magnitude of the effort. Expenditures for R&D 

 are presented initially for the total industrial 

 R&D effort, followed by information on the 

 source of funds and expenditures by specific 

 industries. Trends in the number of scientists 

 and engineers engaged in R&D are presented in 

 terms of the Nation's overall effort in industrial 

 R&D. These are followed by indicators of the 

 division of R&D resources among the categories 

 of basic research, applied research, and develop- 

 ment, as well as the product fields on which the 

 effort focuses. Data are presented also on certain 

 institutional characteristics of industrial R&D — 

 the distribution of R&D expenditures among 

 companies of different size and among specific 

 industries. The section concludes with trends in 

 the R&D intensity of U.S. industries. 



Financial and human resources for R&D 

 represent only a small part of the total invest- 

 ment which industry makes for technological 

 innovation, the principal aim of its R&D. 

 Although little empirical data are available 

 regarding total expenditures for innovation, 

 estimates have been made of the typical distribu- 

 tion of costs among the several steps in the 

 innovation process.- These estimates, which 

 apply to successful innovations only, are shown 

 in the table below. 



Typical distribution of costs in 

 successful product innovations 



Activity Percent 



Research (advanced development-basic 



invention) 5-10 



Engineering and designing the product . 10-20 



Tooling (manufacturing engineering) . . . 40-60 



Manufacturing start-up expenses 5-15 



Marketing start-up expenses 10-25 



Although R&D (which encompasses all of the 

 first step and most of the second) is estimated to 

 account, on the average, for no more than 15-30 

 percent of the total costs of innovation, it is 

 especially significant in that R&D often initiates 

 and provides the basis for the subsequent steps 

 in the innovation process. 



Expenditures for industrial R&D 



The total national expenditures for industrial 

 R&D3 are comprised of funds from both the 

 Federal Government and private industry. The 

 combined funding is shown in figure 4-1, in 

 current and constant dollars. Total expenditures 

 in current dollars more than doubled between 

 1960 and 1974, with one-third of the growth 

 occurring after 1971. The average annual 

 increase of just over $1.0 billion during that 

 latter time was greater in absolute terms than in 

 any other three-year interval between 1960 and 

 1974, and came almost entirely from an increase 

 in funding by industry. 



Total expenditures in current dollars for 

 industrial R&D were over $22 billion in 1974. 

 The growth in current dollar funding, however, 

 was less than increases in inflation in recent 



- Tfi/iMo/o^ira/ Innovation: Us Environment and Management. 

 Department of Commerce, 1967. For a discussion of other 

 estimates of the distribution of costs associated with 

 innovation, see Edwin Mansfield, et. al., Research and Innovation 

 in the Modem Corjjoration, (New York: W. W. Norton, 1971). 



•" Industrial RiStD expenditures presented in this report 

 include all costs incurred in support of Ri&D (i.e., salaries, 

 laboratory equipment, overhead, etc.), but do not include 

 associated capital expenditures. See Research and Development in 

 Industry. 1973. National Science Foundation (NSF 75-315) p. 

 81, for further information on the scope of these costs. 



84 



