R&D Magazine published their annual study conducted with Battelle, providing an outlook for the major Research and Development metrics for the coming year. The report is excellent and filled with solid information and well founded projections. Parts of the report are focused on who will lead R&D spending for the next year. While it’s no surprise that the US will remain #1 in gross spending and near the very top of the chart of spending as a percentage of GDP, the magazine strongly features the ascension of emerging economies, specifically China and India. Even among these two hyper-growth nations, it is astonishing to compare some of the statistics. For example, in 2007 China filed 153,000 patents compared to 35,000 for India, and looking at share of world publications in the engineering area, China has an 11% share compared to 3.6% for India.
One area where India continues to outpace China is in the amount of money they attract as an outsourcing partner for R&D, some $13 billion in 2008. This is likely attributable to several factors including IP concerns, a strong history of outsourcing in India by IT firms and the prevalence of the English language. It will be interesting to see how long this advantage can be maintained. China’s strength in the sciences and its sophisticated manufacturing base will make it an increasingly attractive partner for R&D. In many areas of research it may become a case of partner with the Chinese or be run over by them.
There remains an enormous difference in the nature of R&D in The United States as compared to China and India, and that is where the money comes from. Fully 69% of the R&D money in China and 74% in India come directly from the government. Virtually the exact opposite is true in the US, where 65% of the money comes from industry. This is at once the greatest strength and the greatest liability of the US R&D position. During times of trouble, such as the last 18 months, Industry tends to retreat, even in R&D spending. Additionally, R&D spending driven strictly by profit/loss equations can be said to be more near term focused. Of course that very focus and motive may be said to be missing from government driven initiative, sometimes dominated instead by politics and even less savory elements.
America must work hard to maintain its advantage in the face of strong competition from around the world. It is already perceived to have lost or be near losing leadership in many of what are considered to be the most important issues of the day, energy and the environment. Is this a reality or simply a matter of bad PR? Time will tell and I am certainly no green alarmist, but I worry that unless the profit driven forces in the US find a reason to drive hard in these areas, the reality will be worse than the perception. If that happens we will be reliant on technologies developed elsewhere to solve our problems at home.