Nanotechnology R&D spending is distributed among governments (including national, regional, State, and local), universities, corporations, and venture capital investors. The availability and consistency of accurate figures varies for the different categories. When comparing the data available for various countries, difficulties may arise due to differences in the definition of nanotechnology, the inclusion of private contributions or other variations in the calculation of government funding, difficulty in getting some private―especially venture capital―investment data, mismatch in investment periods, and the various exchange rates employed. Rather than attempt to normalize disparate data sets, the NNAP has chosen to review a sampling of available data and to identify common trends.

　

 White sources vary regarding international levels of nanotechnology R&D investment, one thing that all the data sets agree upon is that nanotechnology spending has been steadily increasing, reaching record levels in 2005. For the purpose of illustration, Table 1 and Figure 1 show one set of estimates indicating that national investments in nanotechnology worldwide increased over eightfold during the period from 1997 to 2005. Investment estimates shown in Table 1 are made using the nanotechnology definition of the NNI (this definition does not include microelectromechanical systems [MEMS], microelectronics, or general research on materials).

　

 Other estimates vary from the amounts shown in Table 1. A report by the European Commission (EC) (2004) estimates that total worldwide government spending in 2003 was just over $3.5 billion, including funding by U.S. States (in addition to Federal programs) and by original European Union (EU) members and associated and acceding European countries.

　

 In a more recent report, Lux Research (2004) estimated that worldwide government spending on nanotechnology research reached $4.6 billion in 2004: approximately 35% ($1.6 billion) was by governments in North America; another 35% ($1.6 billion) was by Asian governments; 28% ($1.3 billion) was by European governments, including the EC; and 30% ($133 million) was by all other governments. The Lux Research data include U.S. State funding in the total for North America and incorporate figures from associated and acceding EU countries in the European estimate.

　

 As previously stated, available figures do not always allow for an "apples to apples" comparison, even among Federal Government expenditures. For instance, some countries invest in research through a combination of Government and corporate contributions. There is often inconsistency in the definition of nanotechnology for purposes of counting R&D expenditures. For example, some countries may include MEMS or biotechnology funding that is not counted under the strict U.S. definition of nanotechnology. Another variable between countries is the treatment of salaries for researchers. Whereas, U.S. figures include a salary component (e.g., as a portion of research grants and for Federal laboratory employees), many other countries fund salaries out of separate accounts from those reported as "nanotechnology R&D."

　

 Although direct comparisons are difficult, the data collectively show that many countries are making significant public investments in nanotechnology R&D, and that these investments have increased sharply since 2000. The similar levels in the investments by the United States, Europe, and Japan, as shown in Figure 1, suggest an element of competition among these leaders. Because the NNAP members believe it is important for the United States to understand how its Federal investments stack up against public investment by other countries, the Panel has commissioned the Science and Technology Policy Institute (STPI), a Federally Funded Research and Development Center (FFRDC) that provides technical research and analysis to the Federal Government, to do a more detailed study to assess U.S. funding as it compares to other governments, including developing a means for normalizing and comparing international government investments.

　

 One difficulty in comparing U.S. Government spending to foreign government spending is that the contributions of U.S. State and local governments (and their foreign counterparts, where they exist) are often overlooked. A fair assessment of the overall U.S. competitive position must therefore include the significant contributions of U.S. State and local governments.

　

 Regional, State, and local initiatives provide a vehicle for additional R&D funding, and a vital avenue for commercialization and economic development activity. In fact, State and local governments typically develop initiatives and commit funding precisely for the expected local economic development benefits this investment will yield. Lux Research reports that in 2004 U.S. State and local governments invested more than $400 million into nanotechnology research, facilities, and business incubation programs (Lux Research, Inc. 2005). Funding provided by State governments is often augmented, or leveraged, by additional resources provided through partnership with local private sector interests, universities, Federal Government agencies, and/or other interested regional organizations. These partnerships typically seek to build on existing regional competencies (e.g., a local research institution, a Government laboratory, and/or a strong local high-technology business community). A partial list of State investments in R&D infrastructure, typically at universities, is shown in Table 2.

　

 In addition to supporting university-based infrastructure, many regional, State, and local initiatives support the development of a technically skilled workforce through the creation or promotion of education and training opportunities. Some have done this by leveraging existing Federal programs (e.g., NSF's Nanotechnology Undergraduate Education and Research Experience for Undergraduates programs) or through the establishment of new programs, such as providing nanotechnology-relevant curriculum assistance to community colleges. Another function of many regional initiatives is to facilitate partner access to NNI user facilities as well as to other nanotechnology resources and business expertise.

　

　

 While much activity is taking place to organize and secure support for regional nanotechnology initiatives from State and local governments and the private sector, the ultimate economic development success of most of these ventures remains to be seen. To the extent that nanotechnology parallels the biotechnology industry, regional "cluster" development may prove an excellent model for equipping local communities with competitive advantages. Technology-based cluster development builds upon a foundation of critical components for economic success―research expertise and infrastructure, technical and management talent, risk capital, commercial infrastructure, and an entrepreneurial culture. Certainly, this type of activity should be encouraged and its progress monitored to determine which of the arrangements ultimately yield long-term economic development and growth.

　

 A workshop held in the Fall of 2003 brought together representatives from regional, State, and local nanotechnology initiatives across the country to share information and experiences. The resulting report (NSTC 2005), to be released soon, will serve as a useful primer for those who are at the early stages of launching similar activities. The NNAP strongly encourages the NNI to continue to interact with those regional, State, and local initiatives to assist their progress and to seek additional channels by which technology transfer may take place.

　

　

 Measures of private investment include both corporate internal investment and venture capital activity. Obtaining firm data in this area is difficult, because private corporations and investors often consider such information to be proprietary. However, in 2003 the European Commission estimated worldwide private R&D funding to be close to 2 billion Euros (Commission of the European Communities 2004).

　

 Of the $8.6 billion that Lux Research estimates was spent on nanotechnology R&D worldwide in 2004, $3.8 billion was by corporations: 46% ($1.7 billion) was by North American companies, predominantly in the United States; 36% (1.4 billion) was by Asian companies; 17% ($650 million) by European firms; and less than 1% ($40 million) was by businesses in other regions. Additional private sector investments were made by venture capital firms investing in nanotechnology start-up companies. These investments totaled roughly $400 million in 2004 (Lux Research Inc. 2004).

　

　

 Because nanotechnology is a relatively new area, the "industry" is evolving rapidly. A study by EmTech Research (2005) identified approximately 600 companies based in the United States or with significant U.S. operations that are engaged in nanotechnology R&D, manufacture, sale, and use. Of these nearly three-quarters (72.9%) were founded in the past 10 years. A significant percentage of those companies (57.6%) have products on the market, although business plans based on development and licensing of intellectual property are widespread. Large companies typically are focusing more on applications and many have early stage R&D subsidiaries and/or research collaborations with small businesses or start-ups. Members of the NNAP observe a similarity between nanotechnology and the biotechnology industry in the 1980s and 1990s, suggesting that future acquisitions and consolidations are likely.