Tuesday, February 5, 2008

Facts on R&D

Africa spends $5 billion (expressed in PPP$) on R&D, but that is only 0.6% of the $814 billion R&D expenditures worldwide, according to a new study on R&D indicators released by the US National Science Foundation.

R&D share of GDP for South Africa is 0.87% or gross expenditure on R&D (GERD) of R12 billion (2004 data). According to the HSRC the share has risen to 0.92% or a GERD of R14.1 billion in 2005/6. For full results of 2005/6 survey click here.

This compares to 4.71% for Israel (excl. defense R&D), 2.25% for all OECD countries, 1.78% for The Netherlands, 1.34% for China and 0.39% for Romania.

According to the Department of Science and Technology (DST):

  • South Africa has set a goal of achieving R&D expenditure equivalent to 1% of GDP by the year 2008.
  • Most South African R&D is performed in the major research field of engineering sciences (comprising 23.9% of total R&D), followed by the natural sciences (20.8%) and the medical and health sciences (14.8%).
  • The business sector is the major performer and financier of R&D in the country and performs 58% of all R&D undertaken, while financing 45% of total R&D. The higher education sector undertakes 21.1% of national R&D while government (including the science councils) performs 20.9% of the total but finances 32.1% of R&D. About 15% of South Africa’s R&D is financed from abroad.
R&D matters. Empirical literature suggests that social rates of return to R&D are far above private returns. That means that spill-overs are present and can be quite large. According to the UK based IFS, returns on R&D in the UK manufacturing sector vary between 17-34%, while the returns to society are close to 100%.

To be truly innovative and be able to compete in the knowledge economy, Africa needs accelerating investment in intangibles such as R&D. It will help to translate existing surveys on R&D into a measurement tool, such as R&D satellite accounts, to support the management of this process.

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