Government-Financed R&D Declining; Private Sector, Tax Incentives Rise, OECD Finds

A new set of science and technology indicators shows that the business sector is expected to remain the driving force behind research and development growth, according to the Organisation for Economic Co-operation and Development (OECD). The OECD released its main science and technology indicators today and found that government-financed research and development expenditures have been declining for some years.

The Main Science and Technology Indicators (MSTI) database “provides a set of indicators that reflect the level and structure of efforts in the field of science and technology undertaken from 1981 onwards by OECD Member countries and seven non-member economies: Argentina, China, Romania, Russian Federation, Singapore, South Africa, Chinese Taipei [Taiwan],” according to the OECD website. The OECD consists of 35 wealthier countries.

According to the OECD, the data shows that government-financed research and development (R&D) has declined by 2.4 percent since 2010 (in real purchasing power parity), “when it accounted for 31% of total OECD R&D expenditures, falling to 27% by 2014.”

Meanwhile, in 2015, according to an OECD release, businesses increased their R&D spending by 2.5 percent, “carrying out 68.8% of all the OECD-area R&D that year.”

In 2016, notes the release, 29 OECD countries and some emerging economies gave preferential tax treatment to business R&D spending. France, Russia and Korea provided the most support as a share of GDP, and the United States, France and China provided the most tax support by volume, it said.

The release also said China continues “to inch towards” the OECD average of total R&D spending and Gross Domestic Expenditure on R&D. According to the release, the US spends the most on R&D and accounts for 40 percent of OECD R&D spending. In volume terms, it said, “China’s R&D spending was 81% of the US level in 2015 and 9% above the EU level.”