GFF GlobeR&D investments have become highly competitive between nations, with each looking to outspend the others to maintain a competitive edge. This internationalization of R&D now pits the U.S., China, Japan, and the EU against each other to develop breakthrough technologies that can be developed into marketable products that can build their country's export trade. Each of these countries has different strengths and capabilities and each is modifying their science and technology (S&T) policies to obtain the most cost-effective and productive means for enhancing R&D staffs and resources.

For the past half century, the U.S. has dominated global R&D spending with increasingly large industrial and government funding matched with research performed in leading corporate, government, and academic laboratories. Over the past ten years, other nations have implemented policies and investments to increase the long-term benefits of strong R&D programs. These emerging economies have developed strong R&D programs that now are challenging the U.S. dominance in a number of specific areas. China in particular, for the past 15 years, has steadily and consistently leveraged its positive balance of trade to increase R&D as a percent of GDP. China's economy is already set to surpass that of the U.S. within the next three years, and its R&D investments will do the same in less than 10 years.

Growth in R&D investments in emerging economies are compared to the leadership of U.S. spending, but that leadership has eroded over the past several years due to efforts to constrain high U.S. debts. The amount of money spent on U.S. R&D is still substantial (more than $400 billion), but in real dollar value it has continued to decrease over the past several years. Current indications suggest that this trend is likely to continue through the remainder of this decade.

BRIC Growth Changes Landscape
As noted, massive deficit spending in the U.S. already limits the ability of the U.S. to match China's R&D investment growth, with the result being that new technologies are likely to be discovered and marketed sooner by China, further increasing the economic disparity that's likely to occur over the next several years. China belongs to a group of countries referred to as BRIC (an acronym for Brazil, Russia, India, and China), which are all deemed to be at similar stages of advanced economic development. Formally established in 2006, BRIC has come into popular use for its discrimination from the G7 economies (consisting of the U.S., France, Germany, Japan, Italy, U.K., and Canada, whose finance ministers meet on a regular basis to discuss economic policies—G7 countries account for roughly half of the world’s total GDP).

BRIC countries account for roughly half of the world's population and a combined GDP that roughly matches that of the U.S. South Africa applied for and became a full member of the BRIC organization in 2011. While not a formal trading organization, the BRIC members use their political alliance as a way to influence the U.S. position on major trade accords or to influence political concessions, such as proposed nuclear cooperation with other countries.


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Europe's Sustained Commitment
Europe is the third player in the global R&D environment with about a quarter of the world's overall R&D spending. European R&D is spread throughout 34 countries, most of which are members in the European Union (EU)—half of the Top 40 R&D spending countries (page 5) are in Europe. Like the U.S., this region is also struggling with massive debt loads that have affected its ability to maintain somewhat lofty long-term R&D investment goals. Despite the setbacks that threaten the economic stability of individual European countries and the EU organization, the countries continue to invest in R&D through their own political structures and collectively in a series of EU S&T programs, such as the Framework Programme (FP). Started in 1984, the FPs have been quite successful and continue to see substantial support in each iteration, which will enter the 8th version at the end of 2013.

The Energy Factor
The power shifts that are expected in R&D investments and GDP growth means that India and China combined will outspend the combined R&D budgets of the U.S. and Europe by 2025. By 2050, China's GDP is expected to be roughly twice that of the U.S. and India will match the U.S. GDP of roughly $38 trillion. The wild card in these forecasts is the recent shift in energy production. According to the IEA (International Energy Association), oil shale production in the U.S. is expected to make the U.S. energy independent by 2020, with significant positive changes in trade balances as a result. China, on the other hand (and likely India as well), are expected to increase their oil energy imports to satisfy the energy demands from their growing economies and already massive, increasing populations.

R&D into alternative energy sources will offset some of this demand, as will the development of more energy-efficient technologies. However, the high energy densities, efficiencies, and massive existing infrastructure of petroleum-based products will likely maintain fossil fuels as the energy source of choice for many decades into the future.