GLOBAL: Europe and US behind in global R&D investment

Just how quickly the world's less developed economies are taking over the lion's share of global investment in research and development is made clear in the recently published Science Technology and Industry Outlook for 2008 from the Organisation for Economic Cooperation and Development. The OECD report broadly represents the world's leading industrial countries and shows the share of global R&D accounted for by the non-OECD countries rose from 11.7% in 1996 to a remarkable 18.4% in 2005.

You would think this is largely accounted for by the growing share of these countries in the world economy but this is not the only reason, says the OECD. The growing intensity of investment in these countries - in other words the priority they assign to research and development - is also significant.

In China, for instance, business expenditure on research and development reached US$86.8 billion in 2006 after expanding at around 19% annually in real terms from 2001 to 2006. Similarly, investment in R&D in South Africa increased from US$1.6 billion in 1997 to US$3.7 billion in 2005, Russia's from US$9 billion in 1996 to US$20 billion in 2006 while India's rose to US$23.7 billion in 2004.

By contrast for the 27 EU countries, the intensity of R&D business expenditure increased only marginally between 1996 and 2006 - to 1.11% of GDP which, the OECD says, "suggests the EU will not be able to meet its BERD target of 2% of GDP by 2010".

In the US, business R&D intensity was 1.84% of GDP in 2006, down from 2.05% in 2000. Over much the same period, it reached a new high of 2.62% in Japan while in China, the BERD-to-GDP ratio "has increased rapidly, particularly since 2000, and has now almost caught up with the intensity of the EU27, with 1.02% of GDP by 2006".

Put another way, while Japan has maintained its global share of R&D spending since 2000, the US share fell by more than 3 percentage points to 35% (owing to very slow growth in BERD) and the EU's share fell by 2 percentage points to 24%.

And what of the future? The OECD says investment in coming years will depend in part on the longer-term impacts of financial market instability on business spending. This could be taken to suggest that the major industrial economies worst hit by the financial crisis could fall further behind in R&D though an increase in employment for scientists and researchers worldwide is likely to be maintained by growth in key countries such as China and India.

"With many countries developing a range of initiatives to facilitate mobility, the internationalisation of the HRST (human resources in science and technology) labour market is likely to continue. At the same time, the growing international competition for talent means that countries will increasingly need to strengthen their own investment in human resources," says the OECD.

alan.osborn@uw-news.com