Investment in R&D shrinking

Among countries for which 2015 data are available, two thirds have decreased their R&D budgets in real terms and the estimated area total has dropped by 1.3%. In a number of cases, this decline may have been mitigated through growing support through R&D tax incentives, which have been increasing in relative importance over time. On the basis of leading budget data, it is expected that R&D performed in government and higher education institutions in the OECD also declined in 2015.

China reaches milestone

The most recent data on Gross Domestic Expenditures on R&D (GERD) for the OECD suggest that annual GERD grew in 2014 by 2.1% in real terms, a slower pace compared to the previous year (+2.8%). This recent growth in the OECD has been mainly driven by a steady increase in R&D performed by business (+2.8%). R&D expenditures recovered in government institutions (+1.0%) after previous fall but slightly decreased in higher education (-0.2%). As a percentage of GDP, GERD remained unchanged at 2.4%.

In China, 2014 saw R&D expenditures reaching the milestones 2% of GDP (the target set in the 2006-2010 plan for 2010). While China’s GERD continued to grow very rapidly (+9% in real terms) in 2014, this represented China’s lowest GERD growth since 1996. Korea has the world’s largest R&D intensity (4.3% in 2014) ahead of Israel (4.1%) for the second year in a row.