Some factors are relatively new and unpredictable. For example,
the federal budget sequester is now a fiscal reality, despite originally
intended as improbable. Arising from the Budget Control Act of
2011 (BCA), it has obvious direct effects on federal government
appropriations, but it also introduces uncertainty into long-term
programmatic and institutional research planning. Forecasting the
net impact of sequestration in 2014 involves not only analysis of
draft budgets, but also interpretation of activity and intentions in
congressional committees, agencies and the White House, as well as
leaders of research institutions.
Forecasting must also accommodate updates and corrections to historic economic data. For example, this 2014 Forecast incorporates
a revision of the NSF’s 2011 baseline research expenditures1. In
addition, preparation of the Forecast begins with analysis of actual
2013 results through the third calendar quarter, which allows refinement of the full-year estimate. We now project that 2013 U.S. R&D
spending will reach $450 billion.
Taking such issues into account, the Battelle/R&D Magazine team
forecasts that U.S. R&D activity will increase to $465 billion in 2014.
This represents growth of 3.2% over the revised 2013 projection.
Against the Office of Management and Budget’s estimate of 2.2%
inflation for 2013-2014, the forecast level of R&D would be an
increase of 1.0% in real terms.
R&D Funding in the U.S.: A Case for Optimism
This Forecast assumes a 1.5% improvement in federal government
R&D funding during calendar year 2014. However, the outlook
involves substantial uncertainty. In one scenario, BCA-mandated
continued reductions in non-defense discretionary spending could
result in lower R&D funding. Another strong possibility is a series
of short-term continuing resolutions, such as the one in effect at the
end of 2013 in lieu of an approved budget, resulting in flat R&D
spending. The third possibility is that R&D spending could increase
either as the result of reallocation of sequestration, or from the passage of a budget.
This 2014 forecast is based on the third scenario. Reasons for mak-
ing this optimistic assumption despite continuing economic and
governance challenges include:
• General acknowledgement that R&D investment has both
short- and long-term return to the economy.
• Concern about maintaining U.S. innovation-based competitiveness at a time when other nations are catching up in R&D
spending, capability and output.
• Apparent bipartisan support for publicly funded R&D. While
policy priorities and objectives vary, expressions of support
suggest that R&D may benefit under various budget and
In the current economy, R&D
jobs are multiplied 3.2X
Projected U.S. R&D spending of
$465 billion will directly employ
over 2. 7 million U.S. residents in the
private and public sectors. In turn,
an additional 6 million
U.S. jobs will be supported. 2
R&D spending is amplified 2.9X
As R&D spending ripples through
the U.S. economy, it will generate
an additional $860 billion in
indirect economic impact.
Long-term economic growth is
linked to research intensity
The most important example
of long-term R&D impact is
U.S. economic growth in the
second half of the 20th century.
Large research initiatives like
the Human Genome Project or
the War on Cancer also have
high rates of social and economic return over the long term. 3
Source: Battelle, R&D Magazine