US Leads World in R&D Funding
More than $282 billion spent on research and development in 2003, says OECD
PARIS - 12/22/03 - Despite a sluggish economy during the first three quarters of the year, the US remains the world's Number One generator of funding for research and development (R&D), according to figures recently released by the Paris-based Organization for Economic Cooperation and Development (OECD).
More than $282 billion was spent in the US on science, industry, and technology research and development projects, more than two-and-a-half times that spent in Japan, which ranked second with $104 billion in R&D spending.
According to the OECD, the greatest growth in R&D expenditures, percentage-wise, came in China, where $60 billion was spent in 2003.
The total figure was up from 0.6% of gross domestic product in 1996 to 1.1% in 2002, with 60% of the spending in 2001 coming from companies - both domestic and foreign - and the rest from government.
R&D spending as a proportion of total output in 2001 in the 30-nation OECD came to 2.3%. Among individual OECD members, Sweden was in the lead with 4.3%. The proportion in the US was 2.8% and 1.9% in the UK, the OECD said.
Money spent on research and development is frequently taken as an indicator of efforts by countries to innovate and develop so-called "knowledge-based" industries, the paper said.
While virtually all the R&D spending in China is at the applied end of this activity - for instance involving work to develop new car parts using conventional engineering techniques - the large rise in recent years illustrates how industry is increasingly using China as a place to develop new ideas as well as set up plants.
The OECD's figures on R&D spending are put in terms of purchasing power parity - which for China has the effect of inflating the figure compared to how this would be expressed in nominal terms.
The OECD says this is the best way to get a fair comparison between the spending efforts by different countries on R&D - the biggest component of which is wages paid to scientists and engineers.
The latest data represent the first time any international organization has tried to put a figure on spending within China on R&D, an area of activity notoriously difficult to measure.
In the past - due to the inadequacy of China's own statistics and government restraint's - it wasn't possible to state accurately how large China's activity is compared with other nations, the OECD said.
However, it appears from the latest run of data that R&D spending in China has been expanding in recent years in inflation-adjusted terms by 10% to 15% a year, a much higher rate than for most other OECD countries. During this period, inward investment by foreign companies into China has grown rapidly, mostly in manufacturing.
Taiwanese information technology companies have also increasingly been spending on R&D in China in an effort to use of the relatively low-cost engineering talent produced by Chinese universities, the paper said.
Despite those efforts, however, China remains low on the list of ground-breaking inventions, indicated by a poor showing in terms of patenting statistics.
US companies such as General Electric and Microsoft have set up R&D centers in China, while Siemens of Germany and ABB of Switzerland have also increased their development activities in the country.
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