SCIENCE & ENGINEERING INDICATORS

Data on R&D expenditures and intensity by country and region provide a broad picture of the current global distribution of R&D capabilities and activities, as well as the changes under way.

Cross-national comparisons of R&D expenditures and funding require currency conversions. The analysis in this section follows the international convention of converting all foreign currencies into U.S. dollars via purchasing power parity (PPP) exchange rates. For a discussion of this methodology, see the Technical Appendix section titled Comparing International R&D Expenditures.

The global total of R&D expenditures continues to rise at a substantial pace.^{​This report provides new R&D expenditures data relative to what is presented in the previous (2018) edition of Indicators. The new data include updated data for 2016 and 2017 and revisions for prior years. Actual 2018 data for all countries will not be available at the time of the report’s publication.} NCSES’s latest estimate puts the worldwide total at $2.153 trillion (current PPP dollars) in 2017 (Figure 4-5).^{​The figures cited for total global R&D in 2000, 2010, and 2017 are NCSES estimates. R&D expenditures for all countries are denominated in U.S. dollars, based on PPP dollar conversions. These estimates are based on data from the Organisation for Economic Co-Operation and Development’s (OECD’s) Main Science and Technology Indicators 2019/1 (OECD 2019b) and from R&D statistics for additional countries assembled by the United Nations Educational, Scientific and Cultural Organization’s (UNESCO’s) Institute for Statistics (as of mid-March 2019). Presently, no database on R&D spending is comprehensive and consistent for all nations performing R&D. The OECD and UNESCO databases together provide R&D performance statistics for 158 countries, although the data are not current or complete for all. NCSES’s estimate of total global R&D reflects 106 countries, with reported annual R&D expenditures of $50 million or more, which accounts for most of the current global R&D.} In 2010, it was estimated at $1.416 trillion, and in 2000, the estimate was $722 billion. The annual increase in total global R&D averaged 7.0% from 2000 to 2010 and averaged 6.2% over the 2010–17 period. This nearly threefold expansion over these 17 years reflects, in part, the escalating knowledge intensity of economic competition among the world’s nations—as well their individual desires to harness advances in science and technology to improve their own economies and indicators of their societal well-being.

R&D performance by the world’s countries and economies continues to be concentrated in three geographic regions: North America, Europe, and the combination of South Asia (including India, Pakistan, and other countries) and East-Southeast Asia (including China, Japan, South Korea, Taiwan, and other countries) (Figure 4-5).^{​The regional groupings of countries reported throughout this section of the report are the classifications of the U.S. Central Intelligence Agency, as described in its World Factbook publication (https://www.cia.gov/library/publications/the-world-factbook/).} In 2017, the combined regions of South Asia and East-Southeast Asia accounted for the largest share of the world total (42%, or $897 billion). North America (United States, Canada, and Mexico) had the second largest share (27%, or $587 billion), followed by Europe (21%, or $460 billion), including the European Union (EU) (see the Glossary section for a list of the 28 EU member countries). The remaining 10% of global R&D performance comes (in decreasing order) from the regions of the Middle East, South America, Central Asia, Australia and Oceania, Africa, and Central America and the Caribbean.

The geographic concentration of R&D is even more evident when the profiles of specific countries or economies are considered (Table 4-5 and Figure 4-6). The United States continues as the lead performer ($549 billion in 2017), accounting for 25% of the global R&D total. China remains the second largest performer ($496 billion in 2017), accounting for 23% of the global total. Over the last few years, China has moved even closer to the United States (Figure 4-7). Japan is third at 8% ($171 billion), and Germany is fourth at 6% ($132 billion). South Korea, also now rapidly rising ($91 billion in 2017), is fifth, accounting for 4% of the global total. France ($65 billion), India ($50 billion), and the United Kingdom ($49 billion) are the next rung down—each accounting for 2%–3%. Russia, Brazil, Taiwan, and Italy make up a fourth tier, with annual R&D expenditures ranging from $34 billion to $42 billion, or around 2% each of the global total. Canada, Spain, Turkey, and Australia each have annual R&D expenditures in the $21 billion–$27 billion range, or about 1% each of the global total.

