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In recent decades, the implications of investment in science and engineering and in knowledge- and technology-intensive industries for economic prosperity have become increasingly important. This is indicated by the rise in knowledge- and technology-intensive production and trade and by increased investments in R&D across the world.

The global economic downturn had a significant impact on S&E-related trends, especially in developed economies. Its effects included increased funding uncertainty affecting R&D activities and changes in institutions of higher learning, such as more reliance on nontenured positions. During the downturn, economic activity involving S&E increased in the developing world, continuing the gradual shift in the world’s knowledge-based economic activity toward developing nations and away from developed ones. The increase was pronounced in Asia but also notable in other parts of the developing world. Knowledge-intensive services in developing countries grew rapidly, especially in China.

U.S. knowledge- and technology-intensive industries, as well as the U.S. economy generally, weathered the global economic downturn better than comparable industries and economies in the EU and Japan. Smaller, more recently developed economies in South Korea and Taiwan also withstood the downturn relatively well.

Concurrent with the downturn, several emerging economies demonstrated significant growth in scientific output, as measured by publications and patents. The growth in publication output in China was striking, and the influence of China’s publications also increased. In addition, rapid growth (6%–9% average annually) in three other Asian locations—South Korea, Taiwan, and Singapore—also reduced the global share of S&E publication by the United States, the EU, and Japan.

Recently developed economies are becoming better positioned to challenge the S&E leadership of developed economies. Economies such as South Korea, Taiwan, and Singapore, with their emphasis on high-quality education, are poised to narrow the gap. China, with a per capita income comparable to other developing countries, is unique among developing countries in having a global presence in knowledge- and technology-intensive economic activity and R&D performance that is comparable to or exceeds that of most long-standing developed countries.

As the world economy has changed, the U.S. S&E enterprise has also undergone substantial changes in the last two decades. The recent economic downturn disturbed the continuity of trends that had characterized the major institutions that fund and perform U.S. R&D and that provide advanced training in S&E. Such breaks in long-term patterns included lower R&D investments by businesses as well as slightly decreased stay rates of foreign recipients of advanced S&E degrees. However, many of those developments appear to have been temporary, and there are signs of a return to pre-downturn patterns and trends.

Nevertheless, the ongoing economic recovery has brought with it indications of emerging changes in S&E education and R&D. Potentially disruptive developments include the emergence of massive open online courses as an avenue for trying to reduce the cost of higher education and the continuing R&D budget uncertainty that accompanies a difficult fiscal environment.

As more countries around the world develop R&D and human capital infrastructure to sustain a knowledge-oriented economy, the United States, not surprisingly, is playing a less dominant role in many areas of S&E-related activity. However, it remains the world’s leading nation in numerous indicators of S&E activity, such as high-value patenting, that can have a large impact on innovation and economic growth. Moreover, the increasing interconnectedness of both the global economy and the international scientific community may provide opportunities for improvements in U.S. S&E and the U.S. economy and also for increased sharing of the gains of international R&D.