The Great Global R&D Divide

By Gunnar Westholm, Bertrand Tchatchoua and Peter Tindemans

Many of the challenges countries and regions of the world are facing in such areas as sustainable development, economic growth, health care, education and agricultural production are increasingly subsumed to a common denominator: developing knowledge societies and economies. While the process towards knowledge societies is driven to a large extent by the industrialized countries, it is now widely recognized that "catching up" depends crucially on each country acquiring, developing, managing and properly applying appropriate knowledge.

There are huge discrepancies between countries and regions in their approaches to building a knowledge society. The process differs greatly for instance between the rapidly growing economies of China, Brazil and the newly industrialized Asian economies (the "dragons"), on the one hand, and many resource-based economies, on the other.

Knowledge underpinning development is not equal to scientific knowledge. But no country will be able to achieve and durably maintain prosperity and a high quality of life without using the results of science and ensuring a well-educated population. Similarly, equitable and sustainable development can only be achieved if all countries -- and men and women everywhere -- share in developing and using science.

Global Investment In R&D

The matter of measuring research and development (R&D) is complicated. But even assessing a few straightforward indicators of input to research and development is quite revealing.

In 2001, the United Nations Educational, Scientific and Cultural Organization (UNESCO) Institute for Statistics published a report, "The State of Science and Technology in the World 1996‚1997." An R&D survey conducted since then of UNESCO's member states, combined with data taken from other intergovernmental organizations, has enabled the Institute to update these figures to 2000.

Global gross expenditure on R&D (GERD) rose to an estimated PPP$746 billion in 2000, up from PPP$547billion in 1997. [PPP$ stands for dollars measured in terms of purchasing parity power. PPP exchange rates are used in international comparisons of standard of living. The idea is not just to use currency exchange rates, but to look at what things actually cost. If a hamburger costs $5 in the United States, but only $2 for an equivalent product in Kenya, the PPP will take this differential into account. Generally, the PPP measure raises the amount of expenditures in poor countries.]

The volume of R&D investment has increased in absolute terms nearly everywhere -- if at varying rates -- and in any event much faster than the stock of full-time equivalent researchers, which is up by only 1.7 percent to just under 5.3 million from 1997 to 2000.

There is some evidence that the R&D gap between the developing world and industrialized countries is closing. Earlier UNESCO estimates had suggested that, in 1985, the developing countries represented as little as 12 percent of total researchers. By 1997, this figure had climbed to 28 percent, although it has stagnated since. Other gaps seem to be shrinking: between 1997 and 2000, the share of GDP of the developing countries increased by some 3 percent to approximately 42 percent, and their share in world GERD rose from just under 16 percent to 20 percent. This compares with a population size of 79 percent of the world total in 2000, as opposed to slightly less than 78 percent in 1997 and 76 percent in 1985.

The very notions of "developed" and "developing" are increasingly blurring the true picture, however. The positive developments are to a large extent concentrated in a few regions or even a few countries. And grouping some of the very low-income countries in the Commonwealth of Independent States (CIS) as "developed" when Singapore, the Republic of Korea and the like are still "developing" shows that statistically meaningful conclusions are better drawn at a more disaggregated level.

What one can say is that the share of the traditional "big spenders" on R&D, namely Europe, North America and Japan (the former Union of Soviet Socialist Republics (USSR) having slipped from this group) is diminishing as the circle of countries contributing considerably -- and increasingly so -- to GERD and R&D personnel widens.

R&D Investment Trends

Although there was a decline in the share of global GERD between 1997 and 2000 in North America (down from 38.2 percent to 37.7 percent), the European Union (down from 25.2 percent to 23.4 percent) and Japan (down from 15.2 percent to 13.2 percent), the triad still dominates global spending on R&D. The only region to see its participation in world GERD increase is Asia; its share rose from 27.9 percent in 1997 to 30.5 percent three years later, a result all the more impressive in light of the downturn in Japan's own world share of GERD.

About Japan, however, it is important to note that, even though growth in expenditure on R&D leveled off, it still progressed at a faster pace than the country's stagnant economy.

The rise in Asia's participation in GERD is explained by significant growth in the world shares of China (6.7 percent as compared to 3.9 percent in 1997) and the "dragons" (from 4.9 percent to 6.5 percent).

In the case of China, the trend is accompanied by sustained strong economic growth, with GDP increasing from PPP$3543 billion in 1997 to PPP$5029 billion only three years later. In comparison, GDP rose in the United States over the same period from PPP$7511 billion to PPP$8868 billion. The leap in GERD for China is equally spectacular: from PPP$21 billion to PPP$50 billion. With PPP$48 billion, the "dragons" have now fallen slightly behind China in terms of R&D investment but this amount still represents a significant increase from just under PPP$27 billion in 1997. The "dragon" countries have managed to withstand the financial crisis of the late 1990s and chosen to increase investment in R&D massively, despite limited growth in GDP (from PPP$2323 billion to PPP$2866 billion).

India's world share of GERD actually dropped slightly between 1997 and 2000, from 2.0 percent to 1.6 percent. National investment in R&D (up from just under PPP$11 billion to PPP$12 billion) has failed to keep pace with healthy growth in GDP (from PPP$1530 billion to PPP$2242 billion). However, this trend may be reversed in the next few years. The government of India has since bolstered research spending and plans further increases.

Within Europe, the Russian Federation's share is up to 1.4 percent from 1.0 percent and Central and Eastern Europe has progressed from 1.0 percent to 1.2 percent. The accession of 10 countries to the European Union in 2004, including Poland and Hungary, will naturally boost the European Union's world share.

