Hunt for Cash Sends Colleges Overseas

Although the National Science Foundation (NSF) tracks R&D trends domestically and internationally, it does not isolate non-U.S. funding for R&D performed domestically. The BEA data have begun to reveal the full extent of foreign industry R&D conducted in the U.S. for the first time. Foreign multinationals not only spend significant sums on R&D performed in the U.S., they increased spending by roughly 8% every year between 1997 and 2004. During the same time period, profits at U.S. multinationals grew more dependent on high margins in foreign markets as domestic growth went essentially flat.

If America slips into a prolonged downturn, the nation's innovation policies will likely attract far more attention and unanswered questions about foreign sources of R&D funding in U.S. research institutions could easily degenerate into a political controversy.

"It has become increasingly clear [that] efforts should be directed toward including isolation and identification of R&D that is performed by U.S. institutions, but supported by non-U.S. entities," Jules Duga, a senior research analyst at Battelle-Memorial Institute and the long-time co-author of Battelle-R&D Magazine's Global R&D Report, wrote recently. Not surprisingly, NSF staffers have been busy for months trying to determine how to do just that.