is expected to rise 9% to $1.04 billion. The Department of Energy is projected to boost its R&D spending by 7.4% to $9.38 billion in 2008.

At the same time, the 36 U.S. government-sponsored research centers -- such as the National Institutes of Health -- will collectively get an estimated $12.4 billion in funding, about 2.3% less than the $12.7 billion received in 2007.