In a new data brief released earlier this month, the Organization for Economic Cooperation and Development (OECD) published updated R&D statistics detailing the stabilizing of R&D intensity in 2015. R&D intensity is defined as R&D expenditure as a percentage of a country’s GDP. In OECD countries in 2015, R&D intensity plateaued at 2.4% and leveled at 1.95% in the EU area, driven largely by EU countries that invest the most in R&D (Germany with 2.9%, France with 2.2% and the UK with 1.7%). The leader in R&D intensity in 2013 and 2014 was Korea, but in 2015, Israel overtook Korea with a narrow lead in R&D intensity, at 4.25% compared to Korea’s 4.23%. R&D intensity in the US increased nominally from 2.76% to 2.79% in 2015. China’s R&D intensity also slightly increased in 2015, rising from 2.02% to 2.1%. Japan’s R&D intensity declined from 3.59% to 3.49%.

In OECD countries, real business expenditure on R&D grew 2.3% in 2015, which is congruent with GDP increases. Government R&D expenditure increased 1.8%, with higher education institutes comprising 18% of R&D in OECD countries and government representing 11%. However, in real, purchasing power parity terms, government-financed R&D has dropped 2.4% since 2010, hitting a total of 27% in 2014 (or a total of 31% of total OECD R&D expenditure). The OECD’s 2015 data on government-based R&D expenditure is mixed, indicating slight growth in OECD countries but declines in the US and Japan, two countries that, combined, represented 54% of OECD R&D expenditures in 2014 and 47% of government R&D expenditure in 2015.

In terms of government budgets or allocations of R&D in OECD countries, in 2015, these increased by 0.7%; accounting for inflation, however, government R&D budgets declined 0.2% in real terms. In 2016, data were also mixed, with the US data indicating growth in R&D budgets, but Japanese data indicating a decline and other OECD countries’ data flat. In 9 out of the 16 countries for which OECD data are available, government-funded R&D budgets and allocations have declined. In 2014, an estimated 6.4% of business R&D came directly from government funds.

The data brief mentions the importance of tax incentives within the last few years, with 29 out of 35 OECD countries and other non-OECD members giving preferential tax rates for business R&D expenditures. Since 2006, government-supported tax relief has jumped from 37% to 45% in 2014 within OECD countries.

Source: OECD