How will pandemic impact research and development spending?

Question

Accepted Answer

Pandemic Expected to Negatively Impact Innovation Funding and Accelerate Shift Towards Asia

The coronavirus pandemic is anticipated to significantly reduce funding for innovation globally, with emerging evidence suggesting that money for such ventures is diminishing. This downturn is projected to disproportionately affect new start-ups that require sustained investment for research and development, as well as those based in developing nations. Concurrently, the crisis appears to be accelerating pre-existing trends, including the virtualisation of economic activities, and potentially hastening the ongoing eastward shift in innovation centres.
Innovation Funding Faces Significant Headwinds

The head of the UN's World Intellectual Property Organization (WIPO), Francis Gurry, has indicated that innovation expenditures and the financial mechanisms supporting them are at risk of a substantial decline as the global economy experiences a slowdown. While specific figures detailing the pandemic's impact on research and development (R&D) spending are not yet available, Gurry noted clear signs that global innovation funding is diminishing. This trend is particularly concerning for nascent companies reliant on long-term R&D investment and for those operating in developing economies, which are expected to bear the brunt of this financial strain.
Global Innovation Landscape Shows Shifting Dynamics

Prior to the pandemic, global R&D spending in 2018 had demonstrated robust growth, increasing by 5.2 percent and significantly outperforming global Gross Domestic Product (GDP) growth. The World Intellectual Property Organization's Global Innovation Index 2020, compiled with Cornell University and the INSEAD business school, reflects this pre-pandemic environment. Switzerland retained its top position for the tenth consecutive year, followed by Sweden, the United States, Britain, and the Netherlands. However, the index also highlights a discernible, gradual eastward movement in the centre of innovation, with several Asian economies making notable advancements in their rankings.
Asian Economies Ascending in Innovation Rankings

The Global Innovation Index 2020 data reveals that a cohort of Asian economies is progressively climbing the innovation rankings. Countries such as China, India, the Philippines, and Vietnam have exhibited the most substantial progress in recent years, with all four now positioned within the top 50 most innovative nations. Notably, China, the sole middle-income economy among the top 30, has secured the 14th place. This upward trajectory of Asian economies in innovation metrics is a trend that the pandemic may further amplify.
Pandemic Accelerates Pre-existing Trends

While the precise ramifications of the coronavirus crisis on innovation across different countries and regions remain complex to ascertain, the pandemic appears to be acting as a catalyst for trends that were already in motion. One such trend, the increasing virtualisation of economic activities, is noted as an example of this acceleration. Gurry has tentatively suggested that the movement of innovation towards Asia could be another significant trend that the pandemic is expediting, indicating a potential reshaping of global innovation hubs.

Reading history

Hide →

This history is cleared when the page is closed.

How will pandemic impact research and development spending?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

3

0

0

Share with friends