Title  : R&D Growth Exceeded 1995 Expectations, but May Slow in 1996
Type   : 1996 Data Briefs, No.11, NSF 96-328
NSF Org: SBE/SRS
Date   : October 25, 1996
File   : sdb96328.TXT
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According to projections, total R&D expenditures in the United
States are expected to reach $184.3 billion in 1996 - a 3.2 percent
increase over the $178.6 billion spent in 1995.  The preliminary 1995
figure represents a 6-percent increase in R&D spending from its 1994 
level. In inflation adjusted terms, total R&D expenditures rose by 4
and 1 percent in 1995 and 1996, respectively, with the 1995 increase
being the largest since 1985.  Last year about this time, R&D was 
expected to decrease by 2 percent in real terms, but much stronger
than anticipated growth in industrial R&D performance led to this
upward revision.  However in 1996, R&D growth continues to be out
paced by growth in the size of the economy, as measured by Gross 
Domestic Product (GDP).  Preliminary estimates of GDP indicate a 
2.7-percent growth between 1995 and 1996 in real terms - well over
twice the expected growth in real R&D.

According to these projections, the United States will spend 
$29.8 billion on the performance of basic research in 1996 
16 percent of the total), $38.8 billion on applied research
(21 percent), and $115.8 billion on development (62 percent).
In comparison to 1995, R&D performance in 1996 will reflect a 
preliminary 0.9 percent real decrease in basic research; a 1.0
percent real increase in applied research; and a 1.5 percent real 
increase in development.

1996 Funding Patterns

Industry will continue to provide the largest share of total U.S. 
support for R&D, which will be $113.5 billion in 1996, by current 
projections (table 1).  This funding represents a 3.5 percent 
increase in real terms over the preliminary level for 1995.  
Companies will fund most (83 percent and growing) of industry's
expected R&D performance total; Federal funding is likely to 
account for the rest (17 percent).  The Federal share of 
industry's performance total-including that in related 
FFRDCs-has fallen considerably; for example, it had been as 
high as 32 percent of the industry total in 1987.

Federal R&D support in 1996 is expected to be $61.9 billion, a 3.0 
percent decline in real terms from 1995. The Federal share of R&D
funds first fell below 50 percent in 1978, and was consistently
between 44 and 47 percent from 1980 to 1990.  Since then, the
Federal share has dropped steadily, rendering for 1996 the
projected value of 33.6 percent, the lowest share reported in 
NSF's 44-year-old R&D data series.

Nearly all of the remaining R&D funds will come from universities 
and colleges and from State and local governments.  In total, 
these remaining funds will reach $9.0 billion in 1996, by 
preliminary tabulations, which will be virtually unchanged in
real terms (only 0.3 percent higher) from their 1995 total.

1996 R&D Performance Patterns

Industry, including industry-administered Federally Funded
Research and Development Centers (FFRDCs) such as Sandia
National Laboratory, is expected to account for 73 percent of 
the Nation's 1996 R&D performance total.  The projected $134.2 
billion in R&D performance by industry represents a 2-percent 
increase in real terms over its preliminary 1995 level.  The
Federal Government is expected to perform $16.2 billion of 
R&D in 1996, a real decline of 3 percent from 1995.  Federal 
agencies will account for 9 percent of national R&D performance,
reflecting, again, a continual decline in the relative Federal 
participation that began in the mid-1970s.  Universities and 
colleges, excluding academically-administered FFRDCs, are
expected to account for 12 percent ($22.4 billion) of the 1996
national R&D performance effort.  By these preliminary findings, 
there will be virtually no change (less than 0.1 percent) between 
1995 and 1996 in the amount of real R&D performance carried out
in academia.

U.S. R&D Expenditure Trends

Growth in total U.S. R&D expenditures has been slow since the
mid-1980s.  From 1980 to 1985, R&D spending increased on average
by 6.6 percent per year in real terms.  From 1985 to 1996, by
preliminary calculations, it slowed to 1.4 percent, in comparison
to a 2.6 annual real growth in GDP.  Slackening in both Federal 
and non-Federal support for R&D, as a proportion of GDP, has
contributed to this slowing, though Federal support has been 
declining at a faster rate than non-Federal support (chart 1).
Consequently, the 4-percent rise in real R&D during 1995 was 
much more the exception than the rule.  From 1985 to 1996, the 
proportion of GDP spent on R&D has fallen consistently, from 2.8
percent to 2.5 percent (based on current projections).  On the
other hand, the relatively high growth in 1995 may be indicative
of some reversal in this downward trend.

International R&D Spending

The United States spends more on R&D activities than any other
country, in fact, more than Japan, Germany, France, and the
United Kingdom combined.  In 1994-the latest year for which
foreign data are available-the U.S. spent 2.49 percent of its
GDP on R&D, in comparison to 2.69 percent spent by Japan, 2.38
percent by France, 2.33 percent by Germany, 2.19 percent by the
United Kingdom, 1.57 percent by Canada, and 1.19 percent by Italy. 
The nondefense R&D/GDP ratio for the United States in 1994
(2.00 percent) was considerably lower than those for Germany
(2.26 percent) and Japan (2.66 percent) (chart 2).  France and
the United Kingdom, which have substantial defense R&D efforts,
reported nondefense R&D/GDP ratios closer to that of the United 
States, 2.09 and 1.88 percent, respectively.  The ratio for
Canada was 1.57 percent, and for Italy, 1.14 percent.

User Notes

U.S. national R&D expenditures data were assembled from several
NSF surveys.  Projections for 1996 and preliminary tabulations
for 1995 are based on data provided by Federal R&D funding 
agencies, independent surveys of academic and industrial R&D 
performers, and time series modeling techniques.  Foreign R&D
expenditure data are derived from national and international
sources.

For free printed copies of SRS Data Briefs call (703) 306-1773 
or e-mail to pubs@nsf.gov.  Users of the World Wide Web on the
Internet can have access to publications from the Division of 
Science Resources Studies (SRS) of the National Science 
Foundation.  Such access allows for viewing and printing the 
document, as well as downloading tables of data onto spreadsheet 
files (Microsoft Excel and Lotus 123).  Web users should go to 
"http://www.nsf.gov/sbe/srs/stats.htm", click on "publications 
and data," after which they can obtain more information on 
National Patterns of R&D Resources by clicking on "Comprehensive
and Special Analytic Reports on Science and Engineering" followed
by National Patterns of Research and Development Resources.

For more information, contact
	Dr. Steven Payson
	National Science Foundation
	Division of Science Resources Studies
 	Research and Development Statistics Program
 	4201 Wilson Boulevard, Suite 965
 	Arlington, VA 22230 

 	Phone: (703) 306-1772, ext. 7209
 	Internet: spayson@nsf.gov

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