Research and Development Expenditures

Over the period 1990-2000, world expenditures on R&D almost doubled from US$453 billion to US$755 billion in current purchasing power parity (PPP). American and European continents share approximately 67% of the total R&D (Table 2.1). Most of the research is conducted in the more technologically advanced developing countries in Asia and Latin America (Table 2.2).1 Moreover, research expenditures by these countries grew at 5-7% annually between 19 76 and 1996, while it stagnated in Africa.

Table 2.1. R&D expenditure share (1980-2000). (From DST, Table No. 125; available at: http://www.eaindustry.nic.in/handbk; and A Decade of Investment in Research and Development (R&D): 1990-2000, UIS Bulletin on Science and Technology Statistics Issue No. 1, April 2004. Available at: http://www.uis.unesco.org/template/pdf/S&T/BulletinNo1EN. pdf.)_

Expenditure on R&D (US$ billion) and % share in brackets

1980 1985 1990 1994 2000

Table 2.1. R&D expenditure share (1980-2000). (From DST, Table No. 125; available at: http://www.eaindustry.nic.in/handbk; and A Decade of Investment in Research and Development (R&D): 1990-2000, UIS Bulletin on Science and Technology Statistics Issue No. 1, April 2004. Available at: http://www.uis.unesco.org/template/pdf/S&T/BulletinNo1EN. pdf.)_

1980 1985 1990 1994 2000

Continent

US$

%

US$

%

US$

% US$

%

US$

%

Africa

1.1

(0.5)

0.9

(0.3)

5.2

(1.37) 4.2

(0.9)

5.8

(0.8)

America

70.4

(33.8)

118.9

(43.7)

167.7

(40.9) 193.1

(40.4)

302.3

(40.0)

Asia

31.7

(15.2)

47.2

(17.4)

94.2

(23.0) 127.5

(26.7)

235.6

(31.2)

Europe

70.7

(33.9)

65.6

(24.1)

138.8

(33.9) 147.7

(30.9)

202.9

(26.9)

Oceania

2.2

(1.1)

2.1

(0.8)

3.9

(1.00) 6.0

(1.3)

8.5

(1.1)

USSRa

32.3

(15.5)

37.2

(13.7)

-

- -

-

-

-

World (Total)

208.4

(100)

271.9

(100)

409.8

(100) 478.5 (100)

755.1

-

aStatistics for states of the erstwhile USSR have been included in Asia or Europe depending on the continent the state belongs to.

aStatistics for states of the erstwhile USSR have been included in Asia or Europe depending on the continent the state belongs to.

Table 2.2. R&D activities (1996-1997). (From UNESCO, UIS, Report 2001. The State of Science and Technology in the World 1996-1997. Available at: http://www.uis.unesco.org/file_download.php?URL_ID=4980&filename=10289086730WS_report_2001.pdf&filetype= application%2Fpdf&filesize=695528&name=WS_report_2001.pdf&location=user-S/.)

R&D

Table 2.2. R&D activities (1996-1997). (From UNESCO, UIS, Report 2001. The State of Science and Technology in the World 1996-1997. Available at: http://www.uis.unesco.org/file_download.php?URL_ID=4980&filename=10289086730WS_report_2001.pdf&filetype= application%2Fpdf&filesize=695528&name=WS_report_2001.pdf&location=user-S/.)

R&D

GERD

R&D exports

Researchers

exports

European

% of world

as a %

(GERD) per

per million

(GERD) per

S&T

patents

US patents

Regions/countries

GERD

of GDP

capita

inhabitants

researcher

publications

offices

offices

World

100

1.6

100

946

105

1 00

1 00

1 00

Developing countries

15.8

0.6

20

347

58

Developed countries

84.4

2.2

377

3033

124

Americas

41.3

2

North America

38.2

2.6

708

3599

1 97

36.6

35.2

51.5

USA

36.4

2.6

750

3698

203

Latin America and the

3.1

0.5

34

715

48

1.8

0.2

0.2

Caribbean

Europe

28.8

1.7

221

2476

89

37.5

46.3

19.2

EU

25.2

1.8

370

221 1

167

Central and Eastern Europe

1.0

0.8

49

1451

34

1.9

0.6

0.5

Africa

0.7

0.3

6

21 1

29

Sub-Saharan Africa

0.3

0.3

6

113

49

0.7

0.2

0.1

(excluding Arab states

and South Africa)

