Allocation of R&D: An Analysis

Higher Education Sector
Research and
Development
Outline
1. Overview of Global R&D
2. Higher Education R&D Overview
3. Higher Education R&Ds impact on
innovation
4. Country Examples
R&D Overview
What is Research and
Development?
R&D, along with other social, economic, and
technological factors, creates new knowledge
and contributes to innovation and the
introduction of new goods, services, processes,
and managerial practices.
4

Suppliers and users of R&D include
businesses, educational institutions, not-for-
profit research organizations, and
governments.
4
1
National Science Foundation- International Comparison
2
European Commission
3
United Nations Educational, Scientific and Cultural Organization
4
OECD- Science and Innovation
5
The Information Technology & Innovation Foundation
6
World Bank

R&D performance is concentrated in a
few high-income countries and regions

Worldwide R&D expenditures in 2007 totaled an estimated $1,107
billion (USD).
1

The top two countries account for 47% of the global R&D total,
whereas the top five countries represent about 66%
1
United States- 33% of the current global R&D total
Japan-13%
China- 9%
Germany- 6%
France- 4%

Four-fifths of the world's R&D is concentrated in just 10 countries.
1
1
2
European Commission
3
4
5
6
World Bank

R&D Expenditures have seen strong
consistent growth over the past decade
For the OECD, real growth
in R&D expenditures has
expanded on average at a
rate of 3.6% annually over
the past 10 years.
1

For EU-27 nations, it has
also been growing in real
dollars over the past 10
years at an average annual
rate of 3.3%.
1
1
2
European Commission
3
4
5
6
World Bank

Singapores R&D intensity is below
the OECD Average
R&D intensity (R&D expenditure as a percentage of GDP) is used as an
indicator of an economy's relative degree of investment in generating
new knowledge.
4
The OECD average stands at 2.29%, while Singapore is at 2.09%
1
2
European Commission
3
4
5
6
World Bank

Research Intensity by Country
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GERD/GDP
Higher Education R&D
Higher Education Research and
Development
Higher Education Expenditure on R&D (HERD)
is the gross R&D expenditure in the higher
education sector:
4

All universities, colleges of technology and other
institutions of post-secondary education
All research institutes, experimental stations and
clinics operating under the direct control of or
administered by or associated with higher
education institutions.
1
2
European Commission
3
4
5
6
World Bank

Singapore has high Higher Education
Expenditures in R&D
Higher Education Expenditure on R&D (HERD) as a percentage of GDP is
the indicator used to determine an economy's relative degree of investment
in generating new knowledge in the Higher Education Sector.
4

Singapores HERD stands at 0.6% while the OECD average is 0.44%.
4
HERD/GDP by Country
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
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1
2
European Commission
3
4
5
6
World Bank

Singapore is ahead of the OECD in
Government-Funded Higher Education R&D
The OECD average of Government-Funded Research Performed in the Higher
Education Sector as a Share of GDP is .35%.
5

Singapore is well above that average, standing at .49% but only 7
th
behind strong
innovative countries such as Sweden, Switzerland and Finland.
5

1
2
European Commission
3
4
5
6
World Bank

R&D performed by Higher Education is low
on Funding from Industry in Singapore
The OECD average for Business-Funded Research Performed in the Higher Education Sector as
a Share of GDP is .032%.
5

Singapore performs poorly in this indicator at .007% of GDP, only above Portugal and the Czech
Republic.
5
1
2
European Commission
3
4
5
6
World Bank

Singapores Business Sector funds very little
research in its Universities while the Government
funds almost all of it

The share of total OECD R&D expenditure in Universities financed by
industry is 6.3%.
3

The share funded by industry in Singapore is half that at 3.1%.
3

1
2
European Commission
3
4
5
6
World Bank

Singapore saw the largest
decline in Business Funded R&D
Business funded research as a share of GDP has seen
an 62% decrease from 2000-2008 in Singapore.
5

1
2
European Commission
3
4
5
6
World Bank

Higher Education R&Ds impact on
innovation

HERD is correlated with
Innovation
There is a close positive correlation
between Higher Education R&D
Expenditures and innovation.
6

Based on several indicators:
Scientific and technical journals articles
Patents
Innovation indexes

1
2
European Commission
3
4
5
6
World Bank

Scientific Article Output
Articles per
million people in
scientific and
technical
journals has a
strong positive
correlation with
Higher
Education R&D
expenditure (%
of GDP).
6
1
2
European Commission
3
4
5
6
World Bank

Scientific Article Output
0
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1.5
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2.5
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0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
HERD/GDP
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There is the same
positive correlation with
only OECD countries
with articles per 1000
inhabitants.
6
1
2
European Commission
3
4
5
6
World Bank

Patents
There is a slightly looser correlation between HERD and patents.
6
1
2
European Commission
3
4
5
6
World Bank

