A new study by a new Boston Consulting Group (BCG) revealed on Monday that although US still holds the top spot in total investment in research and development (hitting $500 billion in 2015), China has discreetly outpaced the US on critical late-stage research years ago.
The research further revealed that China is poised to invest up to twice as much as the US as early as next year, reaching up to $658 billion. The paper said that although the US is working hard to produce new technologies, China, among other countries, is gaining the benefits by turning those ideas into actual commercial products.
The US is still the leader in "basic and applied" R&D, allocating nearly three-fourths of the half a trillion dollar budget on those activities. Although two-thirds of the US' budget is funneled on later-stage development R&D, China is allocating 84 percent of its R&D budget on advances that turns into commercial products. China has reported a 20 percent growth on "development" R&D over the past decade compared with the US with only 5 percent.
"Other countries are free-riding on the US investment," Justin Rose, who co-authored the study, said.
Such trend is causing the US tens of billions of dollars a year in manufacturing products and hundreds of thousands of factory jobs over the last 10 years. That being said, the BCG suggested that the US still has a chance to reverse this through building strong ties with the private sectors. And this shift is poised to revive and increase the yearly manufacturing output by 5 percent (or $100 billion) and add more than half a million factory jobs and nearly 2 million on other industries through ripple effects, the USA Today reported.
"If we want to be the leader in product development for things that matter in people's lives, pushing money into developing important [products] is what we should be focused on," Rose said.