Research and Development Funding

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The funding of R&D differs depending on the type of organization. Research and development funded by government are enacted on government level. In the USA President receives a request for money from national agencies and departments. Later, the request is reviewed by the Congress and Senate. Only then the decision about research and development funding is made (Sargent, 2011). Often, such projects have solid financial support, are long-term, and aim at developing national level of science.

The financial support of R&D in government organizations is relatively stable and its amount is calculated taking into consideration GDP. In 2007 total U.S. R&D expenditures were 2.75 per cent of GDP (Sargent, 2011), in 2009 expenditures were 2.87 per cent of GDP (Sargent, 2012), and in 2010 2.91 per cent (Sargent, 2012). The amount of money in relation to GDP does not differ much because there is a limit for this sector. Therefore, if there is a need to increase expenditures in defense, expenditures in other spheres have to be reduced.

The amount of money spent on R&D differs depending on the government policy and objectives. For instance, during war in Iraq the funding of the Department of Defense was raised. Total costs of R&D in 2002 was $48,792 million, the sum was raised to $57,564 million in 2003 (beginning of the war in Iraq). The tendency towards increase in expenses continued till 2011 when US troops were withdrawn (Sargent, 2011).

The main incentive for privately funded research is profit. Financing of research and development is discussed during the board of directors meeting. Private companies try to be self-sufficient and not to rely on government organizations. The amount of R&D costs depends on the industry the company works in and whether it will generate a return. If the company works in communication sphere, investments in research and development are inevitable in order to stay competitive.

Private organizations try to make research and development strategies relatively short. This is explained by the constant competition in the world of business. Companies try to find new technologies, innovative methods in a short period of time to be ahead of their competitors (Horton, 2008).

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