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R&D funding makes a comeback

Issue 5 and Volume 100.

R&D funding makes a comeback

Investments in research and development (R&D) are predicted to climb slightly this year to $105 billion, as both industry and government take a hard look at revamping R&D plans, according to the Battelle-R&D magazine forecast.

“Despite the fact that industry and the federal government are doing battle with their respective budgets, and changes are being forced by major trends in the global economy, the commitment to today`s research is critical to tomorrow`s economic strength,” said Jules J. Duga, Battelle research scientist and principal author of the forecast.

The report made several predictions for 1996. Battelle estimates the federal government will spend $60.4 billion in 1996, about 0.5 percent less than 1995. Industry will increase R&D spending to $104.6 billion, a 3-percent jump from 1995.

The remaining $8.8 billion in R&D expenditures will be supported by universities and non-profit organizations; spending will outdistance inflation in 1996, a key to industrial investment. Private industry will increasingly look for opportunities to outsource internal R&D functions. An increasing share of U.S. industry`s R&D will be performed off-shore, primarily in facilities owned by the same industry.

Duga notes that the outlook for future federal R&D support could be considerably bleaker as Congress pushes programs fostering closer federal/industrial ties in commercialization of new technology.

Also, proposals have been made to discontinue several programs, with the assumption that the programs will be absorbed by private industry. Industrial support for R&D has seen a reduction in funding for long-term technology as attention is turned to development and commercialization and an emphasis toward technical support for operating divisions. Industry is expected to increase interaction with federal laboratories and to create strategic alliances and cross-licensing opportunities.

Principal factors influencing R&D expenditures for the next few years, according to the forecast, are: the federal government will likely restructure its R&D budget, with much of the non-defense R&D undergoing significant change; efforts will be made to reduce the size and scope of the federal laboratory system, with emphasis on potential privatization; overall industrial R&D support will increase; and private industry will continue to pare its technology-development resource, except for areas where the payoff is short term.

Long-range research will be reduced, as private industry continues its search for strategic alliances; and globalization of markets plus reduced development costs will force a greater degree of off-shore, industrially contracted research, much of which will be done at independent laboratories.

More information on the reportis available from Battelle at (614) 424-6512.