Most non Federal R&D support is provided by industry. Of the estimated 1994 non Federal total ($110 billion), 93 percent ($102 billion) was company funded. Indeed, industry's share of the national R&D funding total first surpassed that of the Federal Government in 1980 and has remained at 50 percent and higher ever since. From 1980 to 1985 industrial support for R&D increased at a 7 percent average annual inflation adjusted rate. This growth was maintained through both the mild 1980 recession and the more severe 1982 recession (chart 5). Key factors behind increases in industrial R&D included a growing concern with international competition, especially in high technology industries; the increasing technological sophistication of products, processes, and services; and general growth in defense related industries such as electronics, aircraft, and missiles.
Between 1985 and 1994, growth in R&D support from industry declined dramatically, averaging only 3 percent per year in real terms. Individual industries show very different trends in their R&D expenditures, and the factors influencing R&D budget decisions vary across industries.
Companies in the communications equipment, primary metals, and stone, clay, and glass industries have experienced the greatest slowing in R&D support since the mid 1980s, actually falling in several years (even before adjusting for inflation) during this period. R&D funding growth has been strongest from the chemicals and the drugs and medicine industries, as well as from companies classified in the nonmanufacturing sector (table B-27).
In contrast to the sluggishness in industrial R&D support, strong support from other non Federal sectors-universities, State and local governments, and other nonprofit institutions-has continued in the late 1980s and early 1990s (chart 5). Between 1980 and 1985 the average annual rate of real R&D support from these sectors was 5 percent. Such non Federal nonindustrial R&D expenditures increased at a 6 percent real annual rate between 1985 and 1994. Most of these R&D dollars are used for research within the academic sector.