years. As a result, total expenditures in constant 

 dollars for industrial R&D were 11 percent 

 lower in 1974 than in 1968-69, the years of 

 highest funding, and approximately equivalent 

 to the funding level of 1965. 



Some perspective on the size of the invest- 

 ment in industrial R&D can be obtained by 

 comparing it to other major investments by 

 industry, such as those for new plant and 

 equipment and for advertising. Such comparison 

 is not intended to imply that identical factors 

 determine levels of investment among the three 

 areas. Indeed, the mix of investments in these 

 areas varies from industry to industry. 



Trends in expenditures for the three purposes 

 are shown in figure 4-2 for manufacturing 

 industries which, as discussed later in this 

 chapter, account for almost all industrial R&D 

 expenditures. Total funds for industrial R&D 

 were close in size to those for new plant and 

 equipment during the early 1960's, but the latter 

 grew more rapidly in subsequent years and by 

 1973 had exceeded total R&D expenditures in 

 industry by approximately one-third. Expen- 

 ditures for R&D from industry's own funds and 

 for advertising-* were closely comparable 

 throughout the 1960-73 period. 



Sources of funds for industrial R&D 



As a consequence of increasing funds from 

 industry and a leveling off of Government 

 funds, industry replaced the Federal Govern- 

 ment after 1967 as the major source of funds for 

 industrial R&D (figure 4-3). By 1974, industry 

 supplied 62 percent of all such funds, compared 

 with only 42 percent in 1960. Federal funds for 

 industrial R&D — principally from the Depart- 

 ment of Defense (DOD) and the National 

 Aeronautics and Space Administration 

 (NASA)— reached a plateau in the late 1960's, 

 dropped some 10 percent in the early 1970's as 

 NASA and DOD support declined, and 

 recovered in later years as DOD funding rose. 

 These changes were reflected most prominently 

 in the aircraft and missiles industry, and to a 

 lesser extent in the electrical equipment and 

 communication industry. 



The extent of Federal support for industrial 

 R&D differs substantially from one industry to 



'• Includes expenditures by manufacturing corporations 

 for newspaper, radio, television, magazine, and other 

 miscellaneous local and national forms of advertising. 



85 



