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Chapter 4. R&D: National Trends and International Comparisons

Conclusion

Growth in global R&D has been rapid, averaging 7% annually over the last 10 years, reaching an estimated $1,276 billion (in purchasing power parities) in 2009. The United States is by far the largest R&D performer, accounting for about 31% of the global total, but down from 38% in 1999. Average annual growth in U.S. R&D spending has outpaced U.S. GDP growth over the last several decades. However, in 2009 U.S. R&D spending was somewhat below the 2008 level. The 2009 slowdown primarily reflects a drop in business R&D in the face of the 2008–09 financial crisis and the economic recession. On the other hand, U.S. R&D spending in other performing sectors continued to rise, notably for federal and academic R&D, in part because of the one-time federal R&D funding increase appropriated in the American Recovery and Reinvestment Act of 2009.

The other major trend has been the rapid expansion of R&D performance in Asia. The region represented 24% of the global R&D total in 1999 but accounted for 32% in 2009, including China (12%) and Japan (11%). The pace of real growth over the past 10 years in China's overall R&D remains exceptionally high at about 20% annually. The rate of growth in South Korea's R&D has also been relatively high, averaging nearly 10% annually over the 10-year period. Growth in Japan has been slower, at an annual average rate of 4.0%.

The R&D/GDP ratio, or R&D intensity, constitutes another basis for international comparisons. The U.S. ratio was about 2.9% in 2009 and has fluctuated between 2.6% and 2.8% during the prior 10 years, largely reflecting changes in business R&D spending. In 2009, the United States ranked eighth in R&D intensity—surpassed by Israel, Sweden, Finland, Japan, South Korea, Switzerland, and Taiwan (but all perform far less R&D annually than the U.S.). China's ratio remains relatively low, at 1.7%, but has more than doubled from 0.8% in 1999.

The majority of R&D by U.S. MNCs continues to be performed in the United States. Indeed, parent companies of U.S. MNCs performed just over two-thirds of U.S. business R&D. U.S. MNCs performed most of their foreign R&D in Europe, Canada, and Japan. However, from 1997 to 2008 the share of R&D performed by U.S. majority-owned affiliates in Asia (other than Japan) more than doubled, including increases in the share performed in China, South Korea, Singapore, and India.