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Monday, January 18, 2010

Asia Challenges U.S. Innovation Leadership, New Report Shows

Originally published at LeadEnergy

A major report released last week by the National Science Board concludes that U.S. global leadership in science and technology is declining as foreign nations – especially China and other Asian countries – rapidly develop their national innovation systems.

“U.S. dominance has eroded significantly… The data begin to tell a worrisome story,” stated Kei Koizumi, assistant director for federal research and development in President Obama’s Office of Science and Technology Policy (OSTP). The Director of the National Science Foundation, Arden Bement, noted that "China is achieving a dramatic amount of synergy by increasing its investment in science and engineering education, in research, and in infrastructure, which is attracting scientists from all over the world.”

The report, “Science and Engineering Indicators 2010,” is published every two years by the National Science Board, a 25-member expert council that advises the National Science Foundation, President, and Congress on science and technology policy, education, and research. Koizumi called it a “State of the Union on science, technology, engineering, and mathematics.”

This “state of the union” for science and technology comes amidst growing concern that Asia is out-competing the U.S. in the burgeoning global clean-tech sector. According to the “Rising Tigers, Sleeping Giant” report I recently co-authored with the Breakthrough Institute and Information Technology & Innovation Foundation, China, Japan, and South Korea have already surpassed the U.S. in the production of nearly all clean energy technologies, and these governments are expected to out-invest the U.S. three-to-one in this industry over the next five years. As U.S. Secretary of Energy Steven Chu recently said, "The world is passing us by. We are falling behind in the clean energy race."

“Asia’s rapid ascent as a major world science and technology (S&T) center—beyond Japan—is driven by developments in China and several other Asian economies,” states the introduction to the report. “Governments [in Asia] have implemented a host of policies to boost S&T capabilities as a means to ensuring their economies’ competitive edge… the United States continues to maintain a position of leadership but has experienced a gradual erosion of its position in many specific areas.” According to Jose-Marie Griffiths, a member of the National Science Board, "While the US is the largest R&D performing nation — representing one-third of total world investment — Asia has narrowed the gap due to the sustained annual increases by China."

Asian Nations Investing Heavily in Research & Development

U.S. investment in R&D as a ratio of total GDP has remained relatively constant since the mid-1980s, at around 2.7%, with the federal share of total R&D consistently declining. In contrast, Asian nations have rapidly expanded their R&D to GDP ratio. Japan and South Korea have outstripped the U.S. with ratios around 3.5%, and China doubled its ratio from 0.6% in 1996 to 1.5% in 2007, even while its GDP grew around 12% annually. China’s investments in R&D grew by over 20% annually between 1996 and 2007, compared to less than 6% annual growth in the United States. Asia’s share of global R&D increased from 24% to 31% over this period, while North America declined from 40% to 35%.

Key R&D graphs (click to enlarge in new window):

Asia Expanding Researchers and High-Tech Education

In terms of total researchers, the U.S. and the E.U. experienced moderate annual growth of about 3% between 1995 and 2006, while growth in the Asian region outside Japan ranged from 7-11%. China averaged nearly 9% growth annually in researchers, far outstripping any other country. Over this period the number of China’s researchers nearly tripled, from just over half a million to more than 1.4 million, boosting its global share from 13% to 25%. The U.S. also has around 1.4 million researchers, which places China at a level playing field in overall numbers (although there are questions about the quality of Chinese researchers).

For science and engineering (S&E) higher education, the report begins by emphasizing its importance as an innovation indicator: “S&E higher education provides the advanced skills needed for a competitive workforce and, particularly in the case of graduate S&E education, the research capability necessary for innovation… Higher education in S&E is important, because it produces an educated S&E workforce and an informed citizenry. It has also been receiving increased attention as an important component of U.S. economic competitiveness.”

Recognizing these trends, foreign governments are taking measure to improve their higher education systems and emphasis on S&E education. “Increasingly, governments around the world have come to regard movement toward a knowledge-based economy as key to economic progress. Realizing that this requires a well-trained workforce, they have invested in upgrading and expanding their higher education systems and broadening participation.”

The U.S. higher education system maintains critical strengths – especially U.S. research universities, which perform 56% of U.S. basic research and educate the majority of future scientists and engineers – but its position continues to decline in terms of S&E graduates. U.S. students earned only 11% of the world's 4 million S&E first university degrees (equivalent to an undergraduate degree) awarded in 2006, compared to 21% in China and 19% in the European Union. S&E degrees are only about one-third of U.S. bachelor’s degrees, compared to 63% in Japan, 53% in China, and 51% in Singapore. Only about 5% of U.S. bachelor’s degrees are in engineering, compared to 20% total in Asia and around 33% in China.

After a long period of growth, China now produces an equal or greater number of natural science and engineering (NS&E) doctoral degrees compared to the United States, rising four-fold from approximately 5,000 in 1997 to over 20,000 in 2007. “Over time,” the report states, “the United States has fallen from one of the top countries in terms of its ratio of NS&E degrees to the college-age population to near the bottom of the 23 countries for which data are available.”

A large portion of these degrees in the United States are awarded to foreign students. International students received 24% of U.S. S&E master’s degrees, 33% of S&E doctoral degrees, and 4% of S&E bachelor’s degrees in 2007. From 2003 to 2007, the shares of the foreign-born among master’s degree and doctorate holders rose 2 percentage points each. Twenty-five percent of all college-educated U.S. workers in S&E occupations in 2003 were foreign born, as were 40% of doctorate holders in S&E occupations. About half of all foreign-born scientists and engineers are from Asia, and more than a third of U.S.-resident doctorate holders come from China (22%) and India (14%).

Key researcher and education graphs (click to enlarge in new window):

U.S. and Global Energy R&D Remains Small

Despite recent efforts by the Obama administration, energy remains a small R&D priority for the U.S. federal government compared to other areas such as health, space, and defense, continuing a long-term trend since the early 1980s. The American Recovery and Reinvestment Act strengthened clean energy R&D, but its funding will expire after 2010. A relatively small portion of U.S. energy R&D goes toward renewable energy sources, and this trend is reflected internationally. Total global investment in energy R&D grew from approximately $8.5 billion in 1997 to $11 billion in 2007, with the portion for renewable energy remaining around 10%. A large and growing portion of U.S. energy experts recommend U.S. federal investment of $15-30 billion per year in energy R&D.

Key energy R&D graphs: (click to enlarge in new window)


The report is alarming, but it is not all bad news for the United States. It presents solid evidence that, at least in the near-term, we remain the world’s innovation leader, from our public and private investments in research and development, to the strength of our higher education institutions, to our production of patents, knowledge-intensive services, and high-technology manufacturing. For the clean-tech industry in particular, this suggests that stronger public policies to leverage U.S. innovation capacities – including $15-30 billion per year in federal clean energy R&D, a national energy education initiative, investments in enabling energy infrastructure, and other policies to drive innovation – could lead to rapid improvements in U.S. competitiveness.

However, the overall trend is clear: Asian nations are quickly ascending as science and technology leaders, and our position will continue to decline without significant efforts to maintain and strengthen the U.S. innovation system, with major implications for our economic competitiveness, national security, and international leadership. This article provided an overview of key "innovation input" indicators, including R&D, higher education, and researchers. For a more comprehensive list of indicators – including outputs such as patents and research articles – see the full report here.

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