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New research finds that the US, EU & UK will lose all innovation leadership positions by 2029
The Center for Advancing Innovation (CAI) and PatSnap, the world’s leading provider of research and development (R&D) analytics, today unveiled the results of the Innovation Arms Race 2018 report. The research found that the United States, European Union and the United Kingdom are losing the Innovation Arms Race. The US has already lost its leadership position in global patenting metrics, and unless steps are taken to improve its innovation and commercialisation processes, will lose its leadership positions for all key performance indicators by 2029.
The aim of this report is to provide an insight into the global innovation landscape, and identify the potential opportunities for businesses, government bodies and academic institutions to innovate more effectively, and to capitalise more efficiently on the substantial amount of innovation that has taken and continues to take place globally.
The Innovation Arms Race refers to a number of factors involving innovation across different countries, with the framework assessing key metrics including patent effectiveness, patent efficiency, patent grants per capita and more. While R&D spending continues to increase with an estimated US $2.19 trillion to be spent on R&D globally in 2018, over the past 30 years, the returns on R&D expenditure have decreased by about 65% - meaning for every dollar spent on R&D, there are 65% fewer returns.
Businesses, government bodies and academic institutions know that they have to innovate to remain relevant, find new sources of revenue, push the boundaries of knowledge and science, and differentiate themselves in an increasingly competitive and global marketplace. Yet, there is a vast amount of wasted money in innovation globally, where “waste” is defined as producing no economic value.
In this report, the CAI and PatSnap analysis determined which countries are driving innovation most efficiently and effectively; innovation trends as well as the current and future winners and losers of the global Innovation Arms Race. The report highlights key findings:
Policy dynamics in the West are not the drivers of weakened performance, since competing countries have been able to increase their ability to have patents granted in US and EU patent offices. Furthermore, spending more on R&D in the US, EU and UK is not a solution to innovation, as competing nations are more productive in converting research expenditure to issued patents.
There are a number of potential issues that may be contributing to the West’s decline in innovative effectiveness, including the fact that scientists in the US, EU and UK are incentivised to patent, and therefore it is possible that more patent applications are pushed forward that are not high in quality. Additionally, scientists have little reason to focus on commercialising their patents, leaving many patents left on the shelf and un-commercialised. Moreover, unsuccessful research is typically not published, leading to a waste of R&D resources allocated to repeating failed experiments.
Rosemarie Truman, Founder and CEO of CAI said, “The Innovation Arms Race analysis illustrates that the US, EU and UK need to be more focused and strategic in converting R&D dollars into impact and outcomes. In particular, it is critical to maximise the returns on past R&D investment by commercialising innovation sitting on the shelf. The US licenses only 0.3% of federally funded inventions out. If we could get 1% more inventions out a year, the value at stake is $1.5 trillion to the US economy alone.”
Ray Chohan, SVP, Corporate Strategy at PatSnap, said that “despite recent obstacles to globalisation, innovation continues to become more relevant to technological progress, and in return – economic progress. While the West has - to a significant extent - pioneered technological breakthroughs in the past, it is being held back by legacy processes and technology when it comes to innovation and turning it into economic gain. Much of the growth and efficiency we’re seeing in R&D in APAC is being supported by companies leveraging new technologies and processes with the aim of streamlining their R&D investment."