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Industry R&D cuts threaten US innovation, warns NSB

The United States’ capacity to innovate is in serious jeopardy, according to a National Science Board (NSB) report which said US businesses cut investment in research and development (R&D) by 5 per cent, or $12 billion, between 2008 and 2009.

Private sector support for R&D fell from $259bn to $247bn during that period, the NSB said in a companion report to the National Science Foundation’s (NSF) Science and Engineering Indicators.

“That decline, coupled with increased hiring of R&D workers outside the US by US-based multinational corporations, represent unfavorable indicators for business sector participation in US R&D,” the NSF’s governing board cautioned in its 16 July report.

Since business investment fosters innovation in high-growth, high-salaried, hi- tech industries, these shifts in business R&D participation could have profound implications for the vitality of the US “innovation ecosystem,” the NSB suggested.

The NSB noted that US private venture capital investment in select science and technology industries fell from $43bn in 2000 to less than $10bn in 2010.

“Private-sector R&D investment is sensitive to economic trends,” said Arthur Reilly, a former senior director for strategic technology policy at Cisco Systems. “During recessions, it’s not surprising that businesses would spend less. But the volatility also reflected shifts of private equity, venture capital and angel funding from early stage investment to the less risky late-stage investment,” added Reilly, who led the report’s development.

Another area of concern highlighted by the NSB involves trends in the government’s capacity to educate and train the R&D workforce. State funding for major public research universities declined by an inflation-adjusted 10 per cent between 2002 and 2010, or by 20 per cent on a per-student basis, the board noted. At the same time, it said, federal government investment in academic R&D faces uncertainties due to future budget constraints.

“Today, the United States finds itself in a long-distance race to sustain its essential global advantage in science and engineering (S&E) human resources and our leadership in science and technology, even as attractive and competitive alternatives for education and jobs are increasing around the world for S&E talent,” said José-Marie Griffiths, a former NSB member who is vice president for academic affairs at Bryant University.

Not all the news in the board’s report was negative. For example, it found that total US R&D has grown nearly uninterrupted since 1953, with significant increases from both the private sector and the federal government. In addition, although the annual growth of the S&E workforce has slowed to 1.4 per cent during the last decade, the NSB said that figure far exceeds the 0.2 per cent growth in overall jobs in the nation.

Furthermore, it noted that unemployment is lower among S&E degree-holders and workers in S&E occupations than in other fields, and salaries tend to be higher.