Two months ago, this column addressed shifts in value and valuation of industrial intellectual property (IP). This month, we examine research and development structures, the birthplace of IP, and look at trends in an increasingly technology-based economy. In spite of the annoying fact that technology sectors were besmirched by dot.com hype in the late 1990s, cast into that mode by incompetent financiers and businessmen and abetted by a gullible investing public, R&D is the major engine of progress. Over the last score of years, industry has realized that structural and operational change by a business is not the only route to profitability and is driven by R&D.
The top 20 American companies in 2002 will spend $75.139 billion for R&D led by Ford and General Motors who will invest $13.18 billion, a 4.42% increase over 2001, a year that saw 4.68% growth over 2000. This growth is lower than expected, but is a healthy rise; a National Science Foundation survey had predicted a 3.2% growth. The decline in growth rate is attributed to the general recession (ripple effects throughout industry as bubbles deflated after last September events), but is balanced by eased cost-of-money. This points to a slower and sustainable growth for the total industrial economy that may not be entrenched until mid-2003.