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Thursday, February 14, 2008

Forecast: Slowing Economy Dampens Research and Development Spending

Total funding for research and development (R&D) is expected to increase just 3.3 percent in 2008 from the $355 billion funded in 2007 to the $367 billion expected to be funded in 2008, according to the annual Battelle R&D Magazine forecast.

The generally sluggish movement of R&D funding and performance continues the enterprise's pattern of small year-to-year changes. The dampening of overall spending on R&D can be attributed to some developing
trends including:

-- Restructuring of the major corporate R&D approaches in industry
-- Significant growth of the practice of off-shore out-sourcing of R&D
-- Shift in federal government priorities as a result of world events
-- Growth of the federal deficit.

"There is little doubt that there are some basic problems facing the U.S. research environment, not the least of which include consideration of energy, environment, and the economy," says Battelle senior researcher and
study co-author Jules Duga. "And to a degree not seen in recent years, the average person on the
street is calling for long-term relief from high energy costs, improved (but non-intrusive) security, and resolution of environmental problems."

Funding By Sector

-- The federal government is expected to spend $25.2 billion funding R&D efforts in 2008, a 1.16 percent increase over the $24.9 billion spent in 2007
-- Industrial investments in R&D are expected to reach $258.7 billion in 2008, an increase of 3.4 percent over 2007 levels of $250.3 billion
-- Academia and other non-profits are expected to expend $70.5 billion on R&D in 2008. Academia is forecasted to increase by 5.3 percent from $51.9 billion in 2007 to $54.6 billion in 2008. Non-profit expenditures on
R&D are expected to increase by 4.3 percent from $15.3 billion in 2007 to $16 billion in 2008
-- Federally Funded Research & Development Centers (FFRDC) is a new category to the annual R&D Forecast. The 36 centers are established by various government agencies and are designed to carry out special long-term
research programs on behalf of their parent agencies. Funding for 2007 was $12.7 billion which is expected to drop by 2.3 percent to $12.4 percent in 2008.

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