According to the Industrial Research Institute’s (IRI) 23rd annual “R&D Trends Forecast,” R&D spending will increase in 2007. IRI’s R&D index is determined by subtracting the percentage of companies that plan to decrease or maintain their R&D spending from the percentage of companies that plan to increase their spending by at least 5%. This index was at an all-time low of –16 in 2004, climbed to –2 in 2005, reached 4 in 2006, and vaulted to 12 this year. However, R&D spending as a percentage of sales will stay the same, according to the survey on which IRI’s forecast was based. Only a third of respondents to IRI’s survey anticipated capital spending increases above 2.5%. Companies are increasingly focusing their R&D spending on new products that can be commercialized quickly. This worries experts in the IRI, who believe that major innovations stem from directed basic research-research with a commercial target expected to be of value to a company in five years or longer. One solution to this problem lies in R&D collaborations: firms report that they are more willing to outsource R&D, license other companies’ technology, provide grants to universities and federal labs, and take part in precompetitive research efforts.

Source: Chemical and Engineering News

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