Introduction to the Engineering & Research IndustryOn a global basis, spending on research and development (R&D) has increased rapidly in recent years. In industrialized nations, R&D investment has risen from an average of about 1.5% of Gross Domestic Product (GDP) in 1980 to about 2.0% today. Vast numbers of university students around the globe are enrolled in engineering and scientific disciplines—many of them dreaming about potential rewards if their future research efforts become commercialized. Global research collaboration (between companies and between companies and universities) is booming, as is patenting; in fact, it is difficult for patent authorities in the U.S. and elsewhere to keep up with demand. Globalization, immigration and cross-national collaboration have such a dramatic effect on research and design that nearly one-half of all patents granted in America list at least one non-U.S. citizen as a coinventor. Major U.S. universities, like the University of Texas and the University of Wisconsin, as well as universities in such nations as China, Korea and Singapore, are eager to patent their inventions and to reap the benefits of commercialized research. Top research universities earn millions of dollars each in yearly royalties on their patents.
The “2012 Global R&D Funding Forecast,” published by Battelle and R&D Magazine, estimates global spending on research and development at $1.402 trillion for 2012, on a PPP or “purchasing power parity” basis (up from $1.333 trillion one year earlier). “PPP” means that the amounts are adjusted to account for the difference in the cost of living from nation to nation, relative to the United States. For example, PPP analysis finds that the cost of buying a given standard of living is considerably lower in China or India than it is in the U.S. Thus, $1 spent in China or India has more purchasing power than $1 spent in America.
The U.S. continues to lead the world in terms of total investment in research and development, at about $436.0 billion during 2012. However, it ranks behind many other industrialized nations in terms of R&D as a percent of GDP at 2.80%. For example, Japan’s annual spending on R&D is estimated at 3.50% of GDP for 2012.
Massive research outlays by the U.S. federal government are a big boost. The proposed federal research budget for fiscal 2011 was $143.4 billion (up slightly from the previous year). Substantial federal research dollars are flowing into such areas as advanced automobile batteries, electronic patient health records, cancer research, nanotechnology, defense and renewable energy. Meanwhile, government research dollars feed projects at universities throughout the U.S. and at many types of private corporations. The United States is expected to account for 31.1% of total global R&D in 2012, compared to 24.1% for Europe and 36.7% for Asia (including 11.2% for Japan, 14.2% for China and 2.9% for India).
Many of the 50 U.S. states have been active in funding local research efforts. California launched an interesting initiative in research funding at the state level when voters there approved, in November 2004, $3 billion in stem cell research funding. By 2007, California’s stem cell research program was slowly getting underway after combating lawsuits questioning the authority of the state government to create such a program. Other states across the U.S. quickly began discussing the potential of launching such initiatives of their own. In 2007, voters in the State of Texas approved a $3 billion cancer research initiative spearheaded by former cancer patient and globally recognized athlete Lance Armstrong. The end result may be heightened competition between tech-savvy states for leading-edge research efforts, at both corporate and university facilities.
Meanwhile, U.S. corporations continue to fund massive engineering projects and research budgets of their own. Top research investors among U.S. companies include Merck & Co., Pfizer, IBM, Ford, Johnson & Johnson, Microsoft and Intel.
Engineering, science and research and development provide large numbers of well-paying jobs in America and around the world. Officially, the U.S. Bureau of Labor Statistics estimates 1.29 million people working in architectural and engineering services as of 2012. In addition, as of its mid-2010 survey (the latest data available), the same source counts 1.06 million in life, physical and social sciences (down from 1.31 million one year earlier). As of 2012, it categorizes 630,200 Americans as employed in scientific research and development positions (up from 620,300 one year earlier).
Rapidly growing areas in U.S., Japanese, Indian and Chinese research include virtually all sectors within the energy field; from renewable energy such as solar power, to oil exploration technologies, to superconductivity, to energy storage. Energy will continue to be a focus of global R&D, as will nuclear electric power generation.
The convergence of information technology, biotechnology and nanotechnology is fueling the imaginations and the research budgets of scientists and engineers. Likewise, the convergence of information technology, entertainment and telephony is booming. Great research emphasis is also placed on chemicals, health care, defense, energy conservation/efficiency, transportation, aerospace, telecommunications, chips, computer hardware and computer software.
Globally, building and infrastructure design and engineering firms have been enjoying a steady stream of large, lucrative contracts. The recent financial crisis put a damper on construction in the U.S. and much of Europe. However, major engineering and construction projects are booming in many of the world’s emerging markets, including Brazil, China, India and Turkey.
Meanwhile, corporations know that they must invest in R&D in order to stay competitive, but in many cases their R&D strategies are evolving. One change is the way in which funding is allocated. Strategies are shifting to include more alliances and joint ventures with other companies; more subsidiary spin-offs based on established technologies; more contracts and cooperative efforts with federal labs and agencies; and higher grants and projects of greater scope at the university level. Companies are also looking for ways to leverage their R&D investments in order to get more return on costs.
Historically, corporate America’s R&D dollars were spent at labs within the bounds of the U.S., but today, more and more projects are going to company-owned or outsourced labs overseas. Due to relatively low costs and large talent pools (including large numbers of new graduates with engineering and scientific degrees), the nations of Eastern Europe, China and India in particular have been attracting more of the total research dollars invested by major companies. Other hot beds of offshored research include Singapore, Taiwan and Korea.
China has one of the fastest-growing research budgets in the world, and by 2020, the government’s goal is to invest 2.5% of GDP annually in research. It remains to be seen whether it will come close to that goal. In 2012, China will invest about 1.6% of GDP into R&D.
According to Battelle, India will invest an estimated 0.8% of GDP in R&D for 2012. Technical education is emphasized in India, particularly at its famous Indian Institute of Technology campuses.
Certain countries have the lion’s share of R&D activity. Corporations with the largest R&D budgets are nearly all headquartered in the U.S. and Canada in North America; in the U.K., France, Germany, Switzerland, The Netherlands, Sweden and Italy in the European region; and in the Asia-Pacific nations of China, Taiwan, Japan, South Korea and Singapore.
South Korea’s R&D spending will be about 3.45% of GDP in 2012, and the nation has hopes of increasing that figure to 5%. Korean government leaders are focused on increasing basic research capabilities and basic sciences, particularly at research-oriented universities.
Technology-oriented Israel invests very high amounts of GDP (a world-leading 4.2% for 2012) in research and development, and that nation has created one of the world’s most successful high tech industries. Finland and Sweden also spend very high ratios of their domestic economies on R&D.
Historically, many American employers have been frustrated in their efforts to hire either U.S. citizens or eligible immigrants who have specific degrees and experience suitable to fill niche jobs that are vital for corporate R&D. These employers feel that the current H1-B immigration program is much too restrictive. Temporary, job-related immigration status under the H1-B program has, in recent years, been limited to 65,000 people per annum, plus a special additional allotment of 20,000 expressly for immigrants who hold advanced degrees from U.S. universities.
View More
Video Introduction to Engineering & Research Industry