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July 24, 1998

Industrial research and development spending totaled approximately $145 billion in 1996, a 10 percent increase for the second year in a row. More than 83 percent of that funding came from industry itself with the federal government providing the remaining funds, according to a new Data Brief prepared by the National Science Foundation. Small businesses, those with 500 or less employees, spent slightly more than $20.2 billion or 14 percent of the total industrial R&D spending in 1996. This represented a 21 percent increase over 1995's total.

The increase in total industrial R&D spending was highlighted by a rebound in R&D spending among manufacturers. Following eight years in which nonmanufacturing R&D rose about 15 percent each year in current dollars, while manufacturing increases were approximately three percent, the figures almost reversed themselves in a single year.

During the 1995-96 period covered by the NSF survey, manufacturing R&D rose by 12 percent — and just as dramatically — nonmanufacturing R&D slowed to a modest two percent increase for the year.

NSF anticipates that 1997 statistics will help determine if the continued healthy economy is resulting in a higher performance of R&D by manufacturers.

The largest industrial R&D increases in manufacturing were in the machinery industries, especially in those which produced computers and other office machines.

The biggest decline in the nonmanufacturing sector was in trade. Transportation and utilities also showed sharp declines in R&D investments.

NSF has tracked industrial R&D spending through its surveys since 1953. The data brief is available on the Internet at: http://www.nsf.gov/sbe/srs/stats.htm