Triadic Patent Families per capita
-20
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60
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140
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
HERD/GDP
SG
HERD is correlated with Innovation
Indexes
Innovation Capacity Index
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0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
HERD/GDP
HERDs correlation is especially strong with Innovation Indexes such
as the Innovation Capacity Index by Harvard Business School.
4
1
2
European Commission
3
4
5
6
World Bank

SG
Accounts for:
Innovation Infrastructure
Technical Sophistication
and Size of Scientific
Labor Force
Scientific and Technical
Achievements and
Influence
Productivity of R&D
Quality of Scientific
Research Institutions
Availability of venture
Capital for innovative
projects
Does HERD Determine
Innovation?
The indication that there is a positive correlation between
university research and innovation points to beneficial
effects of R&D carried out at the university level.
6

Investments in R&D in the Higher Education sector play a
role in strengthening an economys innovation.
6

However, HERD is only one of the many determinants of
innovative strength in an economy.
6

Countries need not have a large HERD to be successful
innovatively.
6

1
2
European Commission
3
4
5
6
World Bank

HERD is Correlated with GERD
One of the reasons why HERD is correlated with innovation
is because countries who have high Gross Expenditures on
R&D (GERD) tend to also have a high HERD
4
HERD correlation with GERD
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R
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/
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1
2
European Commission
3
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World Bank

SG
More R&D in Higher Education over
other Sectors has little effect
Having a larger proportion of the total expenditure on R&D
spend in the higher education does not affect how strong a
country is innovatively
4
HERD/GERD
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Innovative Capacity Ranking- Left to Right
1
2
European Commission
3
4
5
6
World Bank

The R&D system Structure Matters
At what level a countrys HERD should be
depends on its R&D system.
6

A country where the majority of research is
performed in universities will have a high
HERD.
6

Countries where universities are less-research
intensive will tend to have lower HERDs for
most of the research will be preformed by
Businesses or Public Research Institutes
(PRIs).
6

1
2
European Commission
3
4
5
6
World Bank

Higher Education
R&D-Country Profiles
United States
Key Stats
USA OECD
GERD/GDP 2.9% 2.29%
HERD/GDP 0.39% .44%
HERD/GERD 13% 19%
Innovation
capacity index
rank
1 -
1
2
European Commission
3
4
5
6
World Bank

The United States is the most
innovative Country
The United States is by far the largest
R&D performer, accounting for about 31%
of the global total.
1

American enterprises accounted for nearly
a third of total revenue for the 250 biggest
ICT companies in the world.
1

The United States accounted for a third of
the total OECD population with higher
education, while its universities top the
world rankings.
3

1
2
European Commission
3
4
5
6
World Bank

USA R&D System
1
2
European Commission
3
4
5
6
World Bank

Public Performers of R&D
5

Universities and Colleges

Federal Agencies

Agency intramural research
laboratories

Federally funded research
and development centers
(FFRDCs)
Public Funders of R&D
5
National Institutes of Health
National Science Foundation
Department of Defense
National Aeronautics and
Space Administration
Department of Energy
Department of Agriculture

Private R&D crowds out
Higher Education R&D
United States performers of R&D
Business
Enterprise, 70.32
Higher Education
Sector, 13.54
Government
Sector, 11.73
Non-Profit Sector,
4.4
OECD Average
Business
Enterprise, 67.32
Higher Education
Sector, 18.16
Government
Sector, 11.88
Non-Profit Sector,
2.64
The Business Enterprise Sector performs more R&D while the Higher
Education Sector performs less than the OECD Average.
4
1
2
European Commission
3
4
5
6
World Bank

USAs HERD has a small impact on
Scientific output
170,000
180,000
190,000
200,000
210,000
220,000
230,000
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R
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/
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P
S&E Articles
HERD
There is a small relation between the rises in HERD and S&E
Articles.
4
1
2
European Commission
3
4
5
6
World Bank

Americas Innovative Strength
is not determined by its HERD
Despite the its lower than average HERD/GDP,
the United States is still the most innovative
country in the world.
6

It has large expenditures in business R&D and
invests the most by far in R&D in absolute
terms.
6

1
2
European Commission
3
4
5
6
World Bank

Sweden
1
The Swedish Research Council
2
Statistics Sweden
3
OECD- Science and Innovation Country Notes
4
European Commission- Country Profile
5
OECD- STI Outlook 2012 Sweden
6
Center for Higher Education Policy Studies- Higher Education in Sweden
Key Stats
Sweden OECD
GERD/GDP 3.4% 2.29%
HERD/GDP 0.9% .44%
HERD/GERD 26% 19%
Innovation
capacity index
rank
8 -
1
2
European Commission
3
4
5
6
World Bank

Sweden a top R&D performer
Sweden is among the nations worldwide that
devote the most money to research and
development (R&D) in relation to gross domestic
product (GDP).
1

