Figure 18 



Industrial R&D Expenditures, 1961-72 



Total 



(Billions of Dollars) 



Constant 1958 dollars '' 



±_ 



J I L 



y 



I96I '63 



(Billions of Dollars) 

 12 



71 72 

 (est) 



By Source 



4 — 



^ 



1961 



(a) GNP price deflator was used to convert current to constant dollars, 

 SOURCE: National Science Foundation. 



71 72 

 (est,) 



cates that the decline in total R&D expenditures 

 in 1970 was due entirely to reductions in the 

 level of Federal support. Federal funding actually 

 leveled off in 1966 while industrial support rose 

 more rapidly than in previous years, with the 

 result that industry replaced the Federal 

 Government in 1968 as the principal source of 

 support for industrial research. By 1972, 

 industry funded 58 percent of all industrial R&D 

 compared with 43 percent in 1961. 



Although Federal funding for industrial R&D 

 did not start its decline until after 1968, the 

 effects of a relatively slow rate of growth in 

 funding, compared with the increasing cost of 

 R&D, were apparent as early as 1964 in terms of 

 the source of support for R&D scientists and 

 engineers (figure 19). 4 The figure shows that the 

 number of scientists and engineers supported by 

 Federal funds started to decline after 1964, al- 

 though the largest reductions did not occur until 

 after 1969, which coincides with the onset of 

 larger constant dollar funding reductions that 

 are shown in figure 18. 



These funding changes did not affect appreci- 

 ably the relative distribution of funds among 

 basic research, applied research, and develop- 

 ment activities. In 1972 as in 1961, industrial 

 R&D was concentrated in development (78 per- 

 cent), while applied research received some 19 

 percent and basic research declined from 4 to 3 

 percent. (The absolute level of basic research, 

 however, declined considerably as shown else- 

 where in this report.) 



Despite these funding changes, industrial 

 firms still perform the bulk of the Nation's R&D. 

 In 1972, funding of industrial R&D accounted 

 for 68 percent of all R&D conducted in the 

 United States, including 83 percent of the 

 development, 55 percent of the applied research, 

 and 16 percent of the basic research. 



Industry-Funded R&D 



R&D in this category is performed largely in 

 the seven industries indicated in figure 20. They 

 accounted for about 85 percent of all company 

 R&D expenditures during the period reported. 

 Each of these industries, except for "aircraft and 

 missiles" and "motor vehicles," had increasing 

 R&D expenditures (in current dollars) through 



■• Comparable data are not available for years prior to 

 1962. 



27 



