Global R&D spending forecast to grow by 4% in 2010, led by China and India

Columbus, OH – Global research and development (R&D) spending is expected to increase by 4.0% in 2010 to $1,156 billion, according to the Battelle-R&D Magazine 2010 Global R&D Funding Forecast.

The increase in spending mostly will be fueled by continued spending by China and India, two countries that will drive a 7.5% increase in Asian R&D. Meanwhile, United States R&D spending is expected to increase 3.3% to $401.9 billion. Europe is predicted to lag behind, by increasing spending by only 0.5%, to $268.5 billion in 2010.

The impact of US stimulus funding on total R&D in 2009 and 2010 cannot be underestimated; without it, total US R&D would have dropped below 2008 levels. Worldwide economic stimulus funding reached $1.92 trillion last year, with about 38% of that occurring in Asian countries. While having significantly positive short-term effects, the economic stimulus packages dramatically increased the debt loads of the countries implementing them and could take away from comparable R&D investments of the future, the forecast cautioned.

US Industrial R&D funding (including funds to academia and non-profit institutions) will increase 2.85% over 2009 levels of $253.1 billion, to reach $260.3 billion in 2010. The sector comprises 64.8% of all US R&D funding. Overall, industrial R&D performance will increase 2.80% to $283.0 billion in 2010, up from $275.3 billion in 2009, but still not reaching the $289.1 billion of R&D performed in 2008.

“Industrial R&D took a real hit in 2009 in both funding and performance,” said Marty Grueber, Battelle research leader and co-author of the report. “And while it’s forecast to rebound in 2010, it still won’t reach 2008 levels.”

Globally, the 2010 forecast notes a growing trend in which both the Americas (US, Canada, Mexico, Brazil, and Argentina) and Europe are falling behind the spending levels seen in some Asian countries. Even Japan, the second largest R&D spender in the world, is falling behind the level of spending by China and India.

The global recession of 2008-09 has accelerated this trend, as American and EC economies are not expected to return to their 2008 level of spending increases for several years, let alone begin to challenge the current level of spending increases by China and India.

“Even while China and India saw dampening impacts from the global recession, at no time did their growth rates actually go negative. The pace of their R&D growth just slowed, but it will heat right back up as we head into 2010,” said Grueber. “The research engines in China and India are large and getting larger and are driven by a number of factors beyond traditional economic drivers.”

The forecast includes survey results from a broad-based pool of R&D technology leaders. Energy, climate change, and healthcare are expected to be the top technology drivers of the future.

The full report is available online at: http://www.rdmag.com/tags/publications/global-r-and-d-funding-forecast.