These top 16 countries and economies together accounted for 86% of the global R&D total. As Table 4-5 indicates, many other countries also conduct R&D, but each has an annual expenditures total well below that of each of this top group of 16 countries and economies.

Larger increases in the levels of R&D performance in South Asia and East-Southeast Asia, compared with the other major R&D-performing areas, have resulted in major shifts. R&D performed in the North American region accounted for 40% of the global total in 2000 but had slipped to 27% by 2017. Europe accounted for 27% in 2000 but only 21% in 2017. The regions of East-Southeast Asia and South Asia together comprised 25% of the global total in 2000 but rose to 42% in 2017. Present regional growth trends in R&D performance suggest that the dramatic rise of these areas of Asia in the global R&D arena is unlikely to end soon.

Since 2000, China alone accounted for 32% ($463 billion) of the global increase in R&D, while the United States accounted for 20% ($280 billion), and the EU accounted for 17% ($247 billion). The increases of several other major Asian R&D performers were also noticeable: both Japan and South Korea accounted for 5% of the increase ($72 billion each).

China continues to exhibit the world’s most dramatic R&D growth trend (Figure 4-7, Table 4-6, and Table S4-1). The pace of China’s increase in R&D performance has been exceptionally high for numerous years, averaging 20.5% annually over 2000–10 and 12.8% for 2010–17. The expansion in South Korea’s R&D has also been quite high, averaging 10.9% annually over 2000–10 and 8.3% for 2010–17. Japan’s corresponding increases of R&D have been considerably slower, at 3.6% and 2.8%, respectively.

While the United States remains atop the list of the world’s R&D-performing nations, its pace of annual expansion in R&D performance has averaged 4.3% over both 2000–10 and 2010–17, and its share of global R&D has declined from 37% in 2000 to 25% in 2017. Total R&D by EU nations has been increasing at an annual average rate of 5.3% in 2000–10 and 4.9% in 2010–17, with Germany at 4.9% and 6.1%, France at 4.3% and 3.5%, and the United Kingdom at 4.1% and 4.0%, respectively.

The R&D-to-GDP ratio, a widely reported measure of R&D intensity, provides insight into a country’s investments in R&D relative to overall economic activities. For the United States, this ratio has ranged from about 2.6% to 2.8% from 2000 to 2017 (Figure 4-8 and Table S4-1).

In 2017, the United States ranked 10th in R&D intensity among the economies tracked by Organisation for Economic Co-Operation and Development (OECD) and United Nations Educational, Scientific and Cultural Organization (UNESCO) data. South Korea and Israel are essentially tied for the top spot, with ratios of 4.6% and 4.5%, respectively (although Israel’s data exclude expenditures for defense R&D, while South Korea’s data include these values). Israel has long been at the top of the R&D-to-GDP ratio ranking (Table 4-5), but South Korea’s upward movement has been particularly rapid since the late 1990s (Figure 4-8). Furthermore, South Korea is one of the world’s largest R&D performers, with annual R&D expenditures many times that of Israel. Sweden and Switzerland are third, at 3.4%, followed by Taiwan at 3.3%. Japan is sixth, at 3.2%. Several smaller countries with comparatively high R&D-to-GDP ratios are Austria (3.2%), Denmark (3.1%), Germany (3.0%), and Finland (2.8%). The R&D intensities of the remaining top R&D performers are as follows: France at 2.2%, China at 2.2%, the United Kingdom at 1.7%, Turkey at 1.0%, and India at 0.6%.

The U.S. rank in this indicator was eighth in 2009, compared to its current ranking of 10th in 2017. The United States was ranked 11th in 2013 and 2015 (NSB 2012, 2014, 2016, 2018). These shifts in the U.S. rank are not surprising, as other countries have been expanding the scope and level of their R&D activities. Even so, this erosion in the U.S. rank has appeared despite generally high U.S. R&D intensity levels (relative to historic levels) over the last 10 years.

