2002 R&D Funding Buffeted by External Forces

Total R&D expenditures in the U.S. are expected to increase about 3.5 percent to $285.6 billion in 2002, according to the annual Battelle-R&D Magazine research and development forecast.



Three significant factors, according to the forecast, have combined to exert influence on the state of R&D funding for the upcoming year, including the change in presidential administration, the faltering economy and the events and aftermath of the Sept. 11 terrorist attacks. The forecast suggests the impact of these factors cannot be underestimated.



"In previous years, the analysis of the emerging patterns of R&D could readily accommodate almost any singular disruption and could present a reasonable picture of the anticipated effects," said Dr. Jules Duga, a Battelle senior researcher and co-author of the report. "However, the concurrent triple-whammy experienced over the past few months creates a degree of uncertainty that is higher than usual and adds a layer of complexity to the forecast."



Highlights in the forecast are:

• The federal government is expected to spend $75.5 billion on R&D in 2002, a 4.7 percent increase over the prior year.
• Industry continues to lead in the number of dollars funding R&D with nearly $195 billion expected to be spent in 2002, a 3.2 percent increase. 
• Academia and non-profits provide the other significant portion of national R&D funding, which is expected to be $15.4 billion or about 3 percent more than was committed in 2001.

The forecast also offers federal and industrial perspectives, respectively:

• Government commitment to R&D before Sept. 11 was beginning to show signs of growth driven largely by proposed expansions of programs in defense and health. As a result of Sept. 11 events, federal expenditures on R&D will be even greater, especially in the areas of intelligence information and improved methods for the interpretation of such information. Other areas include electronics for computers and telecommunications; and pharmaceuticals and medical delivery systems using specialized capabilities in vaccine development and administration.
• While the total amount is significant, the rate of increase is somewhat less than has been experienced in recent years and is a reflection of the economic factors that have emerged in the last year. The economic downturn that is partially related to the stock market, to cash flow, to discounted interest rates, and to the perception and anticipation of difficult times will have an adverse effect upon both the funding of R&D and the distribution of that funding across different performing sectors. Historically, inflation-adjusted reductions in R&D funding have resulted in periods of retrenchment that lasted over a few years. However, the upcoming year's change in industrial support is primarily a change in the rate of growth and a period of adjustment.

The complete Battelle-R&D Magazine forecast is published annually in the January issue of R&D Magazine. Reprints of the full report can be obtained by calling Karen Taylor, (614) 424-5545, or by e-mail at taylorks@battelle.org