American companies led a worldwide surge of investment in industrial research and development last year, according to the annual International R&D Scoreboard.
The world's top 300 companies spent $216 billion on R&D, 12.8 percent more than in 1996, while the 133 U.S. companies in the scoreboard raised total spending by 17 percent to $97 billion.Both increases are the largest recorded since the British Department of Trade and Industry started compiling the R&D scoreboard in 1991.
Most European countries achieved respectable increases in R&D spending, though few came close to the United States. Japan's increase was 9 percent.
Many international companies in the electronics, engineering, information technology and pharmaceutical sectors show huge individual increases in R&D investment. For example, Cisco, the leading U.S. networking company, doubled R&D to $1.2 billion last year; in 1994 it had spent just $89 million.
Analysts say several factors are responsible for the general surge in R&D spending. Technology is one driver, as companies in a wide range of industries try to apply the fast-growing power of electronic chips to their products.
"The world is becoming more knowledge-intensive," says Margaret Sharp, senior fellow at the University of Sussex's Science Policy Research Unit. "The big European companies, which had been cutting their R&D investment earlier in the 1990s, are now powering ahead."
Paul de Sa, research fellow at Harvard University's Balfour Center for Science and International Affairs says "Wall Street is becoming more receptive to R&D spending."
Carol Galley, co-head of Merrill Lynch Mercury Asset Management in London, makes the same point. "A successful R&D process is not optional but crucial to a successful business strategy," she says. "Getting the R&D process right becomes even more vital in the current economic climate, where labor and capital are flexible, and interest rates and inflation are low."
The most notable exceptions to the trend are the world's two biggest R&D spenders, General Motors and Ford, which cut their investment by 8 and 7 percent respectively to $8.3 billion and $6.3 billion in 1997.