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{{Short description|General term for activities in connection with corporate or governmental innovation}}
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{{multiple issues|
{{Update|developments in (a) USA since Barack Obama and (b) elsewhere since that time|date=June 2021}}
{{More citations needed|date=March 2020}}
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[[File:Cycle of Research and Development.svg|thumb|upright=1.8|Cycle of research and development]]
[[File:Spending on research and development as share of GDP, OWID.svg|thumb|upright=1.8|Spending on research and development as share of GDP (2015)]]
'''Research and development''' ('''R&D''' or '''R+D
Although R&D activities may differ
==Background==
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A system driven by [[marketing]] is one that puts the customer needs first, and produces goods that are known to sell.<ref>{{Cite news|url=https://hbr.org/1998/11/business-marketing-understand-what-customers-value|title=Business Marketing: Understand What Customers Value|last1=Anderson|first1=James C.|date=1998-11-01|work=Harvard Business Review|access-date=2019-02-06|last2=Narus|first2=James A.|issue=November–December 1998|issn=0017-8012}}</ref> [[Market research]] is carried out, which establishes the needs of consumers and the potential [[niche market]] of a new product. If the development is technology driven, R&D is directed toward developing products to meet the unmet needs.{{citation needed|date=March 2017}}
In general, research and development activities are conducted by
[[Statistics]] on organizations devoted to "R&D" may express the state of an [[Industry (economics)|industry]], the degree of [[competition]] or the lure of [[scientific progress|progress]].<ref>{{Cite book|url=https://books.google.com/books?id=fax-DwAAQBAJ&q=Statistics+on+organizations+devoted+to+%22R&pg=PT659|title=Biotechnology Fundamentals|last=Khan|first=Firdos Alam|date=2018-09-03|publisher=CRC Press|isbn=9781498723459|language=en}}</ref> Some common measures include: [[budget]]s, numbers of [[patent]]s or on rates of peer-reviewed [[publication]]s. Bank ratios are one of the best measures, because they are continuously maintained, public and reflect risk.
In the United States, a typical ratio of research and development for an industrial company is about 3.5% of revenues; this measure is called "[[R&D intensity]]".<ref>{{
Generally such firms prosper only in markets whose customers have extreme high technology needs, like certain prescription drugs or special chemicals, [[scientific instrument]]s, and [[safety-critical system]]s in medicine, [[aeronautics]] or [[military weapons]]. {{citation needed|date=March 2017}}The extreme needs justify the high risk of failure and consequently high gross margins from 60% to 90% of revenues.{{citation needed|date=March 2017}} That is, [[gross profit]]s will be as much as 90% of the sales cost, with manufacturing costing only 10% of the product price, because so many individual projects yield no exploitable product. Most industrial companies get 40% revenues only.{{citation needed|date=March 2017}}
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==Business R&D==
[[File:Mercedes Benz Research Development North America (13896037060).jpg|thumb|Mercedes Benz Research Development North America (13896037060)]]
Research and development are very difficult to manage, since the defining feature of research is that the researchers do not know in advance exactly how to accomplish the desired result. As a result, "higher R&D spending does not guarantee more creativity, higher profit or a greater market share".<ref>{{cite web|title=Aerospace and Defense: Inventing and Selling the Next Generation|url=http://csis.org/files/publication/090520_diig_aerospace.pdf|website=