The IPL newsletter: Volume 18, Issue 374

Drive to Win – Report of the Automotive Advisor to the Government of Canada and the Government of Ontario

Ray Tanguay, Canadian Automotive Partnership Council
This report, on the state of the Canadian automotive industry and actions for the future, arrives during a period of unprecedented disruption stemming from climate change, new technologies, and shifting expectations and uncertainties surrounding trade and investment. For Canadians and communities across the country who are dependent on a viable and enduring Canadian automotive industry, the expectations are that policy makers at all levels will identify the impacts of these transformations and challenges and take deliberate measures to protect and strengthen the sector. In targeting prospects for a stronger automotive industry in Canada the federal and provincial governments have to understand and remove barriers for investors. In order for Canada to win investments it needs to be more competitive than other jurisdictions south of the border. While there have been important steps in that direction the challenge for attracting manufacturing investment remains in Canada’s ability to be the most cost competitive and to do well on key performance indicators like safety, quality, and productivity.

NSF Science and Technology Indicators 2018

National Science Foundation
The global landscape of S&E research, education, and business activities has undergone dramatic shifts since the turn of the twenty-first century, as regions, countries, and economies around the globe continue to invest in science and technology (S&T). S&E capabilities, until recently located mainly in the United States, Western Europe, and Japan, have spread to the developing world, notably to China and other Southeast Asian economies that are heavily investing to build their S&T capabilities. This overview highlights information from Science and Engineering Indicators that offers insights into the global landscape and presents broadly comparable data to examine indicators across regions, countries, and economies, comparing S&E training, research outputs, the creation and use of intellectual property, and the output of knowledge-intensive industries.

Workers with S&E Skills

An innovative, knowledge-based economy requires a workforce with high-levels of S&E skills and an education system that can produce such workers in sufficient numbers. Realizing this, governments in many countries prioritized increased access to S&E-related postsecondary education. At the same time, countries compete to attract the best talent (OECD 2017), leading to increased mobility of high-skill workers. Comprehensive and internationally comparable data on the global S&E workforce, while limited, suggest that S&E work is increasingly occurring throughout the world with concentrations in specific regions.

Globally, first university degree awards in S&E fields, broadly equivalent to a bachelor’s degree, totaled more than 7.5 million, according to the most recent estimates. Almost half of these degrees were conferred in two Asian countries: India (25%) and China (22%); another 22% together were conferred in the European Union (12%) and in the United States (10%). University degree production in China has grown faster than in other major developed nations and regions. Between 2000 and 2014, the number of S&E bachelor’s degrees awarded in China rose more than 350%, significantly faster than in the United States and in many other European and Asian regions and economies. Additionally, during the same period, the number of non-S&E degrees conferred in China also rose dramatically (by almost 1,200%), suggesting that capacity building in China, as indicated by bachelor’s degree awards, is occurring in both S&E and non-S&E areas.

R&D Expenditures and R&D Intensity

The rising number of researchers and expanding S&E education have been accompanied by strong and widespread growth in R&D expenditures. The worldwide estimated total of R&D expenditures continued to rise at a substantial pace, more than doubling over the 15-year period between 2000 and 2015, indicative of the global trends toward investments in knowledge and technology.

Global R&D activity continues to be concentrated in North America, Europe, and the East and Southeast Asia and South Asia regions. Among individual countries, the United States is by far the largest R&D performer, followed by China—whose R&D spending exceeded that of the EU total—and Japan. Together, the United States, China, and Japan accounted for over half of the estimated $1.9 trillion in global R&D in 2015. Germany is fourth, at 6%. South Korea, France, India, and the United Kingdom make up the next tier of performers—each accounting for 2%–4% of the global R&D total.

Invention, Knowledge Transfer, and Innovation

Science and Engineering Indicators 2018 presents detailed data on these various components for the United States, but internationally comparable data on these topics are limited. The Overview presents selected topics from this three-part system for which comprehensive and comparable international data are available. Two such topics are patents, an important (albeit partial) indicator of invention, and venture capital, an important catalyst for the transformation of inventions into innovation and practical use.

The developed world dominates global patenting, with notable growth (albeit from low bases) in several Asian economies. The U.S. Patent and Trademark Office (USPTO) grants patents to inventors worldwide, with over 300,000 patents granted in 2016. Inventors from the United States, Japan, and EU account for the majority of USPTO patents. In comparison however, patents granted to inventors from the rest of the world have risen more robustly since 2000, with more than a three-fold increase in patents to other developed economies and a more than 13-fold increase in patents to developing economies. The U.S. share of USPTO patents declined to under half of all USPTO patents by 2008.

Another essential component of the translation of inventions into innovations and practical use is access to financing. Developing and commercializing new and emerging technology is inherently risky, and financial support can provide insurance against some of this uncertainty. Venture capital investment is an indicator of support for emerging technologies that have the potential for successful commercialization and was globally about $131 billion in 2016. The United States attracts slightly more than half of this venture capital funding, although its share has been declining as other countries, particularly China, ramp up their S&T capabilities for developing new technologies.

Seed-stage venture capital refers to very early-stage financing, which generally provides funding for preliminary business operations, such as proof-of-concept development and initial product development, as well as marketing for startups and small firms that are developing new technologies. The United States attracted more than half of the nearly $6 billion of global seed-stage venture capital investment in 2016. These seed-stage investments are very small relative to early- and later-stage venture capital investment (totaling almost $125 billion in 2016), which provide financing for further development, production, commercialization, and marketing of new technologies. The United States attracts slightly more than half of the global early- and later-stage venture capital investment, followed by China. Between 2010 and 2016, the level of investment grew strongly in the U.S. although the U.S. global share dropped from 68% to 52%. In China, investment rose from a low base between 2006 and 2013; after 2013, growth accelerated as investment leaped from almost $3 billion in 2013 to $34 billion in 2016, resulting in its global share to rise from 5% to 27%.

Knowledge- and Technology-Intensive Economic Activity

Industries that intensely embody new knowledge and technological advances in their production, as reflected by their R&D expenditures and utilization of S&T in the delivery of their services, account for nearly one-third (31%) of global economic output. They span both manufacturing (e.g., aircraft and spacecraft; computer equipment; communications and semiconductors; chemicals and pharmaceuticals; testing, measuring, and control instruments; motor vehicles and parts; railroad and other transportation equipment; machinery) and services sectors (e.g., education, health, business, R&D, financial, and information services).

At 38%, the United States leads the major economies in the percentage of its GDP that comes from these KTI industries. Historically concentrated in the developed world, these industries typically make up a larger percentage of GDP in developed economies than in developing economies. However, developing economies, led by China, are emerging as prominent players as they ramp up their S&E capabilities. Additionally, recent global economic developments have had somewhat different impacts on the major global players, further transforming this segment of the S&E landscape. For example, following the global recession of the late-2000s, the United States has had strong growth in many KTI industries and trade of KTI goods and services, contrasting with tepid or negative growth in the EU and Japan. China has continued to grow quite robustly and has become the world’s largest producer in many technology-intensive manufacturing industries. Although its relative position is not as strong in the knowledge-intensive (KI) services sector, where the United States and the EU are the dominant global producers, China is growing far more rapidly than developed economies overall.