R&D Funding Forecast
Upturns and Defense Drive R&D in 2004
Renewed economic growth, albeit slow for industrial R&D, and strong federal funding for defense R&D will be the primary drivers for improved U.S. R&D spending and performance in 2004.
The last quarter of 2003 saw renewed U.S. economic growth that reinforced analysts' projections of 2004 being one of the best, if not the best, years in terms of economic growth in the past 20 years. According to the New York City-based The Conference Board, real GDP (gross domestic product) is expected to increase to 5.7% this year, following 2.4% growth in 2002, and a likely 4% in 2003. And while many analysts would like to believe that R&D spending is more directly linked to long-term economic trends than short-term fluctuations, the effects of a strong economic recession, like the one we have just experienced, has taken its toll on R&D spending. Indeed, industrial R&D spending (in constant-1996 U.S. dollars) has declined for the past three consecutive years (2001-2003), according to data collected by the National Science Foundation (NSF). Industrial R&D spending dropped so dramatically in 2002 (-4.5%) that it caused total U.S. R&D to also drop slightly (0.3%, in constant 1996 dollars) for the first time since the 1993 U.S. recession.
The saving grace of the recent industrial perturbations has been continued strong federal R&D funding support, following periods of weak and sometimes even declining federal spending in the late 1990s.
It is within this framework, that analysts from Battelle, Columbus, Ohio, and the editors of R&D Magazine forecast that combined U.S. industrial, federal, academic, and non-profit R&D spending for 2004 will exceed $290.8 billion, up 2.5% from the $283.8 billion spent in 2003. Industrial spending on R&D is expected to see comparatively small growth to that of government and academic/non-profit spending. Overall, current dollar industrial spending is forecast to increase to $181.1 billion, up from $179.6 billion in 2003, an increase that will not match the expected inflation rate.
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