Trends in the total number of R&D scientists 

 and engineers in industry paralleled constant 

 dollar expenditures for industrial R&D 

 throughout most of the 1960-74 period (see 

 figures 4-1 and 4-3). Such a correlation might be 

 expected since the cost to industry for these 

 personnel — a cost which represents a large 

 fraction of the total cost of industrial R&D — has 

 increased at approximately the same rate as 

 inflation. Thus, the similarity of the two trends 

 provides support for the use of the GNP implicit 

 price deflator as a gross adjustment of current 

 dollar expenditures to reflect more accurately 

 the real level of financial input and the 

 magnitude of effort. ° 



R&D expenditures by specific industries 



The extent to which a specific industry invests 

 in R&D is dependent upon a diversity of factors, 

 including competition within the industry and 

 from other industries, government regulations 

 requiring improved performance of products, 

 the need of substitutes for and the conservation 

 of natural resources, and the availability of funds 

 and personnel for R&D. Nearly all manufac- 

 turing industries engage in some type of R&D 

 activity. A few nonmanufacturing industries^ 

 also perform R&D, but their effort represents 

 less than 5 percent of all industrial R&D 

 spending.* 



Expenditures for R&D in current dollars rose 

 steadily in most industries from 1960 to 1973. In 

 recent years, R&D spending has grown at a rate 

 comparable to the early and mid-1960's, averag- 

 ing over 7 percent per year between 1971 and 

 1973. The industries principally responsible for 

 this growth are electrical equipment and com- 

 munications, motor vehicles and other transpor- 

 tation equipment, machinery," and chemicals 

 and allied products. These four industries 

 accounted for approximately 80 percent of the 

 total increase in current dollar expenditures for 

 R&D between 1971 and 1973. 



Trends in expenditures for R&D in these and 

 other major R&D-performing industries are 

 shown in figure 4-5. In five of the seven specific 

 industries, 1973 was the peak funding year for 

 R&D in both current and constant dollars. The 

 only major industry experiencing a large decline 

 in R&D spending in either current or constant 

 dollars during the 1960-73 period was aircraft 

 and missiles, which dropped sharply after the 

 late 1960's. Other industries, not shown in the 

 figure, in which R&D expenditures in current 

 and constant dollars wereat their highest level in 

 1973 are: drugs and medicine, rubber products, 

 fabricated metal products, communication 

 equipment and electronic components, and 

 optical, surgical and photographic instruments. 



" A more complete discussion of the use of deflators for 

 R&D expenditures appears in the chapter entitled 

 "Resources for R&D" in this report. 



' These include, but are not limited to, agriculture, public 

 utilities, finance, insurance, business services, medical and 

 dental laboratories, and engineering and architectural serv- 

 ices. 



* Research and Development in Induilry, 1973, National Science 

 Foundation (NSF 75-315). 



' Includes office, computing, and accounting machines; 

 metal-working machinery; engines and turbines; farm 

 machinery; construction, mining, and materials handling 

 machinery. 



87 



