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Engineering, Research & Development OVERVIEW

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 (in terms of current US dollars). Nothing could better illustrate the world’s vital need for continual massive investments in R&D than the Coronavirus pandemic that swept across the world from late 2019 through 2021. An intense, global effort resulted in the availability of highly effective vaccines in record time—a few months compared to what typically would take a few years.

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 “2020 Global R&D Funding Forecast,” published by the Industrial Research Institute and R&D Magazine, estimates global spending on research and development at $2.43 trillion for 2021, 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 $598 billion during 2021, down from $608 billion one year earlier. However, it ranks behind many other industrialized nations in terms of R&D as a percent of GDP.

Massive research outlays and grants are made by the U.S. federal government. The proposed federal research budget for fiscal 2021 was $142.2 billion (up from $134.1 estimated 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 25.0% of total global R&D in 2020, compared to 20.5% for Europe and 44.3% for Asia.

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 (parent company of 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 1.52 million people working in architectural and engineering services as of February 2021. In addition, as of its mid-2021 survey, the same source counts 1.29 million in life, physical and social sciences. As of February 2021, BLS categorizes 795,100 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 global hot beds of research include Israel, Singapore, Taiwan and Korea. According to the 2020 Global R&D Funding Forecast, India’s investment in R&D was an estimated 0.86% of GDP in R&D for 2020, or about $96.46 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 the world’s 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 (4.04% or about $15.19 billion on a PPP basis in 2020) in research and development, and that nation has created one of the world’s most successful high tech industries. Finland, Denmark and Sweden also spend very high ratios of their domestic economies on R&D.