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laboration on major scientific challenges. In the commercial sector,
innovation capabilities tend to follow the wealth created by manufacturing, catalyzed by accelerating product development cycles
and sometimes by regulation. China’s Huawei, for example, now
competes for telecommunication contracts in Europe and the U.S.
Its related attempts to acquire U.S. telecom companies have been
largely rebuffed by federal regulators, providing incentive to develop
indigenous product development capabilities. Moreover, China
is designing and building state-of-the-art next-generation nuclear
power plants, a space station, high-speed rail systems, military and
commercial aircraft and other major projects—many of which draw
on global science and technology assets.
R&D capabilities also follow markets for technology-enabled
products. Automobiles are a good example, since the major manufacturers have R&D operations around the world. Japan’s Toyota
is holding its position as the world’s largest car maker, with leading market shares for advanced hybrid and electric vehicles (EV).
Toyota’s research effort in this field, along with that of Ford and
others, builds on earlier publicly funded basic research in batter-
ies and power electronics, while government research now turns to
areas like grid accommodation of fueling demand for EVs. EVs
are a good illustration of a globally distributed, multi-decade R&D
effort with domains of coordinated collaboration, complemented
by independent efforts that leverage loosely coupled global con-
nectivity through publications, licensing, recruitment of experienced
scientists and engineers and other forms of knowledge transfer.
Momentum in EVs is shifting from research to development, and
the prospects seem good for realization of the original policy goals
in energy security and environmental protection that stimulated early
Linkage Between R&D and National Priorities
Tepid economic recovery in Europe and the U.S. suggests significant
increases in R&D investments are unlikely in the next several years.
Emphasis on public deficit and debt reduction will continue, with
unpredictable short-term effects on discretionary research investments. While the historic stability of research intensity in the U.S.
and Europe suggests dramatic declines in national R&D investments
are not likely, these headwinds mean that the west will continue to
lag the accelerated level of R&D spending in Asia.
Governments around the world, and particularly in Asia, recognize
the importance of investing in the building blocks of innovation-based economies. All countries seek economic growth, often amplified by the need for job creation to match rising populations: energy,
food and water demands. Strategies vary. In the U.S., the government tends to seed innovation with investment in basic research and
some tax and policy incentives, but the free market decides which
technology is deployed at large scale. China, on the other hand, has
fixed a macroeconomic goal of spending 2 .2% of GDP on research
by 2015, toward becoming an innovation-based economy by 2020.
Such a command approach can sometimes accelerate the translation from research to development. This is illustrated by the large
proportion of development investment in China versus funding for
basic and applied research, and is manifested (for example) in the
large-scale deployment of clean energy and advanced grid technologies in China. But this approach can also lead to expensive failures,
and economists have warned that sustained large investments in
innovation must be paired with investments in social and environ-mental-protection infrastructures.
Even if the historic stability
of the U.S. and European
commitment to research
intensity (i.e., spending as
a percent of GDP) continues, growth in China’s
economy is likely to propel
it to the top position in
absolute R&D spending by
the early 2020s.
for R&D Expenditures
and R&D Magazine
China places more emphasis on development, less on basic research S
Different Priorities Among Research Leaders