Industrial R&D and Innovation 



INDICATOR HIGHLIGHTS 



Total expenditures for industrial R&D more 

 than doubled between 1960-74, with one- 

 third of the growth occurring after 1971; the 

 large increases in recent years came almost 

 entirely from industry's own funds, raising 

 the total expenditures for industrial R&D to 

 more than $22 billion in current dollars in 

 1974. 



Adjusted for inflation, total expenditures in 

 1967 constant dollars for industrial R&D 

 were $15.2 billion in 1974, which was 11 

 percent lower than in 1968-69, the years of 

 highest funding, and approximately 

 equivalent to the funding level of 1965; in 

 1974, development activities accounted for 

 79 percent of total industrial R&D expen- 

 ditures, compared with 18 percent for 

 applied research and 3 percent for basic 

 research. 



The total number of scientists and engineers 

 engaged in industrial R&D increased in 1973 

 and 1974 to 360,600, following a decline 

 from a peak employment level in 1969 of 

 387,000; such personnel supported by 

 industry's own funds increased throughout 

 the 1960-74 period, while the number 

 supported by the Federal Government 

 declined to pre-1960 levels. 



Expenditures for applied research and 

 development in industry are focused on six 

 product areas: communications equipment 

 and electronic components, aircraft and 

 parts, guided missiles and spacecraft, 

 machinery, motor vehicles and other 

 transportation equipment, and chemicals; 

 these areas comprised nearly 70 percent of 

 all such expenditures in 1973. 



Industrial R&D is concentrated in a few 

 manufacturing industries and in a relatively 

 small number of large companies within 

 those industries; five industries accounted 

 for some 80 percent of all industrial R&D 

 expenditures in 1973 and a similar propor- 

 tion of all R&D personnel, while the 100 



companies with the largest R&D programs 

 spent nearly 80 percent of all industrial R&D 

 funds. 



Improvement of existing products was the 

 reported goal of one-half of all industrial 

 R&D in 1974, compared with approximately 

 35 percent for developing new products, and 

 15 percent for new processes. 



The R&D intensity! gf manufacturing 

 industries declined steadily after 1964 as a 

 result of reduced Federal support for 

 industrial R&D (primarily in the aircraft and 

 missiles industry); in terms of industry 

 support alone, however, the level of R&D 

 intensiveness has changed little since the 

 early 1960's. 



The most R&D-intensive industries were 

 the largest producers of patented inven- 

 tions, accounting for over 67 percent of all 

 patents granted during the 1963-73 period; 

 the majority of patents were for inventions 

 in six major product fields: machinery, 

 fabricated metals, electrical equipment, 

 chemicals, professional and scientific in- 

 struments, and communications equipment. 



The most R&D-intensive industries produc- 

 ed the majority of a sample of major 

 technological innovations during the 1953- 

 73 period; these industries accounted for 66 

 percent of the innovations, followed by 

 intermediate level industries with 24 per- 

 cent, and the least R&D-intensive industries 

 with 10 percent. 



Large companies (those with 10,000 or more 

 employees) produced a greater number of 

 the sample of innovations between 1953-73 

 than companies with less than 100 em- 

 ployees, but a smaller number than firms 



' The proportion of net sales devoted to R&D and the 

 number of R&D scientists and engineers relative to total 

 company employment. 



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