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 co-inventor.
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
reap the benefits of commercialized research.
Top research universities earn millions of dollars each in yearly
royalties on their patents.
The “2018 Global R&D Funding Forecast,” published by
the Industrial Research Institute and R&D
Magazine, estimates global spending on research and development at $2.19 trillion
for 2018, on a PPP or “purchasing power parity” basis.
“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
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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 co-inventor. 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
reap the benefits of commercialized research. Top research universities earn millions of dollars each in yearly
royalties on their patents.
The “2018 Global R&D Funding Forecast,” published by
the Industrial Research Institute and R&D
Magazine, estimates global spending on research and development at $2.19 trillion
for 2018, on a PPP or “purchasing power parity” basis. “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 $553 billion during
2018, up from $538 billion one year earlier. However, it ranks behind many other industrialized nations in terms of
R&D as a percent of GDP, at 2.84%. For example, Japan’s annual spending on R&D is estimated at 3.50% of
GDP and South Korea’s is 4.32%
Massive research outlays and grants are made by
the U.S. federal government. The
proposed federal research budget for fiscal 2019 was $118.1 billion (down from
$119.0 proposed for the previous year). Substantial federal research dollars are flowing into such areas as
advanced batteries, electronic patient health records, cancer research,
nanotechnology, robotics, biotechnology, defense and renewable energy. Government research grants feed projects at
universities throughout the U.S. and at many types of private
corporations. The United States was
expected to account for 25.25% of total global R&D in 2018, compared to 20.52%
for Europe and 43.62% for Asia. Asia’s
share is up from 41.3% in 2015.
Many of the 50 U.S. states are also active in
funding local research efforts. This
generates significant 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 Amazon, Alphabet (Google), Merck & Co., Pfizer, Microsoft, IBM,
Johnson & Johnson 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 (BLS) estimates 1.44 million people working in architectural
and engineering services as of February 2018. In addition, as of its mid-2017 survey, the
same source counts 1.15 million in life, physical and social sciences. As of February 2018, BLS categorizes 665,300
Americans as employed in scientific research and development positions.
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 in partnership with
universities. Companies are looking for
ways to leverage their R&D investments in order to get more return on costs
while gaining competitive advantage on a global scale.
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 the fastest-growing research budget
in the world, and by 2020, the government’s goal is to invest 2.5% of GDP
annually in research.
According to the 2018 Global R&D Funding Forecast, India’s investment in R&D
is an estimated 0.85% of GDP in R&D for 2018, or about $83.27 billion on a
PPP basis, putting it in a league with the UK and France in total
spending. Technical education is
emphasized in India for a select group of students, particularly at its famous
Indian Institute of Technology (IIT) 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 UK, 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. 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 (3.00% or about $12.85 billion on a PPP basis in 2018) 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.
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