Saturday, February 25, 2012

R&D: Portugal versus USA

Portugal R&D was 3.6 b.USD during 2009 (IPCTN09), less than 1% that USA one (0.9%). But Portugal GDP (229 b.USD) was larger than 1% of the USA one (1.6%). Accordingly, the traditional indicator of national intensity of R&D (total R&D expenses as a percentage share of the GDP of the country) were very different: 1.59% (P) versus 2.87% (USA). The intensity of R&D at USA national level seems to be around twice that of Portugal.

Lets begin with the numbers of Portugal. Remember: here industry means private on farm business (everything minus agriculture, fishing, hunting, forest and government). The matrix of R&D “peformed by” versus “funded by” (see table) shows similarities and differences:
- The four most important cells of the matrix are the same:
- performed by government and funded by government (6.5% in Portugal versus 7.7% in USA, the same order of magnitude about the role of governmental labs)
- performed by industry and funded by government (2.6% in Portugal versus 9.9% in USA: the role of government funds in R&D performed by companies is much more important in USA than in Portugal)
- performed by industry and funded by industry (43% in Portugal versus 61% in USA: in both countries this is the major contribution to R&D - both in USA and Portugal, companies are the main performers and funding source of R&D activities, but this contribution is more significant in USA)
- performed by U&C and funded by government (31% in Portugal versus 8% in USA: U&C in Portugal depend much more on government funds that U&C in USA, where government funds go primarily to R&D performed by industry instead of U&C)
- The contribution of R&D performed by U&C and paid by U&C funds in marginal (exactly 2.9% of the total in both countries).
- The cell “performed by U&C and funded by industry” has the same marginal (less than 1%) order of magnitude in both (0.3% in Portugal versus 0.8% in USA)
- The marginal values of all the other cells do not show visible differences at the macro level
The marginal distributions of R&D “performed by” and “funded by” show the most important differences: the U&C role in performing R&D activities is more important in Portugal than in USA (36% versus 14%; we can read it the other way: the role of R&D performed by companies is less important in Portugal) and the government role is more important in Portugal (45% versus 31%; again we can read it other way: the role of business funds is less important in Portugal).
Non profit organizations have a similar contribution to R&D funding (3.7% versus 3.4%), but they perform a larger share of activities in Portugal (9% versus 4.4%), where they perform with much more funding from the government (performed by non profit organizations with government funds: 5% in Portugal versus1.8% in USA - so around ⅔ of their budget is paid by government funds in Portugal, against around ½ in USA). So non profit organizations are more dependent of government funds in Portugal (read it other way: they are more fragile and dependent on public money).  
Now let’s have a look and the distribution between R (research) and D (development) activities: share of R is higher in Portugal (56% versus 44%). Portugal R&D seems to be to much concentrated in R activities, more than in D activities (the other way: too little D).
We can compare the share of R work in total R&D per type of performer (see figure). Government labs are twice more oriented for R activities in USA than Portugal (78% versus 44%), but differences in other performers are not so dramatic. U&C are more D oriented in Portugal than in USA: 81% versus 94% of their R&D activities are research (not development).
Portugal R effort is 0.93% relative to GDP - close to USA (1.05%). So the budget for R (research) in Portugal is at the same level of USA one. (Surprised?). But portuguese D effort is below USA one: 0.67% of GDP versus 1.82%. Again, D intensity in USA R&D is three times more important than in Portugal.
All this suggests the usual “bad boy”: not enough D activities performed by industry: R&D activities performed and paid by industry are 72% of total R&D in USA, against 46% in Portugal; or, R&D activities performed and paid by industry are 2.07% of GDP in USA versus 0.72% in Portugal. Let’s do a simple calculation: what would be R&D performed in Portugal if industry had a similar contribution to R&D as in USA? It would be 2.94%, higher than USA one (2.87%)!. Is this reasonable. We do not think so. To be discussed in future post.

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