pre-feasibility assessment report - Innovationeasterncape.co.za

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African Development Economic ConsultantsADECInternational R&D Funding TrendsSouth African R&D funding follows a similar model to much of Europe,where Government plays a more substantive role. In Japan and the USA, thenational government, universities, and the private sector share more of theresponsibility for funding R&D activities. Japanese universities provide thehighest share of funding for R&D of any major country. In the US, a significantportion of government R&D funding is targeted to industry as compared withGermany, where more government funding is targeted to universities.Table 7. TRENDS IN R&D EXPENDITURES, SELECTED COUNTRIES, 1981-20061981-2001 Change 2001-2006 ChangeCountry 1981 2001 2006 Amount Per Year Amount Per YearUSA 123.2 271.7 294.9 148.5 6.0% 23.2 1.7%Japan 42.9 101.6 120.4 58.7 6.8% 18.8 3.7%Germany 29.6 52.4 57.1 22.8 3.9% 4.7 1.8%France 19.6 35.2 35.8 15.6 4.0% 0.6 0.3%UK 21.5 28.3 31.1 6.8 1.6% 2.8 2.0%Italy 8.6 16.3 NA 7.7 4.5% N/A N/ACanada 6.3 18.6 19.7 12.3 9.8% 1.1 1.2%Russia NA 12.7 16.0 N/A N/A 3.3 5.2%TOTAL 251.7 536.8 575.0 285.1 5.7% 38.2 1.4%Notes:Sources:Expenditures expressed in billions of constant 2000 US dollars.N/A means data Not Available.Organization for Economic Cooperation and Development, Main Science andTechnology Indicators,Volume 2008/1 (Paris, 2008) and ADEC.Among the world’s seven top R&D funders, overall R&D expendituresincreased from $251.7 billion in 1981 to $575.0 billion by 2006. Whilst thisgrowth is substantial, the actual rate of growth has fallen in recent years.Between 1981 and 2001, expenditures increased at the rate of 5.7% per year.However, the increase in expenditures fell to 1.4% per year between 2001 and2006. Part of this shift is explained by the end of the Cold War and the drop indefense R&D expenditures in northern countries (except the U.K.). The 2001-02Recession also impacted on R&D budgets.Overall, the US generates by far the largest amount of R&D fundingworldwide (51.2% among the world’s seven largest funders) and in many casesstill drives the direction of global research and technology development. Assuch, a more detailed assessment was conducted of US R&D trends becauseof their influence on research activities worldwide. The year 2000 was used asa base for assessing trends in real (constant dollar) financial contributions103 Algernon Road, Norwood (Johannesburg). Tel (011)728-1965 / 6690 Fax (011)728-8371Adec@ADEC1.com. Suite 131, Private Bag X5, Norwood 2117 SOUTH AFRICA 52
African Development Economic ConsultantsADECtowards research and development. As such, the effects of inflation have beenremoved so that real revenue growth can be identified.Funding by SourceOverall, the US generated almost $265 Billion in R&D spending in 2007, oralmost 180 times the amount spent in South Africa that same year. Given thatthe US economy (as measured in GDP by the International Monetary Fund) is52 times larger than that of South Africa’s, then South Africa is investingsignificantly less in support of its economic future. The American R&D base wasexpanding at a rate of 10.7% per annum in recent years as compared with 9.3%in South Africa.Table 8. SOURCE OF R&D FUNDING, SELECTED COUNTRIES, 2000 and 2001Country Year Industry Share Govt Share Others Share Totals ShareUSA(Millions of US$s) 2001 184,892 67.4% 75,723 27.6% 13,596 5.0% 274,211 100.0%Japan(Billions of Yen) 2000 11,083 72.4% 2,997 19.6% 1,224 8.0% 15,304 100.0%Germany(Millions of Euros) 2001 34,011 66.0% 16,250 31.5% 1,278 2.5% 51,539 100.0%France(Millions of Euros) 2000 16,255 52.5% 11,967 38.7% 2,731 8.8% 30,953 100.0%UK(Millions of Pounds) 2000 8,648 49.3% 5,069 28.9% 3,827 21.8% 17,544 100.0%Italy (Millions of Euros) 2000 6,239 50.1% 2,356 18.9% 3,865 31.0% 12,460 100.0%Canada (Millions of CAN$s) 2001 8,726 41.9% 6,513 31.3% 5,589 26.8% 20,828 100.0%Russia (Billions of Rubles) 2001 35,394 33.6% 60,229 57.2% 9,638 9.2% 105,261 100.0%Note:Sources:Others includes Higher Education, Private and Abroad.Organization for Economic Cooperation and Development, Main Science andTechnology Indicators; and ADEC.In the US, the private sector accounts for at least 67.4% of total researchfunding. However, the share of private funding is much lower in countries likeRussia (where the Government still plays the prominent role) or Canada (whereuniversities and NGOs take more of a lead). Long-term economic growthrequires that that the private sector makes a significant investment in R&Dactivities.Funding by ActivityResearch funding in the US is concentrated in computer and electronicproducts (22.9%); chemicals (18.7%); Pharmaceuticals and Medicine (15.7%);Professional, Scientific and Technical Services (15.4%); and Semi Conductorand Control Instruments (15.0%). Significant funding also goes to AeroProducts and Parts (6.6%). These six research areas received 94.3% of thetotal R&D funding in 2006. Both South Africa and the US are prioritizing R&Dactivities in chemicals, one of the key strengths of NMMU. Key US R&Dfunding data by sector (research field) are summarized below from 2006 and2007.103 Algernon Road, Norwood (Johannesburg). Tel (011)728-1965 / 6690 Fax (011)728-8371Adec@ADEC1.com. Suite 131, Private Bag X5, Norwood 2117 SOUTH AFRICA 53
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