Sweden also has the largest Higher Education
R&D spending in the world.
1

1
2
Statistics Sweden
3
4
5
6
Structure of the research
system
1
2
Statistics Sweden
3
4
5
6
5

Universities and Colleges

RISE Research Institutes of
Sweden

5
Swedish Research
Council (VR),
VINNOVA (Swedish
Governmental Agency for
Innovation Systems)
The Swedish Council for
Working Life and Social
Science (FAS)
The Swedish Council for
Environment, Agricultural
Sciences and Spatial Planning
(FORMAS)

Higher Education R&D makes up
almost all of Swedens Public R&D
By far the greatest share of publicly funded research in Sweden is conducted in HEIs.
1

Research institutes account for only a small share, which distinguishes Sweden by
international comparison.
1

Sweden performers of R&D
Business
Enterprise, 68.75
Higher Education
Sector, 26.35
Government
Sector, 4.87
Non-Profit Sector,
0.03
1
2
Statistics Sweden
3
4
5
6
OECD Average
Business
Enterprise, 67.32
Higher Education
Sector, 18.16
Government
Sector, 11.88
Non-Profit Sector,
2.64
Increases in HERD have translated
into increases in Scientific Output
1500
1700
1900
2100
2300
2500
2700
2900
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HERD
Technology
Balance of
Payments:
Receipts
Swedens Receipts for transfers of technology (licenses, patents, know-how and
research, technical assistance) has risen with increases in HERD over the last 20
years.
4
1
2
Statistics Sweden
3
4
5
6
Higher Education R&D Expenditures are high in
Sweden due to be structure of its R&D System
Swedens HERD is the highest in the world due to the
lack of major Public Research of Institutes.
4

The Higher Education Sectors expenditure in R&D plays
a major role in strengthening Swedens innovative
capabilities.
4

When the Government increases its appropriations to
investments in R&D, almost all of it goes to the Higher
Education Sector raising HERD while raising GERD
overall.
4
1
2
Statistics Sweden
3
4
5
6
Singapore
Key Stats
Singapore OECD
GERD/GDP 2.09% 2.29%
HERD/GDP 0.6% .44%
HERD/GERD 29% 19%
Innovation
capacity index
rank
13 -
1
2
European Commission
3
4
5
A*STAR National Survey
6
World Bank

Singapore R&D system
5
Agency for Science,
Technology and Research
(A*STAR) Research
Entities

Universities and
Polytechnics

Healthcare Institutions

DSO National Laboratories

5
National Research
Foundation
Agency for Science,
Technology and Research
National Medical Research
Council
Academic Research
Council
Economic Development
Board

1
2
European Commission
3
4
5
6
World Bank

Singapores HERD compensates
for its low Business R&D
Singapore Expenditures of R&D
Business
Enterprise
61%
Higher Education
Sector
29%
Government Sector
10%
OECD Average
Business
Enterprise, 67.32
Higher Education
Sector, 18.16
Government
Sector, 11.88
Non-Profit Sector,
2.64
Singapores HERD is significantly higher than the OECD average because
more R&D is performed in the Higher Education Sectors while businesses
perform much less.
4
1
2
European Commission
3
4
5
6
World Bank

Scientific Output has risen and fallen
with HERD
Singapore- HERD and Patents Filed Trends
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
1990 1995 2000 2005 2010 2015
Year
H
E
R
D
/
G
D
P
0
100
200
300
400
500
600
700
T
o
t
a
l

P
a
t
e
n
t
s

F
i
l
e
d
HERD and Innovation Indicators have moved together since
Singapore begun investing in R&D.
4
1
2
European Commission
3
4
5
6
World Bank

Legend:
HERD/GDP
Total Patents
Filled
Conclusions
HERD is Correlated with Innovation
Greatly due to the fact that countries who spend more on R&D
overall have high HERDs

Having a high HERD at the expense of R&D in other sectors has
a minimal effect on innovation

The size of a countrys HERD is affected by the structure of its
R&D system

Scientific Output rises and falls with HERD closely in Countries
where HERD makes up a large proportion of the total R&D
Because the government allocates most the of Public R&D
Funding to Higher Education

1
2
European Commission
3
4
5
6
World Bank

Should Singapore increase funding
for University R&D?
Singapores Higher Education Sector already
performs a much higher proportion of total R&D
than the OECD average.
4
Government Sector Research is below the
OECD average

Government Sector Research in Singapore is
more productive in its scientific output.
2
A*Star filed 316 patents in 2011 wile NUS and
NTU filed 38 and 33 patents respectively

1
2
Intellectual Property Office or Singapore
3
4
5
Should Singapore increase funding for
University R&D?
Singapore faces Limited Resources in its R&D
Funds

Increasing Funding for University Research in
Singapore at the expense of other sectors will
not significantly improve our innovative
capabilities
The impact of the reductions in funding for
Private Research and Public Research Institutes
(A*Star) will outweigh the benefits of increased
University Research Funding

Allocation of R&D: An Analysis

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