World Economy

China to Overtake EU, US in R&D Spending

China to Overtake EU, US in R&D SpendingChina to Overtake EU, US in R&D Spending

Squeezed research and development (R&D) budgets in the EU, Japan and US are reducing the weight of advanced economies in science and technology research, patent applications and scientific publications and leaving China on track to be the world’s top R&D spender by around 2019, according to a new OECD report.

 Gross domestic expenditure on R&D (GERD) in 2012 was $257 billion in China, $397 billion in the United States, $282 billion for the EU28 and $134 billion in Japan.

With R&D spending by most Organization for Economic Co-operation and Development (OECD) governments and businesses yet to recover from the economic crisis, the OECD’s share in global R&D spending has slipped from 90% to 70% in a decade, according to the OECD's  Science, Technology and Industry Outlook 2014. The report warns that with public finances still tight in many countries, the ability of governments to compensate for lower business R&D with public funding, as they did during the worst of the economic downturn, has become more limited.

R&D spending in 2012 surpassed $1.1 trillion in OECD countries and stood at $330 billion in the BRIICS (Brazil, Russia, India, Indonesia, China and South Africa).

Korea became the world’s most R&D intensive country in 2012, spending 4.36% of GDP on R&D, versus an OECD average of 2.40%. The BRIICS produced around 12% of the top-quality scientific publications in 2013, almost twice its share of a decade ago and compared to 28% in the United States.

China and Korea are now the main destinations of scientific authors from the United States and experienced a net “brain gain” over 1996-2011. China’s R&D spending meanwhile doubled from 2008 to 2012.

European countries are diverging in R&D as some move closer to their R&D/GDP targets (Denmark, Germany) and others (Portugal, Spain) fall further behind.

In most countries, 10% to 20% of business R&D is funded with public money, using various investment instruments and government targets. The report draws on a policy survey conducted every two years in more than 45 OECD and emerging economies. You can read the report, the Highlights and Country Notes included under the table of content.