South Africa

0.4

0.7

51

1031

49

Asia

27.9

1.3

46

537

85

0

0

Japan

15.2

2.9

661

4909

1 35

China

3.9

0.6

17

454

38

2

0.2

0.2

Newly industrial economies

4.9

1.1

66

595

111

10.8

15.5

27.5

India

2.0

0.7

11

1 51

76

1.9

0

0

Arab states

0.4

0.2

8

356

24

Oceania

1.3

1.6

251

3071

82

2.8

1.4

0.6

OECD countries

84.7

2.2

422

2573

164

Russian Federation

1.0

0.9

38

3801

10

CIS countries

1.5

0.8

29

2991

10

3.7

0.4

0.2

GERD: gross expenditure on R&D.

GERD: gross expenditure on R&D.

Underlying the new IPR sensitivities are the dominant R&D complexes located in developed countries (Table 2.3). This dominance in R&D capacity is a source of great competitive advantage by the firms in developed countries. Their investment in R&D, the number of researchers in R&D per million population and the number of patents granted per resident (per million population), demonstrate a strong emphasis on innovation and invention, which contribute to enhanced competitiveness.

Table 2.3. Status of R&D, patents and technology exports. (From World Bank, 2004, World Development Indicators 2004, Washington, DC, based on data from the UNESCO; aggregates calculated for the Human Development Report Office by the World Bank.)

Receipts Patents High-Researchers of royalties granted to technology in R&D and license residents exports (% of R&D exports (per million fees (US$ (per million merchandise (as % of GDP) people) per person) people) exports)

Regions/countries

1996-20023

1990-2001 a

2002d

2000e

1 990f

2002f

All developing countries

0.62

384c

0.3

-

-

20

Least developed countries

-

-

-

-

-

-

Arab states

-

-

0.2

-

-

2

East Asia and the Pacific

1.6

607c

0.5

-

-

28

Latin America and the

0.5b

285c

0.8

1

7

16

Caribbean

South Asia

-

160c

-

-

-

4

Sub-Saharan Africa

-

-

0.1

-

-

4.2

Central and Eastern Europe

1

2289c

1.7

30

-

11

and the CIS

OECD

2.6

2908c

68.4

290

18

22

High-income OECD

2.6

3483c

85.6

360

18

23

High human development

2.6

2890c

66.4

253

18

22

Medium human

-

555c

0.2

3

-

18

development

Low human development

-

-

(.)

-

-

12

High income

2.6

3449c

82.9

350

18

23

Middle income

0.7b

751c

0.5

5

-

19

Low income

-

-

(.)

-

-

9

World

2.5

1 096c

12.9

48

18

21

aData refer to the most recent year available during the period specified. bData refer to 1999. cData refer to 1996.

dCalculated on the basis of data on population from the United Nations (2003) World Population Prospects 1950-2050: The 2002 Revision, Department of Economic and Social Affairs, Population Division, New York; and data on receipts of royalties and license fees from World Bank (2004), World Development Indicators 2004, Washington, DC, based on data from the International Monetary Fund. eCalculated on the basis of data on patents granted to residents from the World Intellectual Property Organization (2004) Intellectual Property Statistics, Publication B, Geneva, Switzerland; and data on population from the United Nations (2003), World Population Prospects 1950-2050: The 2002 Revision, Database, Department of Economic and Social Affairs, Population Division, New York. fWorld Bank (2004) World Development Indicators 2004. Washington, DC, based on data from United Nations Conference on Trade and Development and the International Monetary Fund; aggregates calculated for the Human Development Report Office by the World Bank.

Table 2.4. Estimated world R&D expenditure (1980-2000). (From Department of Science & Technology, Government of India, Table No. 125; available at: http://www.eaindustry.nic.in/handbk/ chap131.pdf; and UIS, 2004.)

