R & D funding outlook for 2006.

In 2006, the total funding for research and development efforts in the U.S. is expected to increase by approximately 2.9% to $329 billion, according to the annual R & D forecast report issued by Battelle--R & D Magazine. An estimated $320 billion was spent in 2005, which covers all research and development expenditures across the industry, government, and academia sectors.

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Broken down by segments, the U.S. government is expected to spend $96.6 billion on R & D efforts in 2006, a modest 1.8% increase over 2005; the industrial sector is to reach $211.9 billion, a 3.5% increase; and academic institutions and non-profits are projected to spend a total of $20.4 billion, with academia increasing by 1.1% and other non-profits by 3.7%.

Regarding the industrial sector, the survey data indicates that support of R & D performed in U.S.-located facilities is starting to lose ground to the amount of R & D funded in countries such as India and China.

An important and disconcerting theme revealed from the data and trends is that "the support of research and development runs the risk of being viewed as an expense and luxury, rather than an investment, and one that can be shelved until more funds are available," says Jules Duga, a senior research leader with Battelle, and co-author of the forecast.

Federal U.S. support of R & D has undergone significant changes in both content and direction over the past few years, especially with respect to the global war on terror. However, the initial increases in R & D following the September 11 attacks have not been sustained in all areas. The areas that are seeing consistent impact are technology capabilities related to threat identification and amelioration, as well as the reorganization of existing programs such as those of the Department of Homeland Security.

In addition, the federal deficit will have a significant impact on the extent to which R & D funds will be available within the overall category of discretionary spending. The large expenditures associated with the war in Iraq and hurricane relief programs have put "a major squeeze" on almost all aspects of the budget recently, according to the report. In addition, of the funds directed toward R & D, the majority will be concentrated on development rather than research.

Responding to the federal shift from research funding, many state governments have assumed a more aggressive role in supporting targeted research areas and investing in the associated university infrastructure. Several states--such as California, Arizona, Iowa, Ohio, New York, and Texas--have proposed significant new funding for a variety of R & D programs in an effort to promote research and an environment of economic development. A great deal of this investment has been in the biosciences, but states are also investing in other emerging technology areas such as nanotechnology.

Judging from recent behavior in industrial expenditure on R & D, it is expected that several sectors will continue their traditional roles as leaders in funding and in the growth of funding. In particular, the broad areas of pharmaceuticals, automotive, and information technology may expect continuous expansion in R & D efforts. Growth in the academic sector is expected to be slower than usual this year, but the slowdown is seen as only being short-term.

An additional impact on R & D will be human capital, as there is projected to be a shortfall of scientists, engineers, and researchers in the future. While this "education gap" is not yet deemed critical, "if commitments are not made now, the future strength and vitality of the R & D enterprise and the ability to set the R & D agenda will be at risk," says Duga.

Battelle has been issuing the R & D forecast for 36 years, the last 10 in conjunction with R & D Magazine. A number of sources were consulted for the report, including federal budget documents, the American Association for the Advancement of Science (AAAS), and the Industrial Research Institute. The report was published in the January 2006 issue of R & D Magazine and reprints are available by contacting Jean Hayward at 614.424.7039 or [e-mail].