Growth of research and development spending in the United States is likely to slip in 1988 because of federal budget constraints, economic uncertainty and short-term corporate outlooks, according to researchers at the Battelle Memorial Institute.
The projected rise for 1988, adjusted for inflation, is 2.28 percent, a new survey by the Columbus, Ohio, research group found. That is below the average 3.81 percent real growth rate of U.S. R&D since 1977, Battelle said, and below the expected growth rate for 1987.
"The rate of growth of R&D has been slowing and is expected to enter a period of uncertainty," Battelle said in a report released last week.
Battelle President Douglas E. Olesen stressed that the figures do not necessarily reflect reduced U.S. interest in new technology. Many companies, he said, remain keenly interested in technology and may be increasing their access to it in ways not reflected by the figures, such as licensing, joint ventures and cooperative agreements -- what Olesen called "taking advantage of technology as it's coming out of other organizations."
R&D is considered a crucial component of long-term industrial and military vitality. The United States has traditionally led the world in military R&D spending as a portion of gross national product, but in recent years industrialized nations such as Japan and West Germany have outstripped it in civilian R&D as measured this way, according to the Battelle report.
Current efforts on Capitol Hill to rein in the federal budget deficit will put a crimp in the flow of government research money, Battelle said. The fact that 1988 is an election year is expected to further brake federal spending.
At the same time, many companies will be less willing to commit their own money to R&D, the research group concluded, because of sluggish sales and profits and the collapse of the stock market in October.
Fear of hostile takeovers may be another factor, Battelle said. Money that might have gone into research will be channeled instead into such programs as stock buybacks and the early retirement of long-term debt, making companies less vulnerable, Battelle found.
Halder Fisher, a senior Battelle researcher who worked on the survey, criticized U.S. companies' tendency to cut spending in hard times. "When the cash flow is down, that ought to be the time the R&D is going up, because they should view R&D as a long-term investment and one that has to be made in the present in order for the future to be better."
He said, "But actually, American business has been very shortsighted, seeing roughly halfway to the end of its nose, in that it has run everything, practically, in terms of quarterly profit rates, and focused on that rather than long-term growth of markets, long-term stability and long-term competitive strength."
Jules J. Duga, Battelle's senior R&D policy analyst, suggested that the important thing was the follow-up by U.S. industry. "The question is not so much how much R&D effort we support, but the extent to which we actually utilize" the resulting discoveries, he said.
Recent decades are filled with examples of technical breakthroughs by U.S. researchers, such as the transistor and the videocassette recorder, that achieved commercial success only when taken up by foreign competitors, primarily Japan.
In 1988, Battelle predicted, U.S. government agencies will put up about 49 percent of the country's projected $131.5 billion in R&D spending. Industry will provide about 47 percent, with the remainder divided between educational institutions and nonprofit agencies.
Industry, however, will carry out about 73 percent of the work to be done. The federal government and universities will handle about 12 percent each, with the rest done by nonprofit organizations.
By far the biggest spender on the federal side in 1988 will be the Department of Defense, with about 66 percent of projected federal R&D funds, the study said. It will be followed by the Department of Health and Human Services with 13 percent, the Department of Energy with 7 percent and the National Aeronautics and Space Administration with 7 percent.
The small increases in military R&D spending that Battelle predicts for 1988 are likely to be directed primarily toward long-term support of major new weapons systems, Battelle said. These include the strategic defense initiative, advanced aircraft and production technologies.
At the same time, federal funds for energy conservation and supply will continue to decline slightly, Battelle predicted. Research on fossil and alternative energy sources will "not be a high priority issue," it said.
R&D funds provided by industry will grow in the fields of electronics, communications, sensors, advanced machinery and related fields, Battelle predicted.
Aerospace will retain leadership in total U.S. R&D spending, as it has in all but one of the last 10 years, taking about $24 billion. Of that, almost 80 percent will be paid for by the federal government. No. 2 in spending will be electrical machinery and communications, including electronics and computers, with $20.4 billion.