Changing profile for R&D spending.

Research and development (R&D) spending in corporate, government, and academic laboratories throughout the United States totals about $170 billion annually. Once the world leader in research, the United States has trailed Japan since 1989 in R&D spending as a share of gross domestic product (GDP). The United States' recent and apparently continuing reductions in R&D as a share of GDP "may be moving us to the 'middle of the pack'" of developed countries, notes Adam B. Jaffe of Brandeis University in Waltham, Mass.

The economist's analysis of U.S. spending, reported in the Nov. 12 Proceedings of the National Academy of Sciences (PNAS), finds "that historically our investment in economically relevant R&D has been comparable to other countries' as a fraction of GDP but that we appear to be on a downward trend, while other nations have not, as yet at least, evidenced such a trend." Only on the basis of absolute spending, he notes, does the United States unambiguously lead.

R&D spending as a share of GDP does not account for who performs research or how useful it is-both of which can affect the investment's economic dividends, Jaffe observes. A related study, coauthored by Jaffe and Manuel Trajtenberg of Tel Aviv University and published in the same issue of PNAS, assesses patents, a measure of social and economic dividends from research.

Patents issued to university researchers tend to be more fertile-to spawn more products and innovations-than those issued to corporate scientists, they found. U.S. government patents, in comparison, generally proved "significantly less fertile than corporate patents."

Where is U.S. spending focused? The country spends far less on university scientists than does any other major developed country besides Japan, Jaffe finds. Meanwhile, industry funding has nearly tripled since the 1950s, and at about $100 billion a year, it now accounts for 60 percent of all R&D spending. Though the federal government had for many years been the leading source of R&D money, it now contributes just 35 percent, which, Jaffe notes, comes to "essentially the same [dollar amount] as in 1967."