Research spending slows

December 27, 1991|By Ralph E. Winter | Ralph E. Winter,Dow Jones News Service

CLEVELAND -- U.S. spending on research and development is slowing as a result of a corporate profits pinch coinciding with the end of the Cold War.

Research and development spending will rise less than 1 percent next year in real terms, according to the annual forecast by Battelle Memorial Institute, a research organization based in Columbus, Ohio.

Even that would be an improvement from this year, when R&D spending appears likely to decline slightly after adjusting for inflation. However, it's considerably below the 3.3 percent average annual increase of the past decade.

R&D spending will reach $155.9 billion next year, up 2.8 percent from 1991, Battelle estimates, but the cost of performing research is expected to rise about 2 percent. For 1991, spending appears likely to rise only 1 percent in current dollars, about half the R&D inflation rate.

"The lackluster rate of growth of R&D expenditures is certainly expected, given the situation with the federal budget and the general slowdown in industrial activity," said Douglas E. Olesen, Battelle's president and chief executive officer. "However, this isn't the beginning of a long-term trend," he said, because both government and industry recognize the need for research spending to produce economic growth.

Battelle performs research for governments and businesses in more than 30 countries.

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