Chapter 6: Science & Engineering Indicators 93

International Trends in Industrial R& D

The industrial sector is the main source of the new technologies and products that aid national economic competitiveness. In high-wage countries like the United States, industries stay competitive in a global marketplace through innovation. Innovation can lead to better production processes and better performing products (i.e., more durable, more economical, etc.); it can thereby provide the competitive advantage high-wage countries require when competing with low-wage countries.

Research and development activities provide an incubator for new ideas that lead to new processes, products--and even new industries. While not the only source of new innovations, R& D activities conducted in industry-run laboratories and facilities are associated with many of the important new ideas that have helped shape modern technology. (Click here for footnote 18.) U.S. industries that traditionally conduct large amounts of R& D have met with greater success in foreign markets than less R& D-intensive industries and have been more supportive of higher wages for their employees. (Click here for footnote 19.)

This section examines R& D trends using a database developed at OECD. It describes trends in all industrial R& D performed from 1973 through 1990, regardless of the source of its funding. (Click here for footnote 20.) The discussion begins with a comparison of overall trends in industrial R& D activity. This analysis is followed by a discussion of trends in the top R& D-performing manufacturing industries in the United States and in those of our two major competitors in the global marketplace, Japan and Germany.

Footnote 17:

Data from OECD's Structural Analysis Database for Industrial Analysis, Analytical Business Enterprise R& D file (STAN/ANBERD) are used to examine trends in total industrial R& D. This database tracks all R& D expenditures (both defense- and nondefense-related) carried out in the industrial sector regardless of funding source. For an examination of U.S. industrial R& D by funding source, see chapter 4.

Footnote 18:

While an important indicator of innovative activity, there is ample evidence that suggests that many new ideas and technological improvements are being developed outside of the R& D "lab." In order to develop better indicators of innovation activities, the National Science Foundation is preparing to conduct a national survey of innovation activities in U.S. industry. This new survey initiative has evolved after many years of empirical study both in the United States and in Europe. The new U.S. survey has been constructed in collaboration with other OECD members and the results will provide a better understanding of the innovation process in the United States and in other major industrialized countries.

Footnote 19:

See "The Global Markets for U.S. Technology" for a presentation of recent trends in U.S. competitiveness in foreign and domestic product markets.

Footnote 20:

These data are not categorized by type of R& D performed (i.e., basic, applied, or development). Both defense- and nondefense-related R& D conducted in the industrial sector are included in these data.

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