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The cover of the 2018 Global R&D Funding Forecast.

R&D Magazine’s 59th annual Global R&D Funding Forecast estimates that global R&D investments will increase by 4.1% in 2018 to $2.190 trillion in purchasing power parity (PPP) values for the more than 115 countries having significant R&D investments. These include those countries with more than $100 million in R&D investments. This forecast rate is a significant increase over the 3.4% seen in 2017 due to the increasingly vibrant global economy expected in 2018.

The annual Global R&D Funding Forecast is created by the editors of R&D Magazine. Published as a public service for scientists, engineers and research managers as well as R&D directors and executives, this report has been utilized for the preparation of annual R&D budgets and the evaluation of the current R&D environment.

The overall global R&D forecast is a combination of the industrial, government and academic investments by each country. Much of the R&D investments are driven by the country’s economic situation which is characterized by its gross domestic product (GDP).

Our proprietary forecast is based on a combination of specific country economic values, published relationships of the country’s science and technology (S&T) to its economy, and the most recent economic forecasts by organizations such as the International Monetary Fund (IMF), the World Bank, the Organization for Economic Cooperation and Development (OECD) and the U.S.’s Central Intelligence Agency (CIA).

The global overview

Global R&D spending has continued its steady climb with more than $2 trillion being invested for the third consecutive year in 2018. The shifting of R&D investments to Asia is a trend that started several years ago, and it has continued with 44% of all R&D monies in 2018 being spent in that region—a significant trend expected to continue into the future.

As noted over the past ten years in these forecasts, the overall growth in global R&D investments is being driven by the substantial increases in Asian countries and especially in China, which for many years increased its R&D investments by more than 10% per year.

Over that many years, the Chinese rate increases are basically unsustainable—and its current R&D growth rate is now in the 6.7% growth rate range, which is still more than twice that of the U.S. and most European countries. Asia accounts for nearly 44% of all global R&D investments. Its share rate continues to increase each year at the expense of all the other countries investing in R&D.

The U.S. continues to be the country with the largest investments in R&D, a title it has held for the past 50 years. The U.S. share of the global R&D pie continues to shrink due to the higher growth rates in Asia, however at a slowing rate over the past five years. Economic turmoil in many third world countries and countries with social strife are seeing stagnating R&D investment rates, which are not keeping pace with the advanced North American and European economies and the Asian high-growth economies.

Over the past 12 months, the global economy has improved substantially, which is reflected in the improving global R&D estimates as well. The IMF modifies its overall outlook in a pattern of forecasts released approximately every three months.

The most current IMF World Economic Outlook (October 2017) again increased its growth forecasts for most countries from the updated report issued in July 2017, which itself revealed a higher growth rate from the IMF’s official April 2017 report. This recovery is one of the longest recovery periods on record—and it has even positively affected the growth rates on most emerging economies.

Industrial investments in R&D

The U.S. economy continues to outpace many other Western economies with strong programs in place for ensuring continued, albeit slow growth. Supporting this growth is a strong cadre of academic institutions, a strong organization of federal government research organizations and facilities and strong industrial organizations.

Over the past two years, industrial investments in R&D appear to be increasing at a time when many federal organizations have frozen their R&D budgets and investments due to budgetary restrictions and constraints. A new U.S. tax policy is expected to stimulate investment activities including those in R&D. The overall effect of the tax changes on U.S. growth is expected to be positive through 2020.

A number of technological trends-- which include biopharmaceuticals, automation and robotics, artificial intelligence, cloud computing, autonomous transportation systems, unmanned aerial systems, advanced space systems and advanced military and weapons systems—ensure that technology will continue to drive new advances for the next five years and beyond. Global warming, energy resources and food production do not appear to pose insurmountable challenges.

Global demographics also appear to be driving technological demands, economic and R&D funding hurdles and possible future research staffing issues as well on a global basis. Most countries—and especially Japan and China—are facing an increasing rate of aging populations that directly impact these challenges.

Sign up for the full 2018 Global R&D Funding Forecast

In the report’s introduction, Bea Riemschneider, Editorial Director, R&D Magazine, noted, “R&D Magazine is proud to present the 59th annual edition of our exclusive forecast of global research and development and related trends—including the annual in-depth surveys of our own audience—providing critical insights into the R&D challenges, issues and opportunities facing the global R&D community today and in the future.”

“R&D Magazine introduced these exclusive R&D forecasts with its first issue in January 1959, and has been producing them ever since. This report has served as a tremendous resource for researchers, economists, policymakers, and R&D leaders worldwide for decades, and it continues to offer the latest outlook on R&D funding,” she wrote.

Details on specific budgetary information on more than 110 global R&D spending countries and insights into the R&D workforce are included in this year’s Global R&D Funding Forecast.

The full report is available here for download.

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