Reading list – R&D spending looks healthy

R&D spending may not be up to the peal levels of 2001, when it accounted for 2.27% of GDP. but it won't be long before it gets there, thanks partly to China's rush to invest in research. The OECD's  Science, Technology and Industry Outlook 2006 says that "Measured as a share of GDP, OECD-wide R&D stood at 2.26% of GDP in 2004, above its level of 2.25% in 2003".

 

The press release announcing the report points out that "China will this year for the first time spend more on research and development (R&D) than Japan and so become the world’s second highest investor in R&D after the United States".

 

"Based on recent trends trends," the release continues, "China will spend just over USD 136 billion on R&D in 2006, just over Japan’s forecast USD 130 billion."

 

It is the rate of that increase that is staggering. "China’s spending on R&D as a percentage of GDP, known as R&D intensity, has more than doubled from 0.6% of GDP in 1995 to just over 1.2% in 2004. In current prices, this represents an increase from just over USD 17 billion in 1995 to USD 94 billion in 2004. And it is growing even faster than the economy which is growing by between 9 and 10% a year."

 

Europe continues to fall behind the other main economic regions. The report itself shows that while in the USA rates of growth in R&D spending were 4% a year between 2002 and 2004, the the EU25 rates were 2.3% a year between 2000 and 2003. The report adds that only a few countries are on track to meet R&D targets of 3% of GDP.