SOURCE: Battelle

independent R&D organization, Battelle,

December 22, 2009 13:58 ET

Battelle-R&D Magazine Report Shows Emerging Economies Drive Global Research and Development Growth

Stimulus Funding Leads to U.S. Rebound in 2010 as Globalization Levels Technology Playing Field

COLUMBUS, OH--(Marketwire - December 22, 2009) - Global research and development (R&D) spending is expected to increase by 4.0 percent in 2010 to $1,156 billion, according to the closely watched Battelle-R&D Magazine 2010 Global R&D Funding Forecast released today.

The increase in spending mostly will be fueled by continued spending by China and India, two countries that will drive a 7.5 percent increase in Asian R&D. Meanwhile, United States R&D spending is expected to increase 3.3 percent to $401.9 billion. Europe is predicted to lag behind, by increasing spending by only 0.5 percent, to $268.5 billion in 2010.

The impact of U.S. stimulus funding on total R&D in 2009 and 2010 cannot be underestimated; without it, total U.S. R&D would have dropped below 2008 levels. Worldwide economic stimulus funding reached $1.92 trillion last year, with about 38 percent of that occurring in Asian countries. While having significantly positive short-term effects, the economic stimulus packages dramatically increased the debt loads of the countries implementing them and could take away from comparable R&D investments of the future, the forecast cautioned.

U.S. Industrial R&D funding (including funds to academia and non-profit institutions) will increase 2.85 percent over 2009 levels of $253.1 billion, to reach $260.3 billion in 2010. The sector comprises 64.8 percent of all U.S. R&D funding. Overall, industrial R&D performance will increase 2.80 percent to $283.0 billion in 2010, up from $275.3 billion in 2009, but still not reaching the $289.1 billion of R&D performed in 2008.

"Industrial R&D took a real hit in 2009 in both funding and performance," said Marty Grueber, Battelle Research Leader and co-author of the report. "And while it's forecast to rebound in 2010, it still won't reach 2008 levels."

To understand the health and future prospects for U.S. industrial R&D, two issues will be important to monitor in 2010 regarding industrial R&D performance. First, will significant industry segments such as electronics/computer hardware and biopharmaceuticals, which both saw declines in 2009, quickly return to a more robust R&D portfolio?

Second, as R&D budgets tighten, there tends to be a further shift of resources toward shorter-term, nearer-benefit development efforts at the expense of research with longer time horizons that seek transformational innovations and technologies. As the ability to expand R&D budgets returns, will these resources be used to re-engage with existing research areas?

Federally funded U.S. R&D is estimated to reach $114.1 billion in 2010, a 4.2 percent increase from 2009's $109.5 billion. Federally funded R&D as a share of total U.S. R&D has steadily been dropping over the past 30 years, from as high as 45 percent in the 1980s to this year's 26 percent.

The American Recovery and Reinvestment Act (ARRA) of 2009 added funds to both the U.S. Gross Domestic Product (GDP) and overall R&D investments. However, of the $18.1 billion that was dedicated to R&D investments, less than 20 percent actually will be spent in 2009, with the remaining funds spent in 2010 and 2011.

Other U.S. funding for R&D, including U.S. academia, non-profits and other government-affiliated entities, comprise the 7 percent of R&D funding that does not come from industrial and federal sources. Academic funding of R&D is expected to increase just over 5 percent, from $11.1 billion in 2009 to $11.7 billion in 2010. Meanwhile, non-profit organizations are expected to fund nearly $12.6 billion, a growth rate of 2.84 percent. Finally, in the "Other Government" category, typically state and local entities, R&D funding is expected to decline by 1.35 percent to $3.28 billion.

Global Trend: The 2010 Forecast notes a growing trend in which both the Americas (U.S., Canada, Mexico, Brazil, and Argentina) and Europe are falling behind the spending levels seen in some Asian countries. Even Japan, the second largest R&D spender in the world, is falling behind the level of spending by China and India.

The global recession of 2008-09 has accelerated this trend, as American and EC economies are not expected to return to their 2008 level of spending increases for several years, let alone begin to challenge the current level of spending increases by China and India.

"Even while China and India saw dampening impacts from the global recession, at no time did their growth rates actually go negative. The pace of their R&D growth just slowed, but it will heat right back up as we head into 2010," co-author Grueber said. "The research engines in China and India are large and getting larger and are driven by a number of factors beyond traditional economic drivers."

The Forecast includes survey results from a broad-based pool of R&D technology leaders. Energy, climate change, and healthcare are expected to be the top technology drivers of the future, with the specific trends noted below in key areas:

--  Energy/Environmental:  Significant investments in R&D put the U.S. in
    the lead on technologies involving carbon sequestration, smart grid, and
    clean coal/zero emission technologies -- positions that are expected to
    hold during the next five years.
--  Health and Biosciences:  This area continues to be a high priority
    for current U.S. leadership in almost all categories, including
    targeted/nanotech drug delivery, medical biotechnology, and automated
    diagnostics/surgical methods.  One area worth watching because of U.S.
    policy changes is stem cell development and related technologies.
--  Defense and Security: The U.S. is expected to continue leadership
    positions over the next five years in Autonomous Unmanned Vehicles such as
    Unmanned Aerial Vehicles (UAVs) and Unmanned Underwater Vehicles (UUVs),
    stealth technologies, and chem/bio sensors.

The full report is available online at: The link also can be accessed via Battelle's Web page at Hard copies of the report will be available Jan. 4 and can be obtained by contacting Jean Hayward at (614) 424-7039 or at

Sources: The 2010 Battelle-R&D Magazine Forecast is build upon a data foundation detailed in the National Science Foundation's (NSF) National Patterns of R&D Resources. It also draws upon a number of additional resources including detailed surveys of R&D performers; R&D budget information compiled by the White House Office of Science and Technology Policy (OSTP), and the American Association for the Advancement of Science (AAAS); information on ARRA budgets and awards from and related agency Web sites; secondary data from a variety of sources; and corporate financial reporting to the U.S. Securities and Exchange Commission. Ultimately, estimation and interpretation of recent data are required, due to various collection time lags and non-disclosed data, to develop the final 2010 forecast.

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