Introduction to the Engineering & Research Industry

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. An intense, global effort resulted in the availability of effective vaccines and therapies in record time—a few months compared to what typically would take a few years.

Meanwhile, 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 “2022 Global R&D Funding Forecast,” published by the Industrial Research Institute and R&D Magazine, estimates global spending on research and development at $2.48 trillion for 2022, 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, with forecast investments of $685 billion for 2022. 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 2022 was $156.0 billion (up from $140.1 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 about 34% of total global R&D in 2022, compared to 27% for China, 9% for Japan and 7% for Germany.

Many of the 50 U.S. states are also active in funding local research efforts, in the interest of boosting their statewide economies and their universities. This generates significant competition between tech-savvy states for leading-edge research efforts, at both corporate and university facilities.

The federal government of the U.S. not only funds research, but also engineering projects. This will be particularly true for 2023 and several years thereafter due to the Infrastructure Investment and Jobs Act, signed into law in November 2021, with potential funding of $1.2 trillion over the mid-term. The act makes funds available for such areas as roads, bridges, public transportation, ports, airports, water and energy. While much of the money will go to construction, it will also fund very significant amounts of engineering, and many engineering/design firms will benefit greatly. In fact, the funding provided by this act is so massive that it may create a historic opportunity for some companies.

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 1.61 million people working in architectural and engineering services as of February 2022. As of February 2022, BLS categorizes 893,500 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.

Certain countries have the lion’s share of the world’s R&D activity. In North America, corporations with the largest R&D budgets are nearly all headquartered in the U.S. and Canada; in Europe the UK, France, Germany, Switzerland, The Netherlands, Sweden and Italy are regional leaders; and in the Asia-Pacific the nations of China, India, Taiwan, Japan, South Korea and Singapore lead the way. Korean government leaders are focused on increasing basic research capabilities and basic sciences, particularly at research-oriented universities. Technical education is emphasized in India for a select group of students, particularly at its famous Indian Institute of Technology (IIT) campuses.

Technology-oriented Israel invests a very high 5+ percent of GDP 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.

Artificial intelligence (AI) is playing an increasingly important role in both engineering and research and development. In engineering, AI has the potential to accelerate both the design and the virtual testing of structures and systems. In R&D, one of the most promising uses for AI lies in identifying and testing chemical compounds that have potential to become new drug therapies—possibly cutting years and millions of dollars from the process.

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