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 “2014 Global R&D Funding Forecast,” published by Battelle and R&D Magazine, estimates global spending on research and development at $1.618 trillion for 2014, on a PPP or “purchasing power parity” basis (up from $1.558 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 $465 billion during 2014, up from $450 billion one year earlier. However, it ranks behind many other industrialized nations in terms of R&D as a percent of GDP, at 2.8%. For example, Japan’s annual spending on R&D is estimated at 3.4% of GDP and South Korea’s is 3.6%
Massive research outlays and grants by the U.S. federal government are a big boost. The proposed federal research budget for fiscal 2015 was $134.0 billion (down from $144.4 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 31.1% of total global R&D in 2014, compared to 21.7% for Europe and 39.1% for Asia (including 10.2% for Japan, 17.5% for China and 2.7% 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 $3 billion in cancer research funding. 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 (BLS) estimates 1.38 million people working in architectural and engineering services as of 2014 (up slightly from the previous year). In addition, as of its mid-2014 survey, the same source counts 1.14 million in life, physical and social sciences. As of 2014, BLS categorizes 634,700 Americans as employed in scientific research and development positions, down slightly from the previous year.
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. Robotics, artificial intelligence and related factory automation can be considered together as a group that is also getting massive attention.
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 efficiency, transportation, aerospace, telecommunications, semiconductors, computer hardware and computer software.
Globally, building and infrastructure design and engineering firms have been enjoying a steady stream of large, lucrative contracts. Major engineering and construction projects are booming in many of the world’s developing markets, including Brazil, China, India and Turkey. These projects include hydroelectric dams, nuclear plants, refineries and LNG (liquefied natural gas) plants; as well as high speed trains, port facilities, highways, water infrastructure and airports.
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 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. This nation is making steady progress in this regard. In 2015, China’s goal is to invest 2.2% of GDP in R&D.
According to Battelle, India invested an estimated 0.9% of GDP in R&D for 2014, or about $44 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 (4.2% or about $11 billion) 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 demanding 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. As of 2015, serious immigration policy reform debate was underway in the U.S. Congress that is likely to help solve this problem over the mid-term.
