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Overview
Chapter Organization
Chapter Overview
 Research and development is widely recognized as being key to economic
growth and social welfare, often resulting in benefits unimagined
at the time it is initiated. Although R&D expenditures never
have exceeded 3 percent of the U.S. gross domestic product (GDP)
and the returns on investment in R&D have been difficult to
measure, academic and government communities continue to study R&D
expenditures as an indicator of technological change in and the
innovative capacity of the nation.
The results of R&D decisionmaking—including the resources
that various organizations devote to R&D and to what ends they
devote them—affect both the economy and national well-being. For
this reason, the United States and many other nations collect extensive
R&D expenditure data, which are disseminated worldwide for study
by analysts in a variety of fields.
In addition to indicating the direction and rate of technological
change, R&D expenditure data also measure the level of economic
purchasing power devoted to R&D projects compared with other
economic activities. Industrial (private sector) funding of R&D,
for example, may be considered an indicator of how important R&D
is to companies because companies could easily devote those same
funds to other business activities such as advertising. Similarly,
government support for R&D reflects governmental and societal
commitment to scientific and technological advancement, an objective
that must compete for dollars against other functions supported
by discretionary government spending. The same basic idea is true
for the other sectors that fund R&D: universities, colleges,
and other nonprofit organizations.
Although total R&D expenditures reveal the perceived economic
importance of R&D relative to all other economic activities,
the composition of R&D expenditures is a policy variable of
equal importance (Tassey 1999). Over the R&D
life cycle, different classes of R&D funders and performers
rise in importance, then give way to others. The success or failure
of technology-intensive industries relative to foreign competitors
often hinges on the availability and effectiveness of these differing
participants. R&D flows between the sectors represented by these
participants indicate a nation's capacity to leverage its science
and technology (S&T) resources effectively.
In addition to R&D expenditures performed within a particular
sector, this chapter presents data on outsourced and collaborative
R&D activities across R&D-performing sectors and on Federal
technology transfer. Technology sources outside a company or industry,
including university research, have played a key role in innovation
and competitiveness from the beginnings of corporate R&D in
the United States (Mowery 1983; and Rosenberg
and Nelson 1994). In recent decades, however, the increased
relevance of scientific research to industrial technology, coupled
with the demands from a global competitive environment, has increased
the importance of collaborative activities for innovation and long-term
competitiveness (Vonortas 1997).
Chapter Organization
This chapter is organized into five major sections that examine
trends in R&D expenditures and collaborative technology activities.
The first and second sections describe R&D performed in the
United States. The first contains information on economic measures
of R&D in the United States and trends in total R&D performance
and funding; areas addressed include industrial R&D, R&D
performance by state, and R&D performance and funding by character
of work. The second focuses on the role of the Federal Government
in the R&D enterprise, giving particular attention to direct
Federal R&D support by national objective, Federal agency, and
field of science as well as indirect fiscal measures to stimulate
R&D growth.
The third section summarizes available information on external
technology sourcing and collaborative R&D activities across
R&D-performing sectors including industrial contract R&D
expenditures, Federal technology transfer, and domestic and international
technology alliances.
The fourth section compares R&D trends across nations. It contains
sections on total and nondefense R&D spending; ratios of R&D
to GDP in various nations; international R&D funding by performer
and source (including information on industrial subsectors and academic
science and engineering fields); the allocation of R&D efforts
among basic research, applied research, and development components;
and international comparisons of government R&D priorities and
tax policies.
The fifth section discusses available R&D data for foreign-owned
companies in the United States, parent companies of U.S. multinational
corporations (MNCs), and U.S.-owned R&D overseas in terms of
investing or host countries, their industrial focus, and implications
for the ownership structure of U.S. R&D activity.
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