R&D expenditure (US$ billion) R&D expenditure as % of GDP

Table 2.4. Estimated world R&D expenditure (1980-2000). (From Department of Science & Technology, Government of India, Table No. 125; available at: http://www.eaindustry.nic.in/handbk/ chap131.pdf; and UIS, 2004.)

Region

1980

1985

1 990

1 994

2000

1 980

1 985

1 990

1 994 2000

World

208.4

271.9

452.6

478.5

755.1

1 .85

2.22

2.55

1.5 1.7

(100)

(100)

(100)

(100)

(100)

Developed

195.8

258.9

434.3

414.2

596.7

2.22

2.62

2.92

2.1 2.3

(94)

(95)

(96)

(87)

(79)

Developing

12.6

13.0

18.3

64.3

158.4

0.52

0.54

0.64

0.5 0.9

(6)

(5)

(4)

(13)

(21)

Figures within parentheses indicate percentages.

Figures within parentheses indicate percentages.

Developing countries only account for approximately 21% of global R&D expenditures despite their efforts to increase investments in R&D (Table 2.4). In 2000, developing countries spent 0.9% of their gross domestic product (GDP) on R&D. Nevertheless, there is considerable variation across countries. The newly industrialized south-east economies and China reached the 1% R&D intensity goal and are playing important roles in global R&D now. These countries are responsible for bringing up the 'developing country average' close to the 1% benchmark. On the other hand, India, the third largest Asian economy, has been struggling over the last 10 years at around 0.8%.

There are about 35-43 million patents published worldwide. Out of this, 99.99% of patents are filed in developed countries. Of the total stock of patents filed, about 5 million (11%) are always in force at any point in time. In India, there are approximately 0.17 million patents issued, of which approximately 0.3% are in force at any point in time. There is an overwhelming dominance of developed countries in this sphere when filing of the patent application is taken as an indicator of the R&D and the level of invention and innovation (Table 2.5). Most patent applications are limited to the US, Japan and Germany, which together share around 64% of the total.

A disproportionately large quantity of patents is being granted in relation to the number of related commercial products. The number of patents granted in the USA has increased by 159% from 71,000 to more than 184,000 between 1981 and 2001. In the 1990s, US R&D expenditures increased in real terms by nearly 41%, while patents granted rose by more than 72% (National Science Foundation, 2002; US Patent and Trademark Office, 2004). This reflects new strategic uses for patents that are defensive as well as offensive (Chicoine, 2005). International exploitation of IP is becoming increasingly important in the globalization process (Maskus, 1998). Patents are now drawn so broadly as to cover a range of possible products including many that are unforeseen by the applicant. The strategy is not necessarily to reap the commercial benefits that come from the patent ownership but instead to prevent upstream research and downstream product development. This has two effects: first, it consolidates biotechnology-related patent ownership in the hands of a small number of firms; second, it creates significant first mover advantages to developed countries that are already heavily invested in biotechnology R&D. In

Table 2.5. Patent applications (2000-2004). (From WIPO Statistics, Filing of PCT International Applications, Filings by Country of Origin, as on 22 September 2004; available at: http://www.wipo.int/pct/en/statistics/pct_monthly_report_2004_8.pdf.)

% share

% share

% share

% share

2004 (till % share

Table 2.5. Patent applications (2000-2004). (From WIPO Statistics, Filing of PCT International Applications, Filings by Country of Origin, as on 22 September 2004; available at: http://www.wipo.int/pct/en/statistics/pct_monthly_report_2004_8.pdf.)

