US chemical, refining R&D not flowing abroad

15 January 2008 22:45  [Source: ICIS news]

WASHINGTON (ICIS news)--Research and development (R&D) spending among US refining and chemical industries will likely remain robust despite the shift of production capacity to Asia and the Middle East, a top US science panel said on Tuesday.

 

Officials with the congressionally chartered National Science Board (NSB) said that while some chemical industry R&D expenditures that otherwise might have been made within the US will follow the shift of process industry production capacity to Asia and the Middle East, those funding losses likely will be minor and may be offset by foreign R&D investment in the US.

 

The science board officials spoke with reporters following release of the board’s 2008 report on US science and engineering education and research.

 

The report notes that while the US and EU still account between them for 65% of global spending by governments and the private sector for both basic and applied research, R&D spending growth has been accelerating sharply in Asia and now accounts for some 30% of the global total.

 

However, the NSB study showed that industry spending on basic research has been flat in recent years, presumably because the business sector is focused more on near-term results and applied research.

 

This means, said the NSB, that greater responsibility for basic research funding must fall to the US government if the country is to maintain its technological edge in the global marketplace.

 

In its three fundamental recommendations, the report urges more federal budget allocations to basic research, increased action by government, academia and industry to improve intellectual exchange among the three sectors, and new work by US federal agencies to track the implications for the US economy of globalization in the manufacturing, services and high technology industries.

 

Asked whether the shift of US chemical and refining capacity to Asia and the Middle East would necessarily mean a shift of those industries’ R&D spending to foreign shores, NSB member Arthur Reilly said such a shift would be part of the capacity migration “but it is not inevitable”.

Reilly, senior director for strategic technology at Cisco Systems, said that chemical and refining R&D “may still be conducted in the US and applied to overseas operations, in part because companies like to keep their R&D work close to company headquarters”.

 

“And even if some US-sourced R&D work takes place elsewhere, that does not necessarily mean that all of it will flow to overseas sites,” he said.

 

Louis Lanzerotti, who directed the NSB’s subcommittee on science and engineering, said that whatever outflow of US industrial R&D spending might take place, “we find an increase in US research and development spending by foreign corporations”.

 

Lanzerotti also suggested that the open and large US economy along with government and private sector policies favouring and supporting entrepreneurship and risk-taking will help attract foreign venture capital and R&D spending.

By: Joe Kamalick
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