Growth in global research and development funding slowed in 2013 from the pace of growth seen in 2011-2012. The 2013 slowdown was due primarily to unsettled European and U.S. economies that, in turn, affected global performance. R&D investments often are closely linked to GDP and economic outlook. Global R&D investments, according to our analysis, are forecast to increase in 2014 and 2015—albeit at a decreasing rate in 2015. Other highlights include:
- Economic and R&D growth in Asian countries have slowed, but R&D investments in this region still outpace the rest of the world.
- U.S. R&D investment is back on track with modest growth that is expected to continue through 2020.
- China continues its unmatched economic growth and double-digit R&D increases.
- R&D rankings have not changed significantly in the past five years, but differences have narrowed in funding levels between countries.
Asia’s Role Continues to Increase
While 2013 R&D investment growth was minimal in the U.S. and Europe, growth in most Asian countries—especially China—continued. Asian R&D investment growth rates are expected to return to their pre-2013 levels in 2014 and 2015. The exception to this outlook may be Japan, which is more correlated with trends in the U.S. and Europe than with neighboring Asian countries.
In 2014, China will continue its two-decade trajectory in R&D investment, consistent with the current Five-Year Plan (FYP 2011 to 2015). According to our Forecast, China’s research intensity will increase to 1.95% of GDP in 2014. China’s FYP is aimed at achieving 2.2% of GDP by 2015. This rate of growth is expected to continue through the end of the decade as China strives to transition from a manufacturing economy to being “innovation-driven” by 2020. At current rates of R&D investment and economic growth, China could surpass the U.S. in total R&D spending by about 2022.
The ranking of the top ten R&D-spending countries has not changed over the past five years, except for China surpassing Japan for the number two position in 2011. These top ten countries spend about 80% of the total $1.62 trillion invested in R&D around the world; the combined investments by the U.S., China and Japan is more than half of the total.
The broad patterns of R&D spending are not expected to change significantly in 2014, but regional shifts are occurring. Just five years ago, the U.S., Canada and Mexico were responsible for nearly 40% of global R&D. That share has dropped to about 34%, with the U.S. shrinking from a 34% share in 2009 to 31% now. Europe has experienced a similar decline from 26% in 2009 to less than 22% in 2014. Where the west has retrenched, Asia has advanced. In the same five years, Asia’s share of R&D investments has risen from 33% to nearly 40%, with China rising from 10% to nearly 18%. China’s high level of research intensity has now been sustained for nearly 20 years, and its total R&D investments are now more than 60% those of the U.S. The economic and political context in each of these regions suggest these trends are not likely to change in the near term and are likely to continue through 2020.
The “Rest of the World” in this Forecast includes countries in Africa, the Middle East and Russia and the Confederation of Independent States. While ROW countries account for about 11% of global GDP ($10 trillion), they only account for about 5% of global R&D. The growth rate for R&D investments in ROW countries is also low—less than 4% expected in 2014. The low rate of investment in these countries implies priorities other than innovation-based growth, and may also relate to under-developed domestic R&D infrastructure and educational capacity.
In the chart above, comparisons of R&D spending, growth in the number of researchers and the ratio of R&D spending as a share of GDP reveal a convergence among many countries on stable levels of research intensity echoing that which has been sustained by the United States for the last half-century. The globalization of R&D endeavors is maturing. Differences among regions in R&D economics, as well as major science and technology priorities, are narrowing. Noteworthy exceptions include China and India, which produce large numbers of scientists and engineers, but the general population is growing at a faster rate. As a result, these S/E (scientists and engineers) ratios continue to lag those of the U.S. and European countries.