Friday, February 23, 2007

2007 R&D Spending Forecast

One of the interesting reads I look forward to each year is R&D Magazine’s funding forecast in which they survey government and now private sector funding in order to predict the development of emerging technologies. Clearly, those technologies which receive funding stand a much greater chance of success over those technologies without it. The authors of the study divide funding into four sectors: federal government, industry, academic, and non-profit organizations.

In this year’s edition the author’s highlight significant changes in the funding environment. They are:

1. Government funding shifted towards the fight against terrorism and mitigating natural disasters.
2. Industry funding has shifted some resources to offshore sites.
3. China and India are becoming key players in the technology arena.

The article forecasts investment of $338 billion in 2007 which is about a 3% gain over 2006. It appears that the Department of Defense and Homeland Security received their increases already, but the remaining increases scheduled for the NSF, NIST, and Dept of Energy have yet to be passed which leaves them vulnerable to no increase for 2007.

Government funded R&D will go towards instruments for detecting biological and radiological materials. Also alternative energy will receive more focus.

In looking at industry, academic labs, and non-profits, it appears R&D staffing will increase by nearly 3% in 2007 with positive changes in semiconductor, pharma, petrochemical, and materials leading the way.

The American Association for the Advancement of Science echoes R&D Magazines’ assessment that DOD expenditures are drawing resources away from basic research. Spending in Health and General Science are increasing while other segments remain the same or decline, according to this chart.

In previous year’s posts, I wrote that biomedical research increased dramatically. To see how it compares to other disciplines such as engineering, math/computer science, or physical sciences, click here. It’s astonishing to see how much money went to biomedical research.

Offsetting the decline in government spending in research is industry spending. The chart here shows it well. It’s interesting to see the breakdown by industry. Pharma leads the way in R&D spending followed by semiconductor, software, and automotive. One third of R&D spending is in the area of services.

The American Competitive Initiative that was launched last year by President Bush committed $6B additional funds to R&D efforts in 2007 with $50B in additional funds spread over ten years. It is aimed at supporting basic research programs in the physical sciences and engineering. The additional funds will be funneled through NSF, DOE, and NIST with an emphasis on training and education of scientists and engineers for both research and engineering teaching.

Best regards,
Hall T.