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Asia Drives Growth in 2013 Global R&D

Tue, 12/18/2012 - 8:16am
Martin Grueber, Research Leader, Battelle and Tim Studt, Editorial Director, Advantage Business Media

GFF GlobeU.S. and Europe expect R&D increases that won’t match 2013 inflation.

Global R&D spending is forecast to grow by 3.7%, or $53.7 billion in 2013 to $1.496 trillion, according to research by analysts at Battelle, Columbus, Ohio, and R&D Magazine, Rockaway, N.J. The largest share of this increase, $22.9 billion, is expected to come from China, which continues its decade-long annual double digit increases in R&D investments.

Share of Total
Global R&D Spending
 

2011

2012

2013

Americas (21) 34.8% 34.3% 33.8%
U.S. 29.6% 29.0% 28.3%
Asia (20) 34.9% 36.0% 37.1%
Japan 11.2% 11.1% 10.8%
China 12.7% 13.7% 14.7%
India 2.8% 2.8% 3.0%
Europe (34) 24.6% 24.0% 23.4%
Rest of World (36) 5.7% 5.7% 5.7%
Source: Battelle, R&D Magazine

Plagued by massive debts and weak overall economies, the combined government and industrial R&D organizations of the U.S. and Europe will both fail to even match their projected inflation rates of 1.9% and 1.5%, respectively, in 2013. And while China's economy is starting to heat up with a projected inflation of 3.6% in 2013, its expected GDP growth of 8.2% and R&D growth of 11.6% will continue to move it toward a leadership role in both areas in the near future.

This year's report is the 55th annual R&D Funding Forecast created by R&D Magazine and the 19th done jointly with Battelle. Reflecting upon the increasingly global nature of the R&D enterprise, this year's forecast includes an analysis of the top 111 countries investing in R&D, from the multi-hundred billion dollar investments of the U.S., China, and Japan, to the $10 million annual investments of Bosnia and Trinidad. This deep analysis was done to more precisely determine the global size of R&D and understand regional growth patterns. In performing this research, we found that 97.3% of the R&D performed in the world is performed in the Top 40 countries listed on page 5. As in previous years, there was a slight shuffling of countries in the Top 40 list with four newcomers in 2013 (Iran, Qatar, Pakistan, and the Ukraine) replacing Saudi Arabia, Romania, New Zealand, and Greece who were listed in the 2012 Top 40.

Global trends
The 2013 Global R&D Funding Forecast contains detailed summaries of the major R&D spending organizations, regions, and researcher profiles. It's important to note the long-term effects of R&D investments and their close relationship to economic growth that are considered in this report. R&D is not an instrument that can be quickly turned on and off to trigger economic growth. Many countries and regions have set long-term R&D goals that have not been realized. Ten years ago, the European Union (EU) set a goal of having 3.0% of its GDP invested in R&D by 2010. Due to weak policies, that ratio stagnated and is now less than 1.9%. The EU's new 8th Framework Programme, which begins a year from now, has reset the 3.0% goal for 2020. On the other side, China established a consistent pattern of double-digit R&D funding increases in the 1990s and over the past 20 years has risen from R&D obscurity to challenging the U.S. (and likely succeeding) for global R&D leadership.

Global R&D Spending Forecast
  2011 GERD PPP
Billion U.S. $
2011 R&D as %
of GDP
2012 GERD
PPP Billions
U.S. $
2012 R&D
as % of
GDP
2013 GERD PPP
Billions U.S. $
2013 R&D
as % of
GDP
Americas (21) 485.4 2.05% 494.9 2.04% 507.6 2.04%
U.S. 412.4 2.70% 418.6 2.68% 423.7 2.66%
Asia (20) 487.1 1.75% 518.6 1.77% 554.6 1.79%
Japan 156.0 3.4% 159.9 3.48% 161.8 3.48%
China 177.3 1.55% 197.3 1.60% 220.2 1.65%
India 38.4 0.85% 40.3 0.85% 45.2 0.90%
Europe (34) 342.9 1.87% 346.7 1.88% 349.5 1.88%
Rest of World (36) 77.8 0.86% 82.3 0.87% 86.4 0.87%
Global Total 1,394.3 1.76% 1,469.0 1.77% 1,496.1 1.77%
GERD, Gross Expenditures on R&D, PPP, Purchasing Power Parity
Source: Battelle, R&D Magazine

In our increasingly technology-dependent world, strong continued support of R&D investments is essential to maintain and grow a nation's economic strength. It is well-established that technological change is accelerating and without the tools, knowledge, and expertise to build upon those changes, a nation will quickly fall behind those that do invest in innovation.

In the industrial R&D arena, the once indomitable pharmaceutical giants now face challenges driving growth from their product pipelines. In the aerospace-defense area, expensive supersonic stealth fighter jets are being replaced with much less expensive remotely piloted armed aerial vehicles. In the materials industry, nanotechnology breakthroughs routinely occur that cause whole new categories of materials to be developed. And in the energy industry, new technologies can change a nation's long-term economic future. Ten years ago, fracking technologies for recovering shale gas deposits were relatively unknown. Today they promise to change the future of the U.S. economy, complemented by technologies being developed to mitigate the environmental effects of this process.

At the core of this R&D is the basic research performed in academic institutions around the world. For more than 65 years, the bastion of basic research has been the 127 U.S. research universities (classified by the Carnegie Foundation) that account for more than 80% of the federally funded research. But even this cornerstone of R&D is under attack by the economic uncertainties of federal and industrial funding, the rapid growth and funding of foreign universities, and staffing challenges. U.S. academia's share of published scientific papers continues to slip, while the foreign share continues to rise—with China's share doubling to more than 11% over the past five years.

