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Leaders in Research and Development

Mon, 08/05/2013 - 1:03pm
Tim Studt

Current statistics and survey-based trends look to technology changes of a different sort by 2020.

The U.S. has led the world in all aspects of R&D for more than 50 years due to combined large industrial and government research spending and investments. That overwhelming advantage has been slipping over the past few years as growth in Asian R&D investments continue to exceed those in the U.S., often a factor of ten or more (growth rates, not actual spending). The U.S. continues to lead most aspects of R&D both in overall spending and in the quality of the actual R&D performed. Actually, U.S. research organizations spend about 15% of the U.S.’s total R&D spending in other countries. Of course, research organizations in other countries also have considerable investments in R&D that are made in the U.S. It has become a global R&D environment.

R&D Spent by U.S. Industries Outside the U.S.
Billions of U.S. Dollars
 

2008

2009

2010

Total 56.9 51.3 59.2
Germany 7.6 6.8 7.5
United Kingdom 7.2 5.4 7.9
Canada 4.6 3.3 4.0
India 3.2 3.1 3.5
China 2.6 2.8 3.1
France 2.6 2.2 2.4
Japan 2.5 2.6 2.8
Source: National Science Foundation

While Asian locations have received much of the media attention for their continued strong R&D growth, the countries receiving the largest share of U.S. R&D investments have been leaders in the Organization for Economic Cooperation and Development (OECD), such as Germany, the U.K., France, Canada and Japan. Combined, these five countries account for about half of the nearly $60 billion invested outside the U.S. by U.S. R&D organizations. Asian countries still only account for less than 20% of those offshore U.S. R&D investments. But the amount invested in Asian countries is increasing, while that invested the other OECD countries is decreasing.

Difference in China and U.S. R&D
Survey Respondents
 

U.S. Superior

Equal

China Superior

Total R&D 67% 16% 17%
Basic Research 67% 19% 14%
Applied Research 56% 24% 20%
Development 49% 21% 30%
Source: R&D Magazine

At current growth rates, within ten years China is expected to invest more in all aspects of R&D (industrial, government and academia) than is invested by U.S. government, industry and academia research organizations. This change in R&D leadership could alter the overall global economic and cultural paradigm. According to a survey of R&D Magazine’s readers, there are a number of scenarios that could play out if and when China R&D investments exceed those of the U.S. (currently expected by 2022 according to the R&D Magazine/Battelle 2013 Global R&D Funding Forecast published in December 2012). One of those most feared is the continued loss of research investments, stagnating economic growth and the continued inability to create an adequate number of jobs. These suppositions are based on the continuation of current economic conditions and not all readers in the survey responses are that convinced that this will be the case. “I don’t expect the 2022 forecast to be accurate,” says one respondent. “It will eventually happen but it likely will be delayed as China will undergo a strong economic bubble burst in the next couple of years.” Another respondent notes that “China’s serious financial problems are only now becoming apparent.”

Difference in European and U.S. R&D
Survey Respondents
 

U.S. Superior

Equal

China Superior

Total R&D 67% 26% 7%
Basic Research 46% 36% 18%
Applied Research 54% 32% 14%
Development 58% 29% 13%
Source: R&D Magazine

A number of respondents also noted that as China increases its economic and R&D spending, it will fall prey to many of the same limitations that the U.S. (and other OECD countries) have encountered, that of securing intellectual property, losing production advantages to offshore low-cost manufacturers and declining market shares in key product areas. “China’s current cost of exports will have noticeably risen [by 2022] and their market share will be less due increased government involvement and regulations,” says another survey respondent.

Expected Changes in China R&D by 2020
Survey Respondents
 

More

Same

Less

Industrial R&D 78% 18% 4%
Academic R&D 64% 31% 5%
Government R&D 66% 27% 7%
Basic Research 50% 38% 12%
Applied Research 75% 19% 6%
Development 76% 19% 5%
Military R&D 81% 14% 5%
Space R&D 76% 18% 6%
Environmental R&D 34% 34% 32%
Life Science R&D 47% 35% 18%
Electronics R&D 75% 21% 4%
Energy R&D 69% 25% 6%
Materials R&D 61% 30% 9%
Transportation R&D 55% 35% 10%
Source: R&D Magazine

In a few specific areas, the U.S. is expected to maintain its current technological advantage and even grow that advantage over that in other countries, according to the survey respondents. Those areas seeing increased U.S. technological superiority include life science, environmental and energy technologies.

Expected Changes in U.S. R&D by 2020
Survey Respondents
 

More

Same

Less

Industrial R&D 49% 35% 16%
Academic R&D 41% 39% 20%
Government R&D 32% 36% 32%
Basic Research 33% 37% 30%
Applied Research 53% 34% 13%
Development 50% 35% 15%
Military R&D 46% 32% 22%
Space R&D 32% 30% 38%
Environmental R&D 55% 30% 15%
Life Science R&D 60% 29% 11%
Electronics R&D 45% 42% 13%
Energy R&D 68% 23% 9%
Materials R&D 51% 36% 13%
Transportation R&D 38% 37% 25%
Source: R&D Magazine

The U.S. and Canada currently account for about a third of the global R&D investments in 2013, while Asian countries (including Japan) account for about 40% and European countries account for about a quarter. The Americas and Europe are each losing about 0.5% share each year, while Asia continues to pick up more than 1% global share each year. At this rate, more than half of all the R&D spent in the world will be spent in Asia by 2020, with about 20% spent in Europe and less than 25% spent in the U.S. These sobering facts relate to where the new technologies will come from and the leading drivers for technological change.

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