March 6, 2016

Some of the information for this post was taken with the January/February 2016 issue of R & D Magazine.  This is a marvelous publication and I recommend it to you as a source of viable information relative to research and development.

I certainly hope everyone realizes the remarkable benefits derived from R & D funding.  The vision comes first, then the hard work of research to prove or disprove viability of the proposed project.   Some R & D efforts yield results definitely before their time.  We see this again and again in industry and commerce.  Great ideas but due to lack of funding for commercial development or possibly an idea is just before its time.

Let’s take a look at what might be in store for funding during the 2016 year and then a projection as to what might occur through 2018.  We will do so for the United States and for other countries.

Research and development (R&D) is defined as the process of creating new products, processes and technologies that can be used and marketed for mankind’s benefit in the future. The R&D processes and their costs vary from industry to industry, from country to country and from year to year.  The 2016 Global R&D Funding Forecast this year is sponsored by the Industrial Research Institute (IRI), Washington, D.C.  This study reveals that global R&D investments will increase by 3.5% in 2016 to a total of $1.948 trillion dollars.  This equates to purchasing power parity (PPP) values for more than 110 countries having significant R&D investments greater than $100 million. If we take a look at spending for 2014, 2015 and proposed spending for 2016, we see the following:

R & D Funding

Let me explain the two categories North America and the U.S.  The North American “bucket” includes Canada, the United States and Mexico.  This is somewhat nebulous from the chart that’s the breakdown.

For 2015 and 2016, R&D investments in the U.S. continue trends started five years previous. These include: 1.) restrictions on total federal government spending for R&D, 2.) the resultant decline in federal government support of academic R&D investments (and their struggles to compensate), and 3.) the slow increase in industrial R&D spending (and its share of the total R&D “pie”). Despite these ‘drags’ on R&D support, the U.S. continues to be the largest single country in R&D investments with slightly more than a quarter of all global R&D spending.  These R&D programs are supported by industrial, sixty-six percent (66%), federal government twenty-five percent (25%) and academic/non-profit seven percent (7%) investments. There are substantial changes being seen in the character of the U.S.’s industrial R&D makeup. Life science R&D, for more than ten years, has been the largest sector in the industrial technology arena.  This is very surprising to me but demonstrates the great need, at least in the United States.  For 2016, many of the large players in this sector—Novartis, Pfizer, Merck, Sanofi, Astra Zeneca, Eli Lilly, GlaxoSmithKline, Bristol-Myers Squibb and more (not all are U.S.-based, but most have large U.S. installations).  All are expected to reduce their large multi-billion dollar annual R&D investments in 2016. A reduction of products in the R&D pipeline, increased regulatory pressures and consumer resistance to high-priced drugs are some of the reasons that pharmaceutical companies are likely to see reduced revenues and a reduced ability to continue funding mega-scale R&D programs.

Much of the R&D growth in a country is driven by that country’s economic growth, which is measured by the gross domestic product (GDP). GDP growth, as documented by the International Monetary Fund (IMF) is forecast for a 6.3% increase for China in 2016, a 2.8% increase for the U.S. and significantly smaller increases for European countries—China’s GDP growth is still significantly larger than all other potential competitors for the immediate future. India has larger GDP growth expectations—7.3%for 2015 and 7.5% for 2016, but its GDP is less than that of China or the U.S., as are its R&D investments(less than 1% of its GDP).   India’s recent strong GDP growth and commitment to R&D currently rank it as the sixth country on the list for overall R & D expenditures.

You can see from the graphic below the relative differences in funding from each segment of our globe.  North America, by far, exceeds other areas, but please notice China.  R & D efforts from China are definitely on the rise and much of the R & D funding involves military weapons and expansion of their desire to dominate the Pacific Rim.  I am also impressed by funding undertaken by Japan and South Korea.  The Pacific Rim is on board and making great progress in the number of international patents awarded to academia and industrial concerns.

American Dominance

If we “drill down” and look at countries specifically, we see the following graphics.  Please note:  GERD = Gross Expenditures on Research and Development and PPP = Purchasing Power Parity (used to normalize R&D investments)



I know this is a bit of an eye chart but does give a very detailed accounting of who has spent the most from 2014 to 2015 and what is projected for 2016.  Please note also the “Global R & D Expenditure” is almost two trillion US dollars.

Looking at the digitals below, we see trends in spending that reflect economies across the world.  Money is very tight. Banks are only looking at low-risk projects that have guaranteed payback.  There is a very limited venture mind-set relative to lending institutions.  Researchers over the world are looking for “angles” to fund their ventures and those angles are few and far between.   It also pays to be well-connected and communicate with your favorite lobbyist.

What Changed

Can you depend upon the US government to fund your project?  I have been waiting on an SBA loan for over one year.  I’m still being encouraged but to date have no real assurance the loan will become available.  Nothing is a “slam-dunk” even though the probably of project success in my case is well over fifty percent (50%).  Still, no bananas.

Will Govt Funding

You will note the Fed seemingly has no problem in funding the various federal branches shown below. I have no problem with this, although the waste and fraudulent practices are really troublesome to me.  Those have been adequately documented by other non-Federal enterprises.

Top U.S. Federal R & D

The chart below gives us a glimpse of what prognosticators feel are the most viable technologies through 2018.  I can agree with all of these categories.  I would say that if you have a son or daughter interested in a profession within the STEM fields, he or she might look into the ones given below.  Every category below needs trained professionals.  These fields of study will not welcome high school graduates and in most cases the most important work will be accomplished by individuals with Masters or Doctoral degrees.  This is where we are with technology.

As always, I welcome your comments.

Important Technologies by 2018



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