R&D expenditures by character of work 



Development activities receive by far the 

 largest portion of total expenditures for in- 

 dustrial R&D, followed by applied and basic 

 research . The proportion going for development 

 efforts has ranged between 75 and 80 percent of 

 total expenditures during the 1960-74 period, 

 compared with nearly 20 percent for applied 

 research and some 3 to 4 percent for basic 

 research (figure 4-7). 



The emphasis on development efforts reflects 

 the general nature of industrial R&D, which is 

 usually focused on specific product lines and 

 relatively short-range goals in terms of the time 



Figure 4-7 



Industrial R&D expenditures for basic 

 research, applied research, and 

 development, 1960-74 



(Billions of Dollars) 

 18 



Basic research 



J \ L 



I960 



1 GNP implicit price deflators used to convert cuirent dollars to 



constant 1967 dollars. 



SOURCE National Science Foundation. 



J 



74 



between R&D and expected returns from the 

 investment. These tendencies are strengthened 

 by the usually large proportion of total corporate 

 R&D resources — funds and personnel — which 

 are controlled by divisional managers of firms 

 whose major focus is often on existing product 

 lines and processes. 



Expenditures in current dollars for applied 

 research and development generally increased 

 each year between 1960 and 1974, whereas 

 funding of basic research has remained at a 

 relatively fixed level of some $600 million since 

 1965. Constant dollar expenditures, on the other 

 hand, declined after 1969 for development 

 efforts, due primarily to reductions in Federal 

 funds, whereas those for applied research have 

 changed little since 1964. Funding of basic 

 research in constant dollars has fallen since the 

 mid-1960's, reaching a level in 1974 which is 

 approximately equal to that of 1961. 



The distribution of funds among these 

 categories of R&D differs according to the 

 sources of funds, with industry providing most 

 of the funds for basic and applied research and a 

 lesser, but still the largest, share of development 

 funds. In 1^74, for example, industry funded 78 

 percent of its own basic research and 75 percent 

 of its applied research, compared to 59 percent of 

 its development. '^ 



Applied R&D in product fields 



Over the last two decades there has been a 

 rapid expansion and diversification of firms into 

 new product lines, markets, and technical fields. 

 Thus, R&D data reported by a firm may include 

 expenditures in several product fields, in addi- 

 tion to the single, major field which determines 

 the broad industrial category to which the firm is 

 assigned. Therefore, R&D expenditures in 

 terms of product areas, rather than industries, 

 are more indicative of the actual composition and 

 focus of the national effort in industrial R&D. 



Expenditures for applied research and 

 development's are concentrated in 6 of the 15 

 broad product fields used for classification 

 purposes.!"^ These 6 fields, and the percentage of 



n Nalkvuil Paltmii of R&D Resouras. 1953-75, National 

 Science Foundation (NSF 75-307). 



'5 Expenditures for basic research are excluded since such 

 research, by definition, is not directed toward specific 

 products. 



lo See Appendix table 4-12 for a listing of these product 

 fields. 



90 



