Data on R&D expenditures by country and region provide a broad picture of the changing distribution of R&D capabilities and activities around the world. R&D data available from the OECD cover the organization's 34 member countries and 7 nonmembers. The United Nations Educational, Scientific, and Cultural Organization's (UNESCO's) Institute for Statistics provides data on additional countries. The discussion in this section draws on both of these datasets.
International comparisons necessarily involve currency conversions. The analysis in this section follows the international convention of converting foreign currencies into U.S. dollars via purchasing power parity (PPP) exchange rates. (See sidebar, "Comparing International R&D Expenditures.")
Worldwide R&D expenditures totaled an estimated $1,276 billion (purchasing power parities) in 2009. The corresponding estimate, 5 years earlier in 2004 was $873 billion. Ten years earlier, in 1999, it was $641 billion. By these figures, growth in these global totals has been rapid, averaging nearly 8% annually over the last 5 years and 7% over the last 10 years.
Overall, global R&D performance remains highly concentrated in three geographic regions, North America, Asia, and Europe (figure
The geographic concentration is more apparent when looking at specific countries (table
Besides the generally vigorous pace at which the global total of R&D is now growing, the other major trend has been the rapid expansion of R&D performance in the regions of East/Southeast Asia and South Asia, including countries such as China, India, Japan, Malaysia, Singapore, South Korea, Taiwan, and Thailand. The R&D performed in these two Asian regions represented only 24% of the global R&D total in 1999, but accounted for 32% in 2009, including China (12%) and Japan (11%).
China continues to exhibit the most dramatic R&D growth pattern (figure
By comparison, while the U.S. remains atop the list of the world's R&D performing nations, its pace of growth in R&D performance has averaged 5.0% over the same 1999–2009 period, and its share of global R&D has declined from 38% to 31% over this time. Total R&D by EU nations has been growing (current dollars) over the same 10 years at an average annual rate of 5.8%. The pace of growth during the same period for Germany, France, and the United Kingdom has been somewhat slower, averaging 5.3%, 4.5%, and 4.5%, respectively. The EU countries accounted for 23% total global R&D in 2009, down from 27% in 1999.
R&D intensity provides another basis for international comparisons of R&D performance. This approach does not require conversion of a country's currency to a standard international benchmark yet still provides a way to adjust for differences in the sizes of national economies. (For additional background on R&D intensity and how it is affected by the economic make-up of a country, see sidebar, "R&D Intensity and the Composition of Gross Domestic Product.")
The U.S. R&D/GDP ratio was just under 2.9% in 2009 (table
The R&D/GDP ratio in the United States has ranged from 1.4% in 1953 to a high of 2.9% in 1964, and has fluctuated in the range of 2.6% to 2.7% in recent years (figure
Among other top seven R&D-performing countries, total R&D/GDP ratios over the 1999–2009 period show mixed trends (figure
In addition to the United States, countries in Nordic and Western Europe and the most advanced areas of Asia have R&D/GDP ratios above 1.5%. This pattern broadly reflects the global distribution of wealth and level of economic development. Countries with high incomes tend to emphasize the production of high-technology goods and services and are also those that invest heavily in R&D activities. Private sectors in low-income countries often have a low concentration of high-technology industries, resulting in low overall R&D spending and, therefore, low R&D/GDP ratios.
Further perspective is provided by the ratio of nondefense R&D expenditures to GDP. This ratio more directly measures civilian R&D intensity and is useful when comparing nations with substantially different financial commitments to national defense. Table
Another perspective comes from the extent to which spending on basic research accounts for a country's total R&D/GDP ratio. Estimates of the relative volume of basic research spending can provide a glimpse of the extent to which R&D resources are directed toward advancing the scientific knowledge base.
In 2009, the U.S. basic research/R&D ratio is about 0.6% and accounts for about a fifth of the total R&D/GDP ratio (table
The business sector is the predominant R&D performer for all seven of the top R&D performing nations (table
R&D performance by the government ranges over 9%–19% of total national R&D for the seven countries. Japan (9%) and the United Kingdom (9%) are on the lower end of this range. China (19%) and France (16%) are at the high end. The U.S., South Korea, and Germany lie in between.
Academic R&D ranges from 8% to 28% of total national R&D performance for these countries. China is the low point, at 8%. The United Kingdom is the highest, at 28%. The U.S. (14%), Japan (13%), and South Korea (11%) have lower shares; Germany (18%) and France (21%), higher shares.
With regard to the funding of R&D, the business sector is again the predominant source for all seven of the top R&D performing nations (table
Government is the second major source of R&D funding for these seven countries. France is the highest, at 39%. The lowest is Japan at 18%. The United Kingdom (33%), Germany (28%), and United States (31%) are on the higher side. South Korea (25%) and China (23%) are in between.
