`Different' 2002 may see U.S R&D spending up 3.5%.

Total R&D expenditures in the United States 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 have combined to exert influence on the state of R&D

"The effects of these are not simply isolated and cumulative," said Jules Duga, a Battelle senior researcher and co-author of the report. "It is clear that there are interactions among the three, and--when superimposed upon what one might consider a `normal' set of circumstances of change--their effects are somewhat more difficult to deal with."

Highlights from the forecast are:

* 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.

* The federal government is expected to spend $75.5 billion on R&D, a 4.7-percent increase over 2001.

* Academia and non-profits provide the other significant portion of national R&D funding, which is expected to be $15.4 billion, about 3 percent more than was committed in 2001.

The impact of external forces 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," Duga said. "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."

Federal Outlook

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.

Industrial Outlook

As also indicated in the Industrial Research Institute's latest R&D trends forecast (RTM, Jan.-Feb. 2002, pp. 16-20), the rate of increase seen for industry spending 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. Battelle expects that 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, 2002's change in industrial support will be primarily a change in the rate of growth, and a period of adjustment, Battelle predicts.

"`All else being equal ...' is perhaps the simplest and most common phrase used by forecasters and futurists, and the first to succumb to the types of changes we have witnessed over the past year," Duga said. "This year is significantly different."

The complete Battelle-R&D Magazine forecast can be obtained from Karen Taylor at Battelle, at (614) 424-5545 or taylorks@battelle.org.