Future Now
The IFTF Blog
Recent NSF Data on National R&D Spending Trends
Sometimes we get so wedded to our own forecasts, because they become part of a web of stories we tell, that we forget to update them over time. I was preparing a presentation for a client, North Carolina's Research Triangle Park, and decided to look in a little more detail at a common trend cited at IFTF - that corporate spending on R&D is declining.
At first glance, this is indeed true in recent years. Overall industry spending on R&D was pretty stagnant 2000-2001 and declined by about 5% between 2001-2002 according the National Science Foundation. According to MIT Technology Review's annual survey of R&D in 2004:
"a troubling trend that began in 2001 continues: corporate R&D spending is on the decline. Last year's decrease of .6 percent is slight, but it follows sharper declines in 2001 and 2002, after more than a half-decade of robust growth. Perhaps most worrisome, the declines were not limited to a few obviously troubled sectors, such as telecommunications, but affected a cross section of industries and included some of the world's top spenders on R&D. In fact, three of the five largest corporate R&D spenders showed significant decreases in their 2003 budgets: the top spender, Ford Motor, cut its budget by $200 million, and Siemens, a long-time powerhouse in research and development, decreased spending by $900 million."
But in 2005 Technology Review reported that there was a turnaround. (Strangely there wasn't a 2006 update published in September, the month it was published in the past).
Clearly the fallout from the dot-com and telecom busts, and the overall post 9/11 global recession were major drivers of this cyclical downturn. So we need to revise our forecast, corporate R&D is again expanding.
But what's more interesting is that if we look at the longer-term trends, we see that corporations aren't the ones making bigger bets on R&D - in fact its universities and non-profits. According to my analysis of the NSF data, between 1996 and 2004, R&D spending grew at the following rates:
- Total national R&D spending: 58%
- Federal: 49%
- Industry: 62%
- Universities and colleges: 79%
- Other non-profit institutions: 119%
Industry still accounts for the lion's share of R&D spending, but universities and colleges surpassed federal spending in 2002 and will probably never give that position back.