Click here to see PDF of pages 3 to 5 of the Global Funding Forecast.

Forecast Gross Domestic Expenditures on R&D (GERD) Billion of U.S. Dollars
Global Rank Country 2011 GDP PPP Bil. U.S. $
2011 R&D as % GDP
20101 GERD PPP Bil, U.S. $
2012 GDP PPP Bil, U.S. $
2012 R&D as % GDP
2012 GERD PPP Bil, U.S. $ 2013 GDP PPP Bil, U.S. $
2013 R&D as % GDP
2013 GERD PPP Bil, U.S. $
1 United States 15,290 2.70% 412.4 15,626 2.68% 418.6 15,955 2.66% 423.7
2 China 11,440 1.55% 177.3 12,332 1.60% 197.3 13,344 1.65% 220.2
3 Japan 4,497 1.55% 177.3 4,596 3.48% 159.9 4,651 3.48% 161.8
4 Germany 3,139 2.85% 89.5 3,167 2.87% 90.9 3,196 2.85% 91.1
5 South Korea 1,574 3.40% 53.5 1,616 3.45% 55.8 1,675 3.45% 57.8
6 France 2,246 2.21% 49.6 2,248 2.24% 50.4 2,257 2.24% 50.6
7 India 4,515 0.85% 38.4 4,736 0.85% 40.3 5,020 0.90% 45.2
8 United Kingdom 2,290 1.81% 41.4 2,281 1.84% 42.0 2,306 1.84% 42.4
9 Russia 2,414 1.48% 35.7 2,503 1.48% 37.0 2,598 1.48% 38.5
10 Brazil 2,324 1.20% 27.9 2,359 1.25% 29.5 2,453 1.30% 38.5
11 Canada 1,414 1.95% 27.6 1,441 2.00% 28.8 1,470 2.10% 30.9
12 Italy 1,871 1.30% 24.3 1,828 1.32% 24.1 1,815 1.32% 24.0
13 Australia 926 2.25% 20.8 957 2.28% 21.8 985 2.30% 22.7
14 Taiwan 887 2.35% 20.8 899 2.38% 21.4 934 2.40% 22.4
15 Spain 1,432 1.40% 20.8 1,411 1.42% 20.0 1,392 1.42% 19.8
16 Sweden 387 3.62% 14.0 392 3.62% 14.2 400 3.62% 14.5
17 Netherlands 713 1.87% 13.3 709 1.90% 13.5 712 1.90% 13.5
18 Turkey 1,087 0.90% 9.8 1,120 0.90% 10.1 1,159 0.95% 11.0
19 Switzerland 344 3.00% 10.3 347 3.00% 10.4 352 3.00% 10.6
20 Israel 238 4.20% 10.0 245 4.20% 10.3 253 4.20% 10.6
21 Austria 356 2.75% 9.8 359 2.75% 8.9 263 2.75% 10.0
22 Singapore 319 2.60% 8.3 326 2.65% 8.6 335 2.70% 9.0
23 Belgium 419 2.00% 8.4 419 2.03% 8.5 420 2.03% 8.5
24 Iran 1,003 0.79% 7.9 994 0.79% 7.9 1,002 0.79% 7.9
25 Finland 198 3.83% 7.6 198 3.80% 7.5 201 3.75% 7.5
26 Mexico 1,683 0.32% 6.4 1,747 0.39% 6.8 1,808 0.40% 7.2
27 Denmark 209 3.05% 6.4 210 3.08% 6.5 213 3.10% 7.2
28 Poland 782 0.72% 5.6 801 0.72% 5.8 818 0.75% 6.1
29 Qatar 184 2.80% 5.2 196 2.80% 5.5 205 2.80% 5.8
30 South Africa 562 0.95% 5.3 577 0.95% 5.5 594 0.95% 5.6
31 Norway 269 1.85% 5.0 277 1.85% 5.1 284 1.85% 5.3
32 Argentina 726 0.58% 4.2 745 0.61% 4.5 769 0.63% 4.8
33 Czech Republic 289 1.55% 4.5 286 1.55% 4.4 288 1.55% 4.5
34 Portugal 252 1.65% 4.2 244 1.67% 4.1 242 1.60% 3.9
35 Pakistan 495 0.67% 3.3 520 0.69% 3.6 546 0.70% 3.8
36 Malaysia 453 0.70% 3.2 473 0.70% 3.3 495 0.75% 3.7
37 Ireland 184 1.75% 3.2 185 1.75% 3.2 187 1.75% 3.3
38 Indonesia 1,139 0.15% 1.7 1,207 0.20% 2.4 1,283 0.25% 3.2
39 Ukraine 334 0.89% 2.9 344 0.89% 3.1 356 0.90% 2.4
40 Hungary 198 1.20% 2.4 196 1.20% 2.4 198 1.20% 2.4
Subtotal (Top 40)   69,082 1.97% 1,358.1 71,117 1.98% 1,404.8 73,533 1.97% 1,455.5
Rest of World   9.943 0.36% 36.2 10,346 0.36% 37.5 10,782 0.38% 40.6
Global Spending   79,025 1.76% 1,394.3 81,463 1.77% 1,442.3 84,315 1.77% 1,496.1
Source: Battelle, R&D Magazine, International Monetary Fund, World Bank, CIA World Factbook
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