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Company R&D Funding Rises as Federal Support Declines

August 02, 1996

Increased company support of R&D offset reduced Federal funding in 1994 and contributed to an overall increase in U.S. industrial R&D, to $119.6 billion, according to the National Science Foundation's Survey of Industrial Research and Development for 1994.

The Survey shows that firms spent $119.6 billion on research and development (R&D) in the United States, 2 percent more than during 1993. Company funding continued to increase, from $94.6 billion to $97.1 billion, as it has each year since 1953. Federal funding decreased from $22.8 billion to $22.5 billion, continuing a trend that began in 1988. After adjusting for inflation, company-funded R&D rose 0.6 percent and Federally funded R&D fell 3.5 percent.

Although the amount spent for industrial R&D during 1994 increased compared with 1993, total R&D measured in constant dollars decreased 0.2 percent. This downward trend, which began in 1992, is only the second since 1953. The first occurred in the early 1970s when total R&D measured in constant dollars began falling and did not regain its 1969 level until 1978.

While the Federal Government's share of support to most industry groups declined during 1994, the amount firms contributed to their own R&D efforts continued to grow. Overall, nonmanufacturing firms as a group comprised approximately 25 percent of the total industrial R&D performance. These firms ranked first among performers of company-funded R&D, contributing $24 billion during 1994.

Performance of R&D by the smallest firms, those with less than five hundred employees, declined 4 percent during 1994 compared with 1993. For this group, federally sponsored R&D declined 28 percent. For larger firms, those with 500-5,000 employees, overall R&D increased 22 percent; however, federal R&D for this group declined 3 percent. For the largest firms, those with more than 5,000 employees, company-funded R&D increased 6 percent, but federal R&D declined by the same percentage.

In addition to collecting information on the amount of R&D, the Survey of Industrial R&D also gathers information on the number of scientists and engineers who perform R&D. The number of full-time equivalent (FTE) scientists and engineers engaged in R&D activities in 1994 was 758,800 for all industries-561,400 in manufacturing and 197,400 in nonmanufacturing industries. Compared with 1993, the number of FTE scientists and engineers dropped 0.7 percent. It fell 1.2 percent in manufacturing industries and rose 0.5 percent in nonmanufacturing industries.

Copies of the Survey of Industrial Research and Development for 1994 write to the National Science Foundation, Division of Science Resources Studies, Publications Management Group, 4201 Wilson Boulevard, Suite 965, Arlington, VA 22230; call (703) 306-1773; or send an e-mail request to srspubs@nsf.gov