Government money buoys US spending on new technology

The United States is expected to dig deeply into its pockets this year to pay for scientific research and new technologies. But behind the modest growth in spending for research and development, some economists see trends that may slow efforts to use discoveries to evolve a more competitive economy.

According to the Battelle Memorial Institute's annual forecast, overall R&D outlays will reach $131.5 billion in 1988, a 6.9 percent increase over estimates for 1987. Inflation is expected to whittle away at that increase, however, reducing it to about 2.3 percent in real terms. This is about 1.5 percentage points lower than the average real rate of increase during the past 10 years.

The federal government is expected to pick up the largest share of the R&D tab, $64.8 billion. About one-quarter of that will go to government-conducted R&D; a bit more than half will support industry research; about 20 percent will go to colleges and universities; and the balance will be sent to nonprofit organizations.

Industry's own spending isn't far behind the federal government's. Industry is expected to underwrite $62.3 billion in R&D efforts this year, with universities and nonprofit organizations paying for the balance.

Jules Duga, one of the forecast's authors, says that when one looks at US R&D spending as a proportion of total economic output, ``We're doing rather well'' compared with countries such as Japan and West Germany. But he adds that the military hands out about a third of all the money the US as a whole spends on R&D - a figure unmatched by America's competitors. Because their militaries do not tie up as much research money, these nations can channel money into R&D that will more directly affect civilian products and industrial processes.

Indeed, it is research in better, more efficient ways to make things that is viewed as one of the US's key shortcomings as it tries to hone its competitive edge.

``The prime reason for America's poor productivity, quality, and trade performance is easily isolated. When it comes to process technologies, Americans are slow to invent and slow to adopt,'' writes Lester Thurow, dean of MIT's school of management, in a recent issue of the journal Science.

Dr. Duga agrees, noting that industrial R&D is generally geared first to improving current products; then to developing new ones; third, to improving current manufacturing processes; and finally, to developing new processes.

``Product improvements have quicker payoffs,'' he observes, noting that adopting new manufacturing processes usually means building new plants or replacing factories full of machinery.

Unfortunately, he adds, ``a considerable amount of industrial R&D decisions are made based on nontechnology factors'' such as changes in tax laws.

From the standpoint of the quality of US research, ``The future generally looks rosy,'' Duga says. ``Despite the fact that the rate of increase in research budgets is falling somewhat, we're making progress where it's important to know something about a field, such as biotechnology. And there's continued commitment to R&D among small and medium-sized companies.''

But over the long term, Battelle expects the outlook for R&D funding in the US to grow more uncertain as federal budget cuts restrict government support for research and as changes in tax laws and other business factors sway decisions in corporate boardrooms.

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