R&D Funding Forecast 2008: Slowing Economy Dampens Research and Development Spending

R&D Funding Forecast 2008: Slowing Economy Dampens Research and Development
Spending

COLUMBUS, Ohio, Feb. 14 /PRNewswire-USNewswire/ -- 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," said 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," Duga said.

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.

Federal Outlook
Federal support has continued to grow in absolute terms although still lags
behind the rapidly growing industrial support. According to federal budget
analysis performed by the American Association for the Advancement of Science
(AAAS), the following funding issues are in play:

-- Department of Defense: Overall R&D funding is essentially flat and with a
decline of .5 percent or $414 million. However, an additional war
supplemental currently before Congress will likely include an additional $3.9
billion for development R&D, which would ultimately provide a 3.2 percent
increase over FY 2007. Air Force and Army will see increases while Navy will
decline
-- Department of Homeland Security will see a 9 percent increase
-- National Institutes of Health (NIH) increased its R&D budget by less than 1
percent, or $245 million, to $29.5 billion with increases seen for the
National Institute of Allergy and Infectious Disease (NIAID) and the National
Cancer Institute (NCI)
-- Department of Energy: Increase by 7.4 percent largely in the area of
renewable energy and energy efficiency technology development
-- The American Competitiveness Initiative is expected to have impact in
greater funding of the physical sciences and STEM (science, technology,
engineering and math) educational programs designed to create a broader and
deeper teaching of these disciplines throughout the federal government and
educational system.

Industrial Outlook

-- Because of the dominance of industrial funding as a source for the overall
R&D enterprise, it is particularly important to pay special attention to
industrial attitudes and practices
-- Offshore outsourcing has become a complex weave of relationships,
facilities, practices, opportunities and threats, that is changing the manner
in which technical services are provided
-- Every indication is that the move toward off-shore outsourcing will
continue and grow over the next few years
-- According to data from Schonfeld & Associates, the following major
industries will see significant increases in R&D support: Biological and
Diagnostics, Pharmaceutical Preps, and Chemicals and Allied Products.
Declining R&D support will be felt in industries such as Motor Vehicles and
Car Bodies, Electronic Measuring and Testing Instruments, Other Electronics,
and Agricultural Chemicals.

The Battelle R&D Magazine Forecast draws data from the following sources:

--The American Association for the Advancement of Science (AAAS)
-- Battelle
-- The Industrial Research Association (IRI)
-- Organization for Economic Cooperation and Development (OECD)
-- R&D Magazine/Advantage Business Media Science Group
-- Schonfeld & Associates
-- U.S. Department of Commerce
-- United Nations Conference on Trade and Development (UNCTAD)

The full report of the 2008 R&D Funding Forecast will be printed in R&D
Magazine in early February. Reprints will be available then by contacting
Battelle's Jean Haoyward at (614) 424-7039 or at haywardj@battelle.org. It's
also available online at www.rdmag.com.

Battelle is the world's largest non-profit independent research and
development organization, providing innovative solutions to the world's most
pressing needs through its four global businesses: Laboratory Management,
National Security, Energy Technology, and Health and Life Sciences. It
advances scientific discovery and application by conducting $4 billion in
global R&D annually through contract research, laboratory management, and
technology commercialization. Headquartered in Columbus, Ohio, Battelle
oversees 20,400 employees in more than 120 locations worldwide, including
seven national laboratories which Battelle manages or co-manages for the U.S.
Department of Energy and the U.S. Department of Homeland Security.

Battelle also is one of the nation's leading charitable trusts focusing on
societal and economic impact and actively supporting and promoting science and
math education. For more information visit www.battelle.org or contact Media
Relations Manager Katy Delaney at (410) 306-8638 or at delaneyk@battelle.org.

SOURCE Battelle

Jean Hayward, +1-614-424-7039, haywardj@battelle.org, or Katy Delaney,
+1-410-306-8638, delaneyk@battelle.org, both of Battelle