Funding from abroad refers to funding from businesses, universities, governments, and other organizations located outside of the country. Table
The mix of government funding for R&D across differing objectives (e.g., defense, health, space, general research) provides insights into government R&D priorities. The OECD compiles such statistics annually on its member countries and selected others: government budget appropriations or outlays for R&D (GBAORD). GBAORD indicators for the United States and other top R&D performing countries appear in table
Defense is an objective for government funding of R&D for all the top R&D-performing countries, but the share varies widely (table
Defense has remained the focus of more than 50% of the federal R&D budget in the United States for much of the past 25 years. It was 63% in 1990 as the long Cold War period drew to a close, but dropped in subsequent years. The defense share of government R&D funding for the other countries over the past 25 years has generally declined or remained at a stable, low level.
The health and environment objective now accounts for some 56% of nondefense federal R&D budget support in the United States and 29% in the United Kingdom. For both countries, the share has expanded dramatically over the share prevailing several decades ago. The health and environment share is currently 19% in South Korea, 15% in France, and 10% or less in Germany and Japan. The funding under this objective goes primarily into the health arena in the United States and the United Kingdom (appendix table
The economic development objective encompasses agriculture, fisheries and forestry, industry, infrastructure, and energy. The share of nondefense government R&D support allocated to economic development has generally declined over the past 25 years across the OECD countries. In the United States, it was 36% of all nondefense federal support for R&D in 1981, dropping to 13% in 2009. In the United Kingdom, it was 39% in 1981, declining to 9% in 2009. Despite a decline, support for this objective remains substantial in some countries: 23% in Germany and 24% in France (both with particular attention to industrial production and technology) and 31% in Japan (notably in energy and industrial production and technology). South Korea currently has by far the largest share for this objective, 52%, with a particularly strong emphasis in recent years on industrial production and technology.
The civil space objective now accounts for 11% of nondefense federal R&D funding in the United States. The share has been above or around 20% in the United States for much of the past 25 years. The share in France is currently about 13%, and has been around that level for almost 20 years. The share has been well below 10% for the rest of the top R&D countries.
Both the non-oriented research and general university funds (GUF) objectives reflect government funding for R&D by academic, government, and other performers that is directed chiefly at the general advancement of knowledge in the natural sciences, engineering, social sciences, humanities, and related fields. For some of the countries, the sum of these two objectives currently represents by far the largest part of nondefense GBAORD: Germany (58%), Japan (54%), the United Kingdom (54%), and France (45%). The corresponding 2009 shares for the United States (18%) and South Korea (23%) are substantially smaller. Nevertheless, cross-national comparisons of these particular indicators can be difficult, since some countries (notably the U.S.) do not use the GUF mechanism to fund general advancement of knowledge R&D, do not separately account for GUF funding (e.g., South Korea), and/or more typically direct R&D funding to project-specific grants or contracts (which are then assigned to the more specific socioeconomic objectives). For a further discussion of this topic, see the sidebar "Government Funding Mechanisms for Academic Research" later in this chapter.
Finally, the education and society objective represents a comparatively small component of nondefense government R&D funding for all seven of the countries. However, it is notably higher in Germany (4%), France (4%), and the United Kingdom (6%), than in the United States (2%) and Japan (1%). South Korea is in between at 3%.
Business R&D varies substantially among countries in terms of both industry concentration and sources of funding. Because businesses account for the largest share of total R&D performance in the United States and most OECD countries, differences in business structure can help explain international differences in more aggregated statistics such as R&D/GDP. For example, countries with higher concentrations of R&D-intensive industries (such as communication, television, and radio equipment manufacturing) are likely to also have higher R&D/GDP ratios than countries whose business structures are weighted more heavily toward less R&D-intensive industries.
Using internationally comparable data, no one industry accounted for more than 19% of total business R&D in the United States in 2008 (figure
Compared with the United States, smaller economies shown in figure
The spread of global production networks and value chains is also reflected in these indicators. Automotive manufacturers rank among the largest R&D-performing companies in the world (see sidebar, "Global R&D Expenses of Public Corporations"). The automotive industry has also highly distributed production and technical sites globally. Thus, countries that are home to major automotive MNCs and/or serve as host countries for MNCs affiliates, their part suppliers, or technical contractors, may have relatively larger share of motor vehicles R&D, as shown for Germany, the Czech Republic, and Turkey.
A significant trend in both U.S. and international business R&D activity has been the growth of R&D in the service sector. According to national statistics for recent years, the service sector accounted for 30% or more of all business R&D in 8 of the 19 OECD countries shown in figure
Internationally comparable data for selected non-OECD members are also available from the same database (ANBERD-STAN) (OECD 2011a). Percentage shares by industry of total business R&D for China, the Russian Federation, Singapore, South Africa, and Taiwan are given in appendix table
For most countries, the government is (and has long been) the largest source of academic research funding. (See sidebar, "Government Funding Mechanisms for Academic Research.") Nevertheless, business support for academic R&D has increased over the past 25 years among the OECD countries as a whole. It was around 3% in the early 1980s, nearly 6% in 1990, almost 7% in 2000, and still around 7% in 2007.
In the United States, business support for academic R&D was about 4% in the early 1980s and rose to about 7% later in that decade and through the 1990s, but has dropped to below 6% since 2000. Some commentators note concern about this recent trend of decline, given the significant role that academic basic research plays in providing a foundation for technological innovation that is important to the national economy.
The proportion of academic R&D financed by business is more varied among the other top R&D-performing countries (figure