R&D Investment Alone Doesn’t Crea
R&D Investment Alone Doesn’t Create Innovation
Industrial R&D in the United States accounts for the sourc- ing of approximately two-thirds ($400 billion) of all U.S. R&D funding and just slightly less than that ($376 billion)
for the actual R&D performance as shown in the Source-Performer matrix on page 7 of this report. Government,
academic and non-profit funding accounts for the remaining
sources of R&D monies.
On a global perspective, industrial sourcing for a country’s
R&D varies from 30% (Russia) to 75% (South Korea and
Japan), with the majority of countries surveyed averaging about
50% and with government sourcing of R&D funding making
up the other 50%. There is a relatively wide disparity for these
industrial funding sources, even in similar geographic regions.
Industrial R&D is often related to a country’s or an organization’s ability to innovate. However, increasing the amount of
monies invested in industrial R&D does not automatically raise
the innovation level.
To create new innovations, countries need continued R&D
investments, an established science and technology infrastructure as well as the social desire. The Global Innovation Index
(GII) 2018, which is co-published by Yale University, the World
Intellectual Property Organization (WIPO) and INSEAD (a
graduate business school based in France with campuses in
Europe, Asia and the Middle East), ranks countries according
to their innovation.
Published annually since 2007, the 2018 version of the GII
specifically focuses on innovation in energy-related areas. The
report states that continued R&D investments are needed to
create the innovations that will drive the future growth needed
to avert an environmental disaster (i.e., global warming from
the over-use of fossil fuels) and supply future energy needs.
Richer economies, with more diverse industry and export
portfolios, are more likely to score high in innovation, according to the GII.
Absolute innovation and R&D performance rely primarily
on large high-income economies, which is more related to
the rankings in R&D Magazine’s Global R&D Funding Fore-
cast than the rankings in the GII. The data inherent in the
large high-income economies are the number of researchers,
R&D expenditures, patents (by origin) and scientific and
China leads the U.S. in the number of researchers (2015) with
1.6 million compared to 1.4 million for the U.S. The UK is a
distant third with about 240,000 researchers. The U.S. continues
to lead China (for the present) in the amount of R&D expenditures as shown on the table on page 5 of this report.
China also leads the U.S. in the number of patents (by ori-
gin) with 1.2 million patent applications compared to 300,000
patent applications in the U.S. And again, China leads the U.S.
in the number of scientific and technical publications with
about 270,000 in 2017 compared to 220,000 in the U.S., and
the U.K. again a distant third with about 70,000 publications.
Harvard Business School’s Professor of Management
Practice Willy Shih has stated that the U.S. has lost its “
industrial commons” or indispensable production skills and
capabilities. Shih says that the U.S. has lost the underlying
production capacity to make many products from flat panel
displays, cell phones and laptops—products now almost
exclusively made in Asia in centers established by U.S.-based
companies with U.S.-developed technologies. Offshoring
practices that originally were done to save startup and short-term production costs evolved into policies that included the
contracting of design and product development activities
which has continued.
A recent study on National Competitiveness by MForesight
(Alliance for Manufacturing Foresight) cites four approaches
that countries (not just the U.S.) can make to regain their manufacturing and production capabilities which will also result in
greater innovation proficiencies. These approaches include:
1) Don’t fear picking winners (invest in translational
2) Invest in hardware startups and scale-ups.
3) Respect and support small and medium enterprises
4) Support students from an early age in manufacturing
technologies and policies.
Top Innovators 2018
1. Switzerland 68.40
2. Netherlands 63.32
3. Sweden 63.08
4. United Kingdom 60.13
5. Singapore 59.83
6. United States 59.81
7. Finland 59.63
8. Denmark 58.39
9. Germany 58.03
10. Ireland 57.19
Source: GII 2018
To create new innovations, countries
need continued R&D investments,
an established science and
technology infrastructure as well
as the social desire.