Industry Retakes Leadership Role
Strong industrial investments for 2007 overwhelms weak non-defense government spending.
The Battelle/R&D Magazine R&D Funding Forecast for 2007 is the latest installment in a continuous series dating back to the 1950s. Over most of this period of time, one in which the U.S. had generally maintained a position of overall global dominance in R&D investment, there were several features that characterized the structure of the R&D enterprise. Three of these features were continuity, inertia, and integrated interfaces. The combination of these specific characteristics contributed to a degree of predictability and ability to understand the roles of the various types of performing institutions within the R&D enterprise/infrastructure.
That said, the simplest early description of the R&D infrastructure could be made in terms of the classes of sources of funding and of performance. For the most part, funding came from the federal government, private industry, academic in-house resources, and other not-for-profit organizations. Similarly, R&D performance was undertaken by each of these four defined sectors, with one small modification: the introduction of the Federally-Funded Research & Development Centers (FFRDCs), specialized federal research facilities that were managed by non-federal operators.
As one of its major duties, the National Science Foundation (NSF), Arlington, Va., has maintained detailed databases that contain information on sources of R&D funding and the manner in which these funds were distributed across each of the performing sectors. These data would then be divided into categories that corresponded to basic research, applied research, and development functions.
Through the early years of our forecast and the NSF database, the description of the overall R&D activity in the U.S. was relatively straightforward and marginally predictable. The magnitude of the enterprise, augmented by a tendency to change at glacial speed, resulted in an inertia that showed relatively little year-to-year variations. The structure was stable, and perturbations that were instituted by broad new policy actions or special needs/opportunities were usually reflected in structural changes that were non-disruptive and spread over time.
Over the past decade, however, the character of U.S. R&D funding and performance has undergone rather significant changes, with a few of the more important ones noted as follows:
• Federal funding of R&D has been impacted by the emphasis that was required to initiate special programs directed toward the global war on terror, and the development of techniques to fight non-traditional types of ground wars.
• Federal funding for R&D has also been affected by major federal budget deficits that accompanied the necessity of responding to the unanticipated damage associated with natural disasters.
• Changes in industrial funding have been influenced by major moves toward establishing or pursuing research programs in financially and intellectually attractive offshore locales.
• Other countries, particularly China and India, are making aggressive moves toward becoming formidable participants in the global R&D and technology arena, with resultant strengthening economic presences.
These may well be seen as factors that have had, and will continue to have, negative impacts on the health and strength of the U.S. R&D enterprise. In addition, there are additional long-term complications that are anticipated. Specifically, the demographics of the U.S. science establishment are such as to raise the proverbial warning flag. Competition for funds, and in some cases the competition for talent, will be difficult now and is expected to get worse over the near term. Moreover, many program managers, planners, teachers, researchers, and operating scientists and engineers are approaching retirement ages. There are also legitimate concerns regarding the absolute numbers that are working their way through the educational pipeline.
However, as will be discussed in the following paragraphs, the long-term picture is not as bleak as one might assume from these introductory considerations.
Electronics, biotechnology, pharmaceuticals, software development, process modeling, and a host of other areas are receiving considerable attention, and are expected to continue as growth fields. Indeed, analysts from Battelle, Columbus, Ohio, and the editors of R&D Magazine forecast that in 2007, total R&D spending in the U.S. will increase to $338 billion, a gain of 2.85% over 2006 levels.
Even with an increase in funding, there are, to be sure, impediments as the U.S moves forward with its innovation programs. But given the right leadership, imagination, and support, there is also the proven capacity to overcome major exciting problems and make progress toward almost unimaginable objectives.
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