Steve Jobs famously said: “Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.” Apple has consistently done more with fewer research R&D dollars so the secret of the global arms race in R&D is to spend efficiently.
Talking to Japanese executives at a recent international tradeshow in Tokyo I was told that despite Japan’s penchant for product design and enhancements, original technology ideas still come from the West. Furthermore China’s well-publicized cyber war campaigns to cull intellectual property and trade secrets from US corporations speaks volumes about where they really see themselves in the competitive R&D race.
That being said, the dollars spent on R&D do matter. Despite recent worldwide economic malaise both developing and established economies are continuing to increase R&D budgets and they will spend close to $2 trillion collectively in 2013.
Traditionally it has been the norm to compare countries R&D budgets but is becoming more illustrative to look at larger regions or the major competing blocs. Two measures are important: first, the overall dollar amount, and second, percentage of GDP.
The US leads the world in the overall dollar amount at $436 billion, China at $198 billion and Japan at $157 billion. Israel leads the world in percentage of GDP spent on R&D at 4.2% followed by Japan and South Korea at just above 3.5% each. The US spends about 2.7% of its GDP on R&D and China about 2%.
Looking at the blocks, Asia will lead the world by spending $514 billion or 2.8% of their GDP, followed by the Americas at $505 billion or 2.3% of their GDP, then Europe at $338 billion or 2% of GDP and finally the rest of the world at $44 billion or 1.1% of GDP.
One final point: the R&D scoreboard shows that as far as private R&D investment is concerned 1,500 companies worldwide represent 90% of the total spent. We will break down R&D budgets by industry sector and company in coming posts so stay tuned!