U.S. leads worldwide R&D with $320B, China is emerging as an R&D giant

U.S. leads worldwide R&D efforts with $320 billion investments last year, compared with $236 billion invested by the EU and $125 billion by Japan. The U.S. is responsible for 32.4% of global R&D this year, compared to 13.4% for China, according to the latest Battelle Memorial Institute and R&D Magazine study

In 2007, the U.S. will be responsible for 31.9% of global R&D and China 14.8%, according to the report. Asia's share of global R&D grew from 34.9% in 2005 to 35.6% this year and should continue to grow to a projected 36.5% in 2007.

China's R&D spending now makes up about 1.6% of its GDP, up from about 1% five years ago.  By comparison US investments in R&D account for 2.6% of GDP and 3.2% of GDP for Japan.

R&D spending in China has been growing at an annual rate of about 17%, and is far higher than the 4% to 5% annual growth rates reported for the U.S., Japan and the European Union over the past dozen years. In 2002, China's industrial-research work force was 42% the size of the equivalent U.S. work force, up from 16% in 1991.

China is by far the primary choice for offshore R&D outsourcing. India is a prime source for computer and software R&D outsourcing. Gartner reports that both India and China will generate $27 billion in software outsourcing in 2006. Chinese government incentives, infrastructure, academic relationships, and scientific capital investments continue to draw interest from the international R&D community. 

Global R&D Spending

 

GDP PPP 2005 billions, $

R&D % GDP 2005 percent

R&D PPP 2005 billions, $

R&D PPP 2006 billions, $

R&D PPP 2007 billions, $

Americas

15,874

2.3

369.07

379.69

387.64

U.S.

12,192

2.6

319.60

328.90

335.50

Asia

19,086

1.8

341.30

361.85

384.01

China (Mainland)

8,859

1.4

124.03

136.30

149.80

Japan

3,890

3.2

124.48

127.84

131.29

India

3,611

1.0

36.11

38.85

41.81

Europe

12,764

1.8

236.09

240.16

244.42

Germany

2,388

2.5

59.68

60.21

60.75

France

1,879

2.2

41.36

42.10

42.86

UK

1,933

1.9

36.72

37.39

38.06

Other

2,276

1.4

31.88

33.76

35.68

World

50,002

2.0

978.34

1,015.46

1,051.75

Source: R&D Magazine, Battelle, OECD, World Bank

Roughly 60% of America's research and development investments come from the private sector. Among the top five R&D-spending companies, four are American, including Pfizer, Ford Motor, Microsoft, and General Motors. The other is Toyota Motor of Japan. (China's Spending For Research Outpaces the U.S. - WSJ)

Top 10 R&D Spending Global Companies

 

Company

Location

Sales 2005 billions, $

R&D 2005 billions, $

R&D 2006 billions, $

R&D 2007 billions, $

1

Pfi zer, Inc.

U.S.

51.4

9.09

9.82

10.61

2

Toyota Motor Corp

Japan

185.8

8.36

8.94

9.40

3

Ford Motor Co.

U.S.

177.2

8.00

7.80

7.60

4

Microsoft Corp.

U.S.

39.8

7.01

7.50

8.03

5

General Motors Corp.

U.S.

192.6

6.70

7.02

7.34

6

DaimlerChrysler AG

Germany

186.1

6.67

7.06

7.17

7

Johnson & Johnson

U.S.

50.5

6.67

7.34

8.00

8

Siemens AG

Germany

100.1

6.35

6.52

6.70

9

Sony Corp.

Japan

66.0

5.77

6.24

6.71

10

GlaxoSmithKline PLC

UK

39.4

5.39

5.84

6.13

Source: Schonfeld & Associates, Inc., R&D Magazine, Battelle

The U.S. remains the overwhelming leader in R&D investments by biotechnology-active firms, with more than 10 times the investment (more than $16 billion 2004) of the second largest country (Gemany with about $1.4 billion), according to the Organization for Economic Cooperation and Development (OECD). The U.S. also has the largest number of R&D employees working in biotech (73,500), with nearly 50% more researchers than all other global countries combined. The U.S. again accounts for the bulk of the sales generated by biotech firms with more than $60 billion in 2004 (a 25% increase from 2003). Most global organizations involved in biotech are active in health areas (51%), followed by agro-food (19%), and industry-environmental (15%)—the remaining 16% are active in the “other” categories.

Nanotechnology is the hottest topic in research and development labs around the world right now. The U.S. Government Nanotechnology R&D Act of 2004, for example, provides for about $1 billion/yr through 2008. Corporate R&D funding is estimated to be about twice that this year with overall global funding at several times that as well. If you include electronics, life science, and coatings applications research, the overall R&D spending on nanotechnology in the U.S. is about $26 billion. More than 4,000 companies around the world are working on nanotechnology. The National Science Foundation has stated that the overall market for nanotechnology applications will exceed $1 trillion in less than 10 years, by 2015.

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