National Patterns of R&D Resources: 1998

Character of Work

The Nation spent an estimated $34.4 billion on the performance of basic research in 1998, $49.8 billion on applied research, and $136.4 billion on development (figure 16). These totals represent noticeable increases from preliminary estimates of 1997 levels: a 2.4-percent increase, in real terms, for basic research; a 6.2-percent increase for applied research; and a 5.8-percent increase for development. As a share of all 1998 projected R&D performance expenditures, basic research represents 15.6 percent, applied research 22.6 percent, and development 61.8 percent.

Figure 16. National R&D spending, by character of work: 1960-98

The expected 1998 percentage shares differ only slightly from those reported for 1980. Basic research then accounted for 13.7 percent, applied research for 21.8 percent, and development for 64.5 percent. The methodology for imputing character-of-work estimates for industry's R&D performance, however, was changed for 1986 and later years. Consequently, data after 1985 are not strictly comparable with data for 1985 and earlier years. The revised approach resulted in relatively higher estimates for basic and applied research and lower estimates for development expenditures. Furthermore, the improved sampling of industry's R&D activity beginning in 1992 also resulted in notably higher basic research estimates than had previously been represented. (See appendix A for further details.)

Basic Research top

The average annual real growth in basic research performance was 5.2 percent between 1980 and 1985, 4.5 percent between 1985 and 1994, and 2.2 between 1994 and 1998 (by preliminary estimates for 1998).

In terms of support, the Federal Government provided the majority of funds used for basic research. However, the Federal share of funding for basic research dropped as a percent of all funding, from 70.4 percent in 1980 to a preliminary 56.7 percent ($19.5 billion) in 1998. This decline does not reflect a decline in Federal funding for basic research, which in fact, grew an estimated 3.0 percent per year in real terms between 1980 and 1998. Rather, the decline in the Federal share of basic research reflects an increased tendency for the funding of basic research to come from other sectors. Specifically, from 1980-98, non-federal support for basic research grew at the remarkable rate of 6.4 percent per year in real terms, by preliminary estimates.

With regard to performance, universities and colleges (excluding FFRDCs) account for the largest share (51.1 percent) of the projected basic research total for 1998. When the performance of university-administered FFRDCs is included, the academic sector's share climbs to 58.9 percent. In 1998, basic research performance of universities—excluding FFRDCs—reached an estimated $17.6 billion in current dollars , representing a 3.3-percent increase from 1997 in real terms. By preliminary calculations, the Federal Government provided 62.5 per-cent of the basic research funds used by the academic sector in 1998. Non-federal sources—including industry, state and local governments, universities and colleges themselves, and nonprofit organizations—provided the remaining 37.5 percent.

Applied Research top

The estimated average annual real growth in applied research performance was 7.3 percent between 1980 and 1985, 0.8 percent between 1985 and 1994, and 5.6 percent between 1994 and 1998 (by preliminary estimates for 1998). Increases in industrial support for applied research were behind much of this growth. Industrial support accounted for 63.6 percent ($31.7 billion) of the 1998 preliminary total for applied research, and Federal support for 30.0 percent ($14.9 billion).

During the eighties, Federal support for applied research had been intentionally deemphasized in favor of support for basic research. Even with the current admini-stration's increased support of generic/precompetitive applied research, preliminary estimates of Federal support in 1998 for applied research were only 76.3 percent of that for basic research ($14.9 billion vs. $19.5 billion, respectively), as reported by research performers.

Preliminary calculations indicate that 70.0 percent ($34.8 billion) of the Nation's applied research was performed by industry and industry-administered FFRDCs in 1998. Non-federal sources accounted for most ($30.7 billion) of these funds, while Federal sources provided the rest ($4.1 billion).

For the Nation's nonindustrial applied research in calendar year 1998, preliminary data indicate most was performed by universities and colleges and their administered FFRDCs ($7.7 billion) and the Federal Government ($5.1 billion). Approximately 18.9 percent of the projected Federal intramural applied research in FY 1998 was performed by DoD, another 24.4 percent by HHS, and 10.9 percent by NASA.[28] Total Federal applied research performance has been remarkably level over the past 32 years, experiencing only a 0.4-percent average annual growth, in real terms, since 1966.

Development top

Since R&D expenditures are primarily expenditures on development, historical patterns of development expenditures mirror historical patterns of total R&D expenditures. From 1980-85, development grew on average by 7.0 percent per year in real terms as larger shares of the national R&D effort were directed toward defense R&D, which tends to be approximately 90 per-cent development. Between 1985 and 1994, on the other hand, development in real terms grew at an average annual rate of only 0.4 percent, from $74.4 billion in 1985 to $103.0 billion in 1994. Between 1994 and 1998, by preliminary estimates, annual growth was back up to 5.0 percent in real terms, to $136.4 billion in 1998, of which 75.7 percent was supported by industry and 23.6 percent by the Federal Government. In terms of performance, industry (including industrial FFRDCs) accounted for 89.7 percent ($122.3 billion) of the Nation's 1998 development activities, the Federal Government 6.5 percent ($8.9 billion), and all other performers 3.8 percent ($5.2 billion).


[28] These percentages were derived from preliminary Federal obligations as reported in NSF, Federal Funds for Research and Development: Fiscal Years 1996, 1997, and 1998, NSF 98-332.

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