% share

% share

% share

% share

2004 (till % share

Country of origina

2000

2000

2001

2001

2002

2002

2003

2003

August)

2004

USA

38,006

40.76

43,052

39.78

41,299

37.41

41,078

35.71

22,303

33.47

Japan

9,567

1 0.26

11,904

1 1 .00

14,061

12.74

17,363

15.10

12,026

1 8.05

Germany

12,582

1 3.49

1 4,031

12.96

14,320

1 2.97

14,652

12.74

8,082

12.13

UK

4,795

5.14

5,482

5.07

5,372

4.87

5,214

4.53

3,186

4.78

France

4,138

4.44

4,707

4.35

5,088

4.61

5,171

4.50

2,243

3.37

Netherlands

2,928

3.14

3,410

3.15

3,979

3.60

4,436

3.86

2,517

3.78

Korea

1,580

1 .69

2,324

2.15

2,522

2.28

2,953

2.57

1 ,61 4

2.42

Switzerland

1,989

2.13

2,349

2.17

2,755

2.50

2,850

2.48

1 ,646

2.47

Sweden

3,091

3.32

3,421

3.16

2,990

2.71

2,616

2.27

1 ,61 9

2.43

Canada

1,801

1 .93

2,114

1 .95

2,259

2.05

2,277

1 .98

1 ,188

1 .78

Italy

1,394

1 .50

1 ,623

1 .50

1 ,983

1 .80

2,165

1 .88

1 ,241

1 .86

Australia

1,576

1 .69

1 ,664

1 .54

1 ,761

1 .60

1,685

1 .46

1 ,089

1 .63

Finland

1,578

1 .69

1 ,696

1 .57

1 ,762

1 .60

1,558

1 .35

999

1 .50

China

784

0.84

1 ,731

1 .60

1 ,01 7

0.92

1,291

1.12

960

1 .44

Israel

964

1 .03

1 ,314

1 .21

1,174

1 .06

1,129

0.98

784

1.18

Denmark

795

0.85

919

0.85

977

0.89

1,026

0.89

645

0.97

Spain

555

0.60

616

0.57

720

0.65

792

0.69

490

0.74

Belgium

581

0.62

690

0.64

695

0.63

778

0.68

41 5

0.62

India

190

0.20

295

0.27

525

0.48

764

0.66

345

0.52

Austria

484

0.52

620

0.57

552

0.50

640

0.56

438

0.66

Russia

533

0.57

557

0.51

539

0.49

583

0.51

238

0.36

Norway

528

0.57

592

0.55

550

0.50

533

0.46

277

0.42

South Africa

387

0.42

419

0.39

384

0.35

356

0.31

264

0.40

New Zealand

258

0.28

288

0.27

300

0.27

300

0.26

184

0.28

Ireland

245

0.26

243

0.22

308

0.28

299

0.26

179

0.27

Singapore

222

0.24

288

0.27

330

0.30

281

0.24

252

0.38

Brazil

178

0.19

1 73

0.16

201

0.18

220

0.19

176

0.26

Poland

109

0.12

99

0.09

116

0.11

155

0.13

61

0.09

Mexico

73

0.08

1 04

0.10

132

0.12

131

0.11

70

0.11

Luxembourg

138

0.15

1 28

0.12

143

0.13

115

0.10

69

0.10

Hungary

135

0.14

1 27

0.12

185

0.17

115

0.10

89

0.13

Total

92,184

98.87

106,980

98.85

108,999

98.74

113,526

98.70

65,689

98.59

aResidence indicated for the first named applicant.

addition, patents are being sought in many countries simultaneously. As many as 80-85% of patents registered in developing countries are held by foreigners. Such efforts clearly illustrate the tension between the objectives of the public policy and IP (Lesser, 1991).

So the business of seed biotechnology is centred in the developed countries where first mover advantages are significant as they compete with the natural resource-rich developing countries. Seed development is also a business where IP management and patents are essential elements of sustained profitability. The final element of the new seed industry is its increasingly private nature. Agricultural research is now moving away from government-managed and inward-looking tendencies to a more entrepreneurial, proprietary and international research focus (Table 2.6). By 1995 61% of total R&D expenditures in the Organisation for Economic Co-operation and Development (OECD) countries (which currently account for some 85% of all R&D in the world) were privately funded (OECD, 2000, 2001). The median percentage of private R&D funding in the OECD countries was 48%.

Two additional features are important to note: first, although public finance cannot keep pace with private activities, it is still significant; second, while R&D finance is no longer a national phenomenon, cross-border activities have become an essential feature of increasingly open global markets.