The R&D-to-GDP ratio has been rising gradually for the EU as a whole, from about 1.7% in 2000 to nearly 2.0% in 2017 (Figure 4-8). For the largest R&D performers among the EU countries, Germany’s ratio has gradually risen over that period, from 2.4% to 3.0%, whereas those for France (from 2.1% to 2.2%) and the United Kingdom (from 1.6% to 1.7%) have moved in narrower tracks.

Among the large Asian R&D performers, Japan’s R&D-to-GDP ratio has moved mainly upward in recent years, from 2.9% in 2000 to 3.2% in 2017. The high risers—across the eight top R&D-performing countries considered here—have been China and South Korea. China’s ratio more than doubled over the period, from just over 0.9% in 2000 to about 2.1% in 2017, suggesting that ample room remains for future increases (Table S4-1). South Korea’s ratio has increased considerably in recent years, from 2.2% in 2000 to 4.6% in 2017.

The business sector is the predominant R&D performer in nearly all the top eight R&D-performing nations (Table 4-7). In 2017, the sector accounted for approximately three-fourths of R&D performance in the United States (73%) and the leading Asian R&D performers, China (78%), Japan (79%), and South Korea (79%.). Business shares in the European countries were lower, with Germany at 69%, France at 65%, and the United Kingdom at 68%. Older data for India show a share of less than half (44% in 2015).

Over half of India’s R&D was performed by the government (52%). Government-performed R&D ranged from about 7% to 15% for the remaining top eight countries (Table 4-7). The higher education sector accounted for over 20% of R&D performance in France (21%) and the United Kingdom (24%) and for 4%–17% of R&D performance in the remaining top eight countries. At 4%, India had by far the lowest level.

For the most part, the business sector is also the predominant source of R&D funding among the top R&D-performing countries (Table 4-7); government is the second largest source. The business sector accounted for 52%–78% of R&D funding, while the government sector accounted for 15%–33% among the top eight countries (Table 4-7). (Comparable data on R&D funding sources are not presently available for India.) Funding from the rest of the world refers to funding for a country’s domestically performed R&D from businesses, universities, governments, nonprofits, and other organizations located outside of the country. Among the top R&D-performing countries, the United Kingdom is the most notable in this category, with about 16% of R&D funding coming from nondomestic sources in 2017. Foreign funding was also significant in France, Germany, and the United States (around 6%–8%), while the rest of the top countries show much lower shares for this funding source. The distributions of R&D performance and funding have been relatively stable for these countries since 2011.

Comparison of the levels and shares of overall national annual R&D performance devoted to basic research, applied research, and experimental development provides another way to analyze trends among top R&D-performing countries.

France leads the top eight R&D-performing countries in the share of total R&D expenditures on basic research (21% in 2016), although the total spent is relatively low ($13.4 billion) (Table 4-8). (The type-of-R&D data are not available for some countries, including Germany and India.) The United States spends the most on basic research ($91.5 billion in 2017), and this accounts for 17% of its total R&D expenditures. China’s basic research share is on the low side, at about 6% in 2017; nevertheless, this share still added up to about $27 billion of basic research performance that year, which was higher than France’s spending.

The United Kingdom has the leading share of R&D expenditures devoted to applied research (44% in 2016) among these countries, spending about $21 billion. Shares for the remaining countries range from 11% (China) to 41% (France), with the U.S. share nearly in the middle, at 20%. Nonetheless, in terms of overall volume, the United States dominates this category, with $108.8 billion of applied research spending in 2017. The overall volume of spending by the second- and third-ranked countries in this category are comparatively far behind: China, at $52.1 billion, and Japan, at $31.9 billion.

Regarding experimental development, China exhibits the highest share by far—84% of its R&D total in 2017, or $416.4 billion of spending in this category. For the United States, the development share that year was 63%, totaling $347.6 billion of spending. Japan and South Korea also have comparatively high shares for development, each around 64% in 2017; however, the dollar amounts of those countries’ performances were well below the levels for China and the United States.

Similar statistics on the distributions of R&D performance by type of R&D appear in previous editions of Science and Engineering Indicators (https://www.nsf.gov/statistics/seind/). The type-of-R&D shares reported by the countries have been stable over the past several years.