US R&D: Industry Continues to Outpace Government.

Expenditures on research and development in the US reached $220.6 billion in 1998, estimates a special R&D report by the National Science Foundation. Adjusting for inflation, this represents a 5.3% increase over 1997.

Most of this growth has been fed by industry funding. While

As far as R&D performance, industry performed 75.1% of all R&D in the US. Universities, which received 59% of its R&D funding from the federal government, performed the second most R&D, or 11.6% of the overall total.

In terms of basic and applied research and development, applied research increased the most in 1998, by 6.2%. Development increased by 5.8%, while basic research saw only 2.4% growth.

Basic research within the budget for the federal government, however, is expected to increase for fiscal 2000, by 4%, according to the latest budget report. In contrast, applied research will remain flat, and government development spending will decline by 4%. R&D expenditures on facilities are also expected to decline in fiscal 2000, by 8%, but R&D spending for equipment is to increase by 9%.

The total federal R&D budget will actually decline in fiscal 2000, by 1.3%, and that compares to the 2.2% increase in overall budget outlays for the period. But there is a distinct reason for the fall, and that is the 5.8% decline in defense spending. This marks the first time since 1981 that defense spending for R&D has fallen below 50% of total federal R&D expenditures, in this case to 44.8% (see table this page). Excluding Defense spending, federal R&D expenditures will actually increase by 2.7% for fiscal 2000.

The four departments realizing the biggest percentage increase in funds are Transportation, Interior, Commerce, and the National Science Foundation. Increased funding for the NSF includes more funding for bio-complexity research involving ecosystems. The Department of Commerce's National Institute of Standards and Technology is receiving more funding for a program to promote cost-shared R&D partnerships, as well as more funding for its Measurement and Standards labs.

Efforts by the government to balance the budget in recent years have put a strain on federal R&D spending, but President Clinton has also vocalized his continued commitment to a strong research program (hence, his 21st Century Research Fund). It seems that as long as the economy continues to boom, government R&D spending will lag behind the ambitious plans of industry. But when US economic growth again slows, and industry cinches its belt (as some instrument companies have already been forced to do, see article above), it would be possible for the government to regain some of its share of total R&D spending in the country.

Bar Graph: US R&D: Performers and Source of Funding ($b, 1998)
   Source of Funds   R&D Performer
FFRDC*      0   5.529
Other nonprofit inst.   3.449   6.735
Federal Govt.      66.636   16.936
Universities      6.819   25.672
Industry      143.714   165.746
*FFRDCs administered by universities.
Source: National Science Foundation
Bar Graph: US R&D: Performers and Source of Funding (% change 1998-1997)
   Source of Funds   R&D Performer
FFRDC*      0.0%   1.3%
Other nonprofit inst.   4.1%   5.7%
Federal Govt.      2.7%   2.1%
Universities      6.0%   5.0%
Industry      9.7%   8.5%
*FFRDCs administered by universities.
Source: National Science Foundation
Table: US Federal R&D Budget Fiscal 2000 ($m)
               % chg   % of total
Agency         1998   1999*   2000*   99/00   2000
Defense         37,568   37,204   35,064   -5.8%   44.8%
Health/Human Svcs   13,860   15,792   15,984   1.2%   20.4%
NASA         9,753   9,714   9,771   0.6%   12.5%
Energy         6,483   7,240   7,465   3.1%   9.5%
NSF         2,528   2,721   2,934   7.8%   3.7%
Agriculture      1,561   1,796   1,718   -4.3%   2.2%
Commerce      1,091   1,075   1,162   8.1%   1.5%
Transportation      859   891   1,230   38.0%   1.6%
Interior         472   517   590   14.1%   0.8%
EPA         636   669   645   -3.6%   0.8%
Veteran Affairs      587   674   663   -1.6%   0.8%
Other         928   974   1,016   4.3%   1.3%
Total         76,326   79,267   78,242   -1.3%   100%
*Figures for 1999 are estimated and proposed for 2000.