Back in late 2008 I wrote a post sharing thoughts from Judy Estrin, former Cisco CTO and author of "Closing the Innovation Gap," who contends U.S. corporations' focus on short-term profit is eroding America's reputation as an innovation leader. Not surprisingly, the recession exacerbated this trend, with industrial R&D spending taking a nosedive in 2009. Companies were understandably reluctant to spend money on research that may not boost their bottom lines in the near future.
A 2010 Global R&D Funding Forecast from R&D Magazine and independent R&D firm Batelle predicts industrial R&D funding will increase 2.8 percent this year to reach $283 billion, up from $275.3 billion in 2009, but that's still well below the 2008 total of $289.1 billion. The U.S. hasn't shown much of an appetite for this kind of research since the demise of Bell Laboratories, the research arm of AT&T that developed the transistor, the first wireless local area network technology and the C++ programming language, among other diverse discoveries, writes Ed Sperling on Forbes.
When industrial R&D spending drops, government and academia can step up to help fund the kind of research that can result in the kind of innovation that can launch entirely new industries. That's what is happening in some countries, particularly in Asia, writes Sperling. He offers the example of South Korea, which just appointed its first chief technology officer, a former Samsung executive who says part of the government's role is to invest in the kinds of research that companies can't afford.
While the U.S. still spends a greater percentage of its R&D budget on basic research than most countries, reports Inc., as a percentage of gross domestic product, funding for scientific research is less than what it was in 2003. Scary statistic: The federal contribution to R&D is now below 1 percent of GDP, which the article calls "a commonly accepted minimum goal for economically developed countries."
As a percentage of GDP, South Korea and Japan both spend more on R&D than the U.S. While China spends less, it grew spending at an astounding 20 percent compound annual growth rate from 1996 to 2007. While there doesn't appear to be an immediate threat, some in the U.S. scientific community believe other countries will challenge this country's longstanding edge in innovation within 15 years, says Patrick Clemins, director of the R&D Budget and Policy Program at the American Association for the Advancement of Science.
More scary stats from the National Science Board, which every other year produces a report on science and engineering indicators: North America's share of global R&D activity fell from 40 percent to 35 percent between 1996 and 2007. The European Union's share declined from 31 percent to 28 percent during the same period. The Asia-Pacific region's share rose from 24 percent to 31 percent. Annual growth of R&D expenditures in the U.S. is just over 5 percent, less than in India, South Korea, Taiwan, Thailand, Singapore, Malaysia and China.