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For the first time in the study’s 13-year history, a software and Internet company, Amazon,  is leading the top 20 R&D spenders, with outlays of $16.1 billion.
For the first time in the study’s 13-year history, a software and Internet company, Amazon,  is leading the top 20 R&D spenders, with outlays of $16.1 billion.

Global R&D Spend Surpasses $700b, But Threatened by Protectionism

Thirteen of the top 20 spenders in 2017 were headquartered in the United States, while companies in the “rest of world” group boosted their spending by 1.5% in 2017

Global R&D Spend Surpasses $700b, But Threatened by Protectionism

Consultancy firm PwC has published its latest Global Innovation 1,000 survey showing that corporate spending on Research & Development has never been higher, but also warning of the effects of economic nationalism.
The world's 1,000 most innovative companies increased their R&D spending by 3.2% in 2017, pushing it to an all-time high of $702 billion, according to the Global Innovation 1,000 survey published by consultancy PwC on Tuesday, DW reported.
The figure marked a resumption of meaningful growth in innovation spending following flat results in 2016, and means the global private-sector spending is now 2.7 times as high as it was in 1999—the first year for which PwC assembled data.
The rise in R&D spending came despite a 2.5% decline in revenue for those 1,000 companies surveyed by PwC. As a result, the combination of overall spending growth and lower revenues led to a record-high R&D intensity rate of 4.55.

Leaders and Laggards
For the first time in the study's 13-year history, a software and internet company, Amazon, is leading the top 20 R&D spenders, with outlays of $16.1 billion.
The US online retail giant is followed by Google's parent company Alphabet Inc., with an outlay of $13.9 billion in 2017, and ahead of US chipmaker Intel and Korean electronics firm Samsung with $12.7 billion each.
German carmaker Volkswagen dropped to fifth place in 2017, with spending of $12.2 billion, and after leading the tables for the five previous years.
Annabelle Kliesing, co-author of the survey, attributed the fall mainly to currency effects, saying that in euro terms VW's spending decreased by only €400 million (470.75 billion) compared with 2016.

Tech Sector Rising
What's more significant though, she said, was the fact that the four leading companies all came from the high-tech sector and that all the software and internet companies in the top 20 either stayed at their position or rose on the spending list in 2017.
Global R&D spending growth by the tech companies was 16.1%—once again the fastest of all industries. Given their current trajectory, software and internet companies are expected to surpass the combined total of auto companies in 2018.
Moreover, they have added the largest number of companies to the PwC list with 13 new arrivals from that sector, and nine from the healthcare sector.

The Geography of R&D
Thirteen of the top 20 spenders in 2017 were headquartered in the United States, reflecting the country's dominance in the high-tech and healthcare industries, which tend toward high R&D intensity.
Europe and China have the largest numbers of industrials companies, and Japan and Europe have the largest numbers of auto companies.
Companies in the "rest of world" group boosted their spending by 1.5% in 2017, with Chinese companies even decelerating sharply after growing at double-digit rates in the past few years. The first Chinese decline, falling by 3.3%, tracks an 11.4% drop in spending in the country's industrials sector due to an economic slowdown and increasing financial constraints.

Risks From Economic Nationalism
PwC warns that protectionist rhetoric and policies may cause international corporations to reduce R&D spending due to the global nature of their innovation models. With their research being based on the free flow of information, money and talent across borders, "policies inspired by economic nationalism" may be disrupting activities for new products and services, PwC said in its survey.
"With the increased focus on nationalism and some protectionist tendencies, there's a real fear that the gains from the globalization of R&D, which we all have benefited from, might become weaker going forward," said Soumitra Dutta, dean of the SC Johnson College of Business at Cornell University and co-author of the survey.
According to PwC, many corporations said they would make changes to their R&D operations within the next two years if more nationalistic policies were adopted—three-quarters said they would act in the next five years.
Survey participants believe the US, UK, and China could be most at risk from potential changes in policy that could impact R&D investment; while Canada, Germany, and France were likely to be the major beneficiaries if protectionist policies broadly became a reality.

 

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