Global Growth Continues While U.S. Spending Slows; Industrial R&D Looks to New Innovative Strategies
COLUMBUS, Ohio--(BUSINESS WIRE)--Industry and government sources that intend to spend money to fund research and development are a reflection of the world’s economy—unsure, according to the latest joint Battelle-R&D Magazine 2009 R&D Funding Forecast. The report, which has mapped research and development (R&D) spending for longer than 40 years, also shows a growing movement toward international collaboration.
The forecast estimates that 2009 R&D spending in the US will reach $383.5 billion, up 1.75 percent from the approximately $377 billion in 2008. However, when corrected for inflation, real spending will decrease by about 1.6 percent. This decrease arises from an expected 2.9 percent decrease in federal support and a 1.3 percent decrease in industrial funding, as expressed in inflation-adjusted dollars.
At the same time, the overall global R&D funding is expected to increase by about 3.2 percent, as expressed in current (non-inflation adjusted) dollars.
“I think we are seeing a funding future that is a reflection of the world’s current economy,” said Jules Duga, a senior research scientist at Battelle and a co-author of the report. “We all are intertwined and everyone, whether they know it or not, is linked in some way to the fundamental importance of research and development.”
The report says there are three basic issues affecting R&D spending in the U.S.:
The United States’ federal budget problems will have an impact on the amounts of discretionary spending that will be dedicated to U.S. research regardless of merit. Rapidly changing business conditions will affect industrial R&D expenditures.
Although the incoming Administration had stressed the importance of maintaining a strong and growing R&D base, it is expected that near-term support will be influenced by the existing Federal Budget. The budget for Fiscal Year 2010 will be the first opportunity for the new Administration to set goals for both continuation and initiation of major R&D areas.
Analyses of historic data of the National Science Foundation (NSF), surveys of R&D leaders, and other resources indicate that real domestic industrial R&D spending generally will slow down in the near future. However, industrial support of academic research and funding of off-shore R&D is likely to increase, if only slightly. “In spite of the detailed historic data that are available,” noted Duga, “there is a growing need for more detailed information on the expanding role of international cooperation. Fortunately, NSF is expanding its efforts in this direction.”
Federal Government
The U.S. Federal government is predicted to spend a total of $99 billion on R&D in 2009. Of this amount, $24.9 billion will be spent in government laboratories, $24.6 billion in industry, $29.8 billion in academia, $14.27 billion in the so-called Federally Funded R&D Centers and $5.55 billion in non-profit institutions.
Industry
By far the biggest contributor to R&D, industry sources will fund $252.8 billion in industry research and development. Academia will receive about $3.0 billion and non-profits $1.6 billion.
Other
Academia and other non-profit organizations will just about equally share the remainder of the funding that is directed toward R&D. About $10.6 billion will be derived from academia’s own funds, and an additional $3.3 billion will come from state and local government funding. Non-profit institutions will provide a total of just over $10.1 billion.
World R&D trends
Despite these mostly negative indicators, this year’s Global R&D Funding Forecast expects that global R&D spending will reach $1,140 billion in 2009, 3.2 percent higher than in 2008. As in previous reports, much of the global growth is fueled by continued expansion of R&D in Asia, although global effects have slowed R&D growth in this geographic area as well.
Information derived from industry manager and researcher surveys suggests that other countries will continue to move into what historically has been American turf. In medical advances and defense applications, the U.S. is the acknowledged world leader. But in technologies related to renewable energy, telecommunications and advanced electronics, the U.S. either is not perceived as a world leader or will lose its leadership position in the next five years.
The International Monetary Fund published a World Economic Outlook in October 2008 and stated that the world economy is decelerating quickly, which will affect global R&D. Like the picture in the United States, there will be some global R&D growth that’s absorbed by the inflation rate for a net result of flat R&D spending.
Liberalization of economics, breaking of barriers, movement from suppliers of material parts to suppliers of intellectual inputs, and aggressive investments in science and technology (S&T) by industry and governments around the world have contributed to a shift in the global R&D picture. China and India continue to grow as major actors in the world’s R&D efforts. Accelerated programs in South Korea, Singapore, and other Asian countries have influenced the “R&D balance of trade” with respect to the US.
China remains a world force in R&D and is one of the largest exporters of high-technology products, dominated by communication equipment. It also is the largest exporter of information and communication technology, though this is low intensity R&D. According to the OECD, China must put in place a number of policy issues before it becomes a sustained world player on the R&D platform, including moving to a more innovative driven growth model, building an enterprise centered national innovation system and strengthening innovation governance.
India, on the other hand, is moving quickly to establish itself on the world’s R&D stage. It is becoming a top player in biopharm, automotive, IT/software, and IT-enabled services. China’s strength is built upon large scale/low cost manufacturing capabilities while India adds value to its customers’ products with large scale/low cost intellectual property. Both countries continue to churn out more engineers and technical specialists than their Western counterparts. Japan, which is not an emerging but established economy, is the second largest spender in the world on R&D, but will soon be surpassed by China.
Advanced Technology Focus
The report also notes a few hot technologies around the world that are drawing R&D focus. There will be increased R&D on renewable energy systems despite the recent downturn in oil prices. Nuclear energy systems are enjoying a healthy rebound and wind turbine systems have blossomed around the globe. Photovoltaic systems have suffered because of traditional carbon energy price drops and some large-scale solar generating facilities still are on track but could lose support with a continued global recession. Biotechnology is overtaking conventional chemical-based pharmaceuticals and big pharma may save small biotech firms by funding them in exchange for products to fill their pipelines.
Global demand for clean water grows every day, both from humans and from industrial and agricultural communities. Development of clean water supplies will go hand-in-hand with the development of new manufacturing processes that use less water.
Sustainable processes and low-cost transportation systems will be two other areas of focus during what the report sees as at least a 12-month global recession. All this means the R&D spending likely will be a work in progress with unforeseen changes affecting the amount of money available, much of that hinging on the eventual price of oil.
The full report of the 2009 R&D Funding Forecast will be printed in the December issue of R&D Magazine. Reprints will be available later this month by contacting Battelle’s Jean Hayward at (614) 424-7039 or at haywardj@battelle.org. A printable copy of this report can be found at http://www.battelle.org/news/pdfs/2009RDFundingfinalreport.pdf It also is available online at www.rdmag.com.
Battelle is the world’s largest non-profit independent research and development organization, providing innovative solutions to the world’s most pressing needs through its four global businesses: Laboratory Management, National Security, Energy Technology, and Health and Life Sciences. It advances scientific discovery and application by conducting $4 billion in global R&D annually through contract research, laboratory management and technology commercialization. Headquartered in Columbus, Ohio, Battelle oversees 20,400 employees in more than 120 locations worldwide, including seven national laboratories which Battelle manages or co-manages for the U.S. Department of Energy and the U.S. Department of Homeland Security.
Battelle also is one of the nation’s leading charitable trusts focusing on societal and economic impact and actively supporting and promoting science and math education.
Contact Public Relations Manager Katy Delaney at (410) 306-8638 or delaneyk@battelle.org or T.R. Massey, media relations specialist, at (614) 424-5544 or masseytr@battelle.org for more information.