Latin America and the Caribbean, Africa and Oceania still only make a modest contribution to world GERD, and their roles appear in decline (from 3.1 percent to 2.9 percent in Latin America, from 1.3 percent to 1.1 percent in Oceania and from 0.7 to 0.6 percent in Africa). In the Latin American and Caribbean group, about half the estimated R&D effort may be attributed to Brazil; for its part, South Africa accounts for broadly the same share as the remainder of the entire African continent.

Two groupings of countries span two continents. The Arab states stretch over parts of Africa and Asia, and the CIS -- the former USSR -- over Europe and Asia. Whereas the Arab states' already small contribution to world GERD has declined in relative terms from 0.4 percent to 0.2 percent, a small expansion is observed in the CIS, from 1.5 percent to 1.8 percent, essentially underpinned by the recovery of the Russian Federation after a decade of absolute decline or, at best, stagnation. Nearly 85 percent of overall Arab GERD was performed in the following seven countries in the late 1990s: Egypt, Jordan, Kuwait, Morocco, Saudi Arabia, Syria and Tunisia, with the 15 remaining states of the Arab League together accounting for the remainder.

Several of the most R&D-intensive Arab states are geographically situated on the African continent and their R&D is strongly supported by public finance. In the past 10 to 15 years, R&D resources have seriously dropped in most African countries and what little R&D is being performed there is essentially project-financed from abroad by international agencies, NGOs and, in exceptional cases, by industrial corporations.

In 1997, nearly 85 percent of all R&D performed around the world could be credited to the member countries of the OECD (the Organization for Economic Cooperation and Development, the grouping of rich, industrialized countries). This share had dropped to around 80 percent by 2000, a decline explained by the retreating shares of North America, the European Union and Japan.

Country Comparisons

GERD as a percentage of GDP is the most commonly used indicator for international comparisons and for defining national policies for science and technology. High-income countries usually spend considerably more than 1.5 percent of GDP on R&D and even up to 3 percent in some cases, a figure which is now the European Union's policy target for 2010. Still higher ratios are observed in a number of much smaller economies, such as Israel (4.4 percent) and Sweden (3.8 percent). India has set itself a target which would place it among the nations of the world which devote the greatest share of GDP to R&D: it plans to hoist research spending to 2 percent of GDP by 2007, according to a national policy document published in 2003. Indicative of India's commitment, GERD had already climbed to 1.08 percent of GDP by 2002.

In 2000, approximately 1.7 percent of world GDP was devoted to R&D, compared to 1.6 percent in 1997. The all-OECD ratio for 2000 was around 2.3 percent and that of the European Union approximately 1.9 percent, compared to 2.2 percent and 1.8 percent respectively in the previous analysis. Within the group of OECD countries, the median GERD/GDP ratio hovered around 1.8 percent, approximately the level of Canada.

The great majority of countries around the world, however, still spend only a tiny fraction of GDP on R&D. For most of these, the GERD/GDP ratio was even smaller in 2000 than in 1997. There are winds of change in Africa, however, where governments recently reaffirmed their determination to raise spending on R&D to 1 percent of GDP.

Spending on R&D in Latin America and the Caribbean broadly represented some 0.6 percent of the region's GDP in 2000, an increase of one decimal point over the previous study, with a median intensity of around 0.27 percent (the level of Costa Rica). Brazil reported the highest GERD/GDP ratio for Latin America (just under 0.9 percent in 1999), closely followed by Cuba (0.8 percent). The figure for Mexico, the region's only OECD member, was 0.4 percent in 1999.

Be it north or south of the Sahara, Africa remains by far the least R&D-intensive of the continents. Sub-Saharan Africa allocates only 0.3 percent of its resources to R&D, the most R&D-oriented country being South Africa (0.7 percent).

The Arab states (in Africa and Asia combined) devote only 0.2 percent of their resources to R&D. This low figure merits a more detailed look to ascertain to what extent the overall Arab GDP is inflated by the values of important petroleum production figures (although not all the states concerned are oil producers). In point of fact, however, the presence of researchers from the Arab region, albeit negligible by international standards, is still about three times higher (0.6 percent) than the region's share of world GERD.

Regional ratios are, of course, directly biased by the weight of the major countries (Brazil, South Africa, China, Japan, etc.), which can cloak the reality of other countries in the same region. counting researchers

There were some 876 research scientists and engineers per million inhabitants worldwide in 2000, down from 985 in 1997.

This overall decline is explained by the rapid population growth in the developing countries, for which the number of research scientists and engineers fell from 347 to 313 per million between 1997 and 2000. The indicator remains unchanged in the developed regions over the same period. There is a very low presence of research scientists and engineers in the Arab States and, above all, in Africa.

Japan is the most R&D-intensive of the major players in R&D, outstripping both the USA and the Russian Federation. Again, there are large disparities both between and within regions.

No Turning Back

No single country has succeeded in achieving and sustaining high levels of prosperity and comfort without investing in science and technology and exploiting them. The effort therefore must be sustained. More often than not, however, R&D trends are only too indicative of the snail's pace at which the world is progressing towards equitable global development.

Gunnar Westholm is a consultant with UNESCO (the United Nations Educational, Scientific and Cultural Organization). Bertrand Tchatchoua is a statistician with the UNESCO Institute of Statistics. Peter Tindemans is a science policy analyst and former OECD Megascience Forum chair.. This article first appeared in World of Science, published by UNESCO, in the magazine’s January-March 2004 issue.