How does the United State’s R&D Performance Compare to the Rest of the World?

new-york-945240_640Experts agree that research and development (R&D) is the backbone of a globally competitive, knowledge-driven economy. R&D investment helps develop new products and services that drive growth, create jobs, and improve the national welfare. For decades the U.S. government and private sector have spent more than any other nation on R&D. But that advantage is eroding as other nations increase public and private R&D investments at faster rate. In light of this, how does the United States R&D performance compare to the rest of the world?

The Organisation for Economic Cooperation and Development (OECD) provides an overview of several economies R&D performance.  As detailed by OECD, global R&D performance remains highly concentrated in three geographic regions: North America, Asia, and Europe. North America (United States, Canada, Mexico) accounted for 32% ($462 billion) of worldwide R&D performance in 2011; the combination of East/Southeast and South Asia (including China, Taiwan, Japan, India, South Korea) accounted for 34% ($492 billion); and Europe, including (but not limited to) European Union countries accounted for 24% ($345 billion). The remainder, around 10%, reflects the R&D of countries in the regions of Central and South America, Central Asia, the Middle East, Australia/Oceania, and Africa.

Despite more rapid growth overseas, the United States is still a scientific powerhouse. In fact, U.S. researchers are responsible for more publications in top scientific journals than any other nation, and account for nearly half of the top 1 percent of the most cited (PDF) scientific papers. In addition, forty of the world’s top fifty research universities are in the United States. Historically, the R&D/GDP ratio in the United States has ranged from 1.4% in 1953 to well above 2.8% in 1963–67 to an all time high of 2.9% in 2009. Overall, the ratio has generally been rising since 2004.

Hence, as noted above the United States performance in R&D continues to experience sturdy growth. Moreover, tax incentives like the Research and Development tax credit are one tool to encourage investment. In our blog yesterday, we provided an overview of how the United States tax credit compared to others on offer around the globe. Check out our infographic in our previous blog to get a more complete picture of international government support for business R&D.

Swanson Reed is a specialist R&D Tax firm with a broad range of experience assisting a vast range of industries. Contact us today to learn more about the R&D Tax Credit. 

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