R&D Dollars Flow Even as Revenues Slump

Firms see innovation as key to post- recession success
By Clay Dillow,  Newser Staff
Posted Apr 6, 2009 11:11 AM CDT
Apple CEO Steve Jobs introduces the new iPod Nano in San Francisco, Tuesday, Sept. 9, 2008.   (AP Photo/Paul Sakuma)
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(Newser) – Revenues may be plummeting, but US companies spent as much on research and development in 2008’s fourth quarter as they did in 2007's, the Wall Street Journal reports. Analysts point to products like the iPod, introduced during the last recession, as proof that continued R&D outlay can lead to recovery triumph. Firms know cutting is “suicidal,” one analyst says. “It is the last shoe to drop.”

And US firms aren’t alone in maintaining R&D growth: One analyst estimates that while American companies spent 4% more last year, Indian and Chinese outfits spent 7% more, and stand to take the lead in the field. And, some experts warn, prolonged recession could short-circuit the trend, with desperate companies cutting back or merging with others and paring overall R&D.