placed into one of three groups according to its 

 relative level of R&D intensity over the 1961-72 

 period. These groups, each consisting of five 

 industries, are shown in the table below along 

 with their R&D intensity indices, with Group I 

 industries being the most R&D-intensive and 

 Group III the least. 



As the table shows, the level of R&D inten- 

 siveness among industries within each group is 

 within a relatively close range regardless of the 

 specific index chosen. Furthermore, the R&D 

 intensity of each group is separated from the 

 next by approximately a factor of three. 



The R&D intensity of manufacturing in- 

 dustries overall has declined steadily since 1964. 

 As shown in figure 4-10, the declines occurred 

 almost exclusively in the most R&D-intensive 

 industries (Group I), and were caused primarily 

 by reductions in the level of Federal support for 

 industrial R&D after the mid-1960's. Aside from 

 the changes produced by declining Federal 

 support, the R&D intensity of each group of 

 industries has changed little since 1961. 



The assignment into three major groups of 

 industries exhibiting approximately the same 

 level of R&D activity provides a convenient and 

 direct method for relating R&D to the outputs 

 and returns from such effort, as shown in the 

 next section of this chapter. 



OUTPUTS FROM R&D AND INNOVATION 



Earlier sections of this chapter dealt largely 

 with the resources employed in industrial R&D 

 and structural aspects of the system. This 

 section attempts to provide indicators of some of 

 the outputs and returns from R&D— aspects 

 which are considerably more difficult to measure 

 than inputs. 



The principal indicators in this section deal 

 with trends in technological invention and 

 innovation. Measures of invention are in terms 

 of patents and include indicators of the areas and 

 magnitude of inventive output, sources of 

 invention, product areas involved, and 

 relationships with R&D intensity. Indicators of 

 innovation are based upon new industrial 

 products embodying major advances in 

 technology and include characteristics of in- 

 novating organizations, innovativeness of 

 different industries, relationship to investment 

 in R&D, time between invention and innovation, 

 and the role of research. 



The measures of output presented here 

 represent only a step toward the array of 

 indicators needed for the industrial sector. 

 Present measures are small in number, broad in 

 scope, and restricted generally to relatively 

 direct outcomes of R&D. Lacking are indicators 

 such as reduced costs, gains in an industry's 

 productivity or increases in sales which result 

 from R&D. The measures, in addition, do not 

 encompass the qualitative improvements in 

 industrial products and processes which often 

 constitute the major form of return from R&D 

 investment. 



The present indicators, furthermore, do not 

 specify the separate and distinct contribution of 

 R&D to invention and innovation. As noted 

 earlier, invention and innovation result from a 

 complex of interacting factors— economic, 

 social, and technical. Analytical efforts to date 

 have not been successful in determining the 

 precise contribution of the individual factors, 

 including that of R&D. Thus, indicators 

 presented here should be regarded as ap- 

 proximate measures of the relationship between 

 this factor and invention or innovation. 



The impact of technological innovation on 

 productivity and economic growth is, in turn, 

 understood only in general terms. Present 

 knowledge of the causal connection between 

 innovation and economic returns is not suf- 

 ficient for developing quantitative indicators of 

 the relationship. In lieu of such indicators, the 

 major conclusions derived from studies in this 

 area are summarized. 



Finally, the indicators in this chapter do not 

 include measures of the negative impacts and 

 side-effects of technological innovation. These 

 costs may be extensive in human and social 

 terms, ranging from the loss of jobs to the 

 pollution of our environment. The determina- 

 tion of these costs and their assessment relative 

 to benefits, is necessary for the wise manage- 

 ment of innovation. Valid indicators of these 

 costs, however, are exceedingly difficult to 

 develop; it is for this reason, rather than a lack of 

 recognition of their need, that such indicators 

 are not provided in this report. 



Objectives of industrial R&D 



In general, industry views R&D as a means to 

 remain competitive and profitable. Most in- 

 dustrial R&D is an attempt to focus science and 

 technology on improving existing products and 



94 



