Urenio Watch Watch: Innovation Measurement

OECD Science, Technology and Industry Outlook 2008

Recent data on the globalisation of innovation activities show a series of favourable trends.
“OECD investment in R&D climbed to USD 818 billion in 2006, up from USD 468 billion in 1996. Gross domestic expenditure on R&D (GERD) grew by 4.6% annually (in real terms) between 1996 and 2001, but growth slowed to less than 2.5% a year between 2001 and 2006. Future investment will depend in part on the longer-term impacts of financial market instability on business spending.

However, the global distribution of R&D is changing. China’ s GERD reached USD 86.8 billion in 2006 after expanding at around 19% annually in real terms from 2001 to 2006. Investment in R&D in South Africa increased from USD 1.6 billion in 1997 to USD 3.7 billion in 2005. Russia’ s climbed from USD 9 billion in 1996 to USD 20 billion in 2006, and India’ s reached USD 23.7 billion in 2004. As a result, non-OECD economies account for a sharply growing share of the world’ s R&D ‘“ 18.4% in 2005, up from 11.7% in 1996. The growing weight of these countries in the global economy accounts for part of this shift, but so does the growing intensity of investment in R&D relative to GDP, notably in China. In 2005, the global shares of total R&D expenditure in the three main OECD regions were around 35% for the United States, 24% for the EU27 and 14% for Japan. While Japan has maintained its global share since 2000, the United States fell by more than 3 percentage points owing to very slow growth in business expenditure on R&D (BERD), and the EU’ s share fell by 2 percentage points.

Businesses account for the majority of R&D performed in most OECD countries. This investment has grown over the past decade, although the pace of growth has slowed markedly since 2001. In the EU27, BERD intensity increased only marginally between 1996 and 2006, to 1.11% of GDP. This suggests that the EU will not be able to meet its BERD target of 2% of GDP by 2010. In the United States, business R&D intensity reached 1.84% of GDP in 2006, down from 2.05% in 2000, whereas in Japan it reached a new high of 2.62%. In China, the BERD-to-GDP ratio has increased rapidly, particularly since 2000, and has now almost caught up with the intensity of the EU27, with 1.02% of GDP by 2006.”

Source: OECD Science, Technology and Industry Outlook 2008