Corporate spending on research and development remains the driving force behind innovation. Indeed, the five corporations with the largest R&D budgets alone spent $33.6 billion last year, more than the U.S. government spent on R&D conducted by federal agencies. But a troubling trend that began in 2001 continues: corporate R&D spending is on the decline. Last year's decrease of .6 percent is slight, but it follows sharper declines in 2001 and 2002, after more than a half-decade of robust growth. Perhaps most worrisome, the declines were not limited to a few obviously troubled sectors, such as telecommunications, but affected a cross section of industries and included some of the world's top spenders on R&D. In fact, three of the five largest corporate R&D spenders showed significant decreases in their 2003 budgets: the top spender, Ford Motor, cut its budget by $200 million, and Siemens, a long-time powerhouse in research and development, decreased spending by $900 million.

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