In developing countries, the governments and other public bodies continue to be the primary sources of R&D funding, providing financial support to an overwhelming proportion of their R&D activities. Investment in agricultural R&D is a central objective in many developing countries because the economies tend to be primary sector-based, and food security is still elusive. Their process continues to focus on varietal and management improvement through the public R&D at national research institutes. These efforts are supported by a network of international public research institutes under the umbrella of the Consultative Group on International Agricultural Research (CGIAR). Thus the R&D models of developed and developing countries fundamentally differ. The former has shifted to a private system, exploits biotechnological opportunities, is investment intensive, leverages strict IPRs, is transnational, and accesses significant flows of private financial capital. The latter is still a public model, relies on open sourcing and conventional breeding, has a local focus, and utilizes public finance.

Developing countries operate at a competitive disadvantage when they have not adapted the changing business norms of the global economy. Possibilities of what can be achieved in agricultural research have been vastly expanded with the advance of biotechnology techniques for 20 years. Developing countries have not been able to participate because of their reliance on the traditional public research model. Public investment in public research has stagnated in recent years while private sector has increased dramatically. For example, rice, whose value of production in India alone exceeds that of the US maize market, has been a crop where breeding has been conducted in the national or international public sector. Recently though the private sector has become increasingly interested in rice research. Monsanto and Syngenta have worked on sequencing the rice genome of two major rice varieties. The number of patents related to rice issued

Table 2.6. Percentage distribution of R&D source. (From http://www.uis.unesco.org/ev. php?ID=5753_201&ID2=DO_TOPIC.)

R&D expenditure as a percentage of GDP in 2004

1 980

1 985

1 990

1 995

2004

USA

2.8

Government

46.5

45.0

44.6

35.5

28.7

Business organizations

47.6

48.4

48.7

59.4

66.2

Others

5.9

6.6

6.7

5.1

5.1

Canada

1.9

Government

38.7

40.5

35.8

30.1

33.2

Business organizations

36.6

40.6

41.9

50.7

40.0

Others

24.7

18.9

22.3

19.2

26.8

UK

1.9

Government

47.7

40.7

35.8

32.7

30.1

Business organizations

42.7

45.8

49.4

51.9

46.2

Others

9.6

13.5

14.8

15.4

23.7

France

2.2

Government

-

51.9

48.3

41.6

38.7

Business organizations

-

41.8

43.5

48.7

52.5

Others

-

6.3

8.2

9.7

8.8

Japan

3.1

Government

27.9

21.0

18.2

-

18.5

Business organizations

72.0

78.9

81.7

-

73.0

Others

0.1

0.1

0.1

-

8.5

Israel

5.0

Government

65.2

63.8

37.5

40.7

28.8

Business organizations

22.1

21.7

38.0

35.7

63.9

Others

-

-

-

-

-

Korea

3.0

Government

49.8

19.0

15.2

15.9

25.0

Business organizations

48.4

80.9

80.6

84.0

72.5

Others

1.8

0.1

4.2

0.1

2.5

China

1.1

Government

-

-

-

-

33.4

Business organizations

-

-

-

-

57.6

Others

-

-

-

-

9.0

India

0.8

Government

82.7

88.1

87.4

75.0

-

Business organizations

13.4

11.9

12.6

24.0

-

Others

3.9

0.00

0.00

1.0

-

Brazil

1.1

Government

66.9

-

43.9

-

60.2

Business organizations

19.8

-

20.8

-

38.2

Others

13.3

-

35.3

-

1.6

Other sources include higher education, private non-profit, funds from abroad, not distributed.

Other sources include higher education, private non-profit, funds from abroad, not distributed.

annually in the USA has risen from less than 100 in 1995 to over 600 in 2000 (Barton and Berger, 2001).

In sum, the agricultural research has shifted from a public model to a private model. Biotechnology, in terms of its costs, politics and potential market impacts, has been disproportionately the subject of private research rather than of public research. Competitive advantage of developed countries in the modern economy is increasing due to its differential advantage in creating and managing knowledge resources. When these forces are set within a free trade environment, capital flows and intellectual property protection (IPP) become central to a competitive agricultural research programme.

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