Growth in R&D; Spending to Slow in ‘02, Study Says

The growth of U.S. corporate spending on research and development will slow to 3.2% in 2002 because of the slumping economy, according to a new study.

U.S. economic contraction will limit research and development spending after annual growth rates the last six years ranged from 5.4% to 11%, said Jules Duga, co-author of the report produced by Battelle Memorial Institute and R&D; magazine.

U.S. companies will spend about $194.7 billion in 2002, up from an estimated $188.6 billion this year, the study forecast.

Federal government research spending is expected to rise 4.7% to $75.5 billion, the study said.

“The economic downturn that is partially related to the stock market, to cash flow, to discounted interest rates on big-ticket items and to the perception and anticipation of difficult times will have an adverse effect” on corporate research spending, the report said.

This year’s increase in corporate research spending will be about 5.4%, Duga said, a slowdown from the annual growth rate of 8% to 11% from 1995 to 2000.

Research and development spending by IBM Corp., the largest computer maker, grew 1.1% to $3.74 billion in the first three quarters of 2001, compared with the same period a year earlier. R&D; spending by Pfizer Inc., the largest drug maker, grew 5% to $3.33 billion in the first three quarters.

It’s unlikely that corporate research and development spending will return to the growth rates of the 1990s, the authors said.

“A slower and more sustainable growth is more likely, but that will probably not begin until 2003 or 2004,” the study said.

Total U.S. research and development spending, including corporate, federal, university and foundation expenditures, will increase about 3.5% in 2002 to $286 billion, the study forecast.

The full study is expected to be published in January by R&D; magazine. Battelle, based in Columbus, Ohio, conducts corporate and government research in such areas as health, space, chemicals, automobiles and defense.