United States

McGladreys 2010 Innovation Industry Report

Fourth Quarter 2010


U.S. still leads, but clouds on the horizon

2010 National Manufacturing and Wholesale Distribution Survey Innovation Report

Despite the sharpest financial downturn since the Great Depression, the United States remains the world’s largest economy, with nominal gross domestic product of $14.3 trillion in 2009. A significant reason why the nation maintains its top economic standing is a dynamic, inventive spirit, which has helped U.S. entrepreneurs turn innovative ideas into profitable business ventures.

This year, U.S.-based research and development (R&D) expenditures are expected to total just over $400 billion, when accounting for all academic, government and industry research programs. While that puts overall domestic investment for innovation ahead of all Asian and European countries, there are signs that U.S. dominance in this area is starting to wane.

For example, in the last decade R&D spending in emerging Asian economies has outpaced U.S. growth by at least 2-to-1, according to the Manufacturers Alliance/MAPI in Arlington, Va. According to the National Science Foundation, the annual growth of total U.S. expenditures for R&D (academia, government and industry) has averaged just over 5 percent since the mid-1990s. That is far less than the double-digit increases posted by several rising Asian nations, including China, Malaysia and Singapore.

In its 2010 Global R&D Funding Forecast, Battelle Memorial Institute, an Ohio-based nonprofit trust focused on scientific research for government and industry, projects China will surpass Japan for second place in overall global research expenditures. Based on current growth trends, the report also projects the BRIC nations (Brazil, Russia, India and China) will dominate future R&D growth, with the potential to match U.S. R&D spending by 2022.