Chapter Background

Readers of this publication would be hard pressed to discover disagreement with the belief that investment in research and development (R&D) is good for the economy and the health and welfare of society. This axiom has always been the cornerstone of U.S. science and technology (S&T) policy. There is widespread consensus that the invention of new and improved products, processes, and services provides innumerable societal benefits, including a competitive and productive economy, a strong national defense, new diagnostic tools and treatments for disease, and protection of the environment. (See chapter 8, Economic and Social Significance of Scientific Research.)

Because S&T have such a pervasive impact on the quality of life and the standard of living in the United States and other industrialized nations, changes in the U.S. R&D enterprise attract considerable attention. In the past few years, a number of new trends have emerged, including an increase in domestic and international collaborative efforts within and across economic sectors, growth in R&D performed in the service sector, and industrial firms' diminishing reliance on central research facilities for new S&T breakthroughs. In addition, defense downsizing, which began in the late 1980s with the end of the Cold War, is continuing to force a reconfiguration of industrial R&D activity and a redefinition of the mission of Federal laboratories.

The change in the U.S. R&D enterprise causing the most consternation in the mid-1990s, however, is a lack of real growth in R&D investment. Although cutbacks in defense appropriations are responsible for a sizable portion of the reduction in R&D effort, the flow of dollars into civilian R&D projects also has been constricted. The immediate outlook for U.S. progress in S&T, therefore, may not appear as optimistic as it did in the past. Despite the lack of growth in R&D funding, there are some positive signs, including

The purpose of this chapter is to track these and other trends in financial investment in science and technology.

Chapter Organization

This chapter contains seven sections. First, aggregate trends in R&D expenditures are discussed and analyzed. That section is followed by more detailed information on two of the major R&D-performing sectors: industry and the Federal Government. Also covered in this section are collaborative R&D activities and R&D data for federally funded research and development centers (FFRDCs).

The third section is devoted to the most recent data on the geographic distribution of R&D expenditures, including information on state and Federal cooperative technology programs. Defense-related S&T issues are discussed in the following section.

International R&D comparisons are covered in the last three sections, including analyses of absolute levels of spending by country, R&D-to-gross-domestic-product (GDP) ratios, government focus by national objective, and the internationalization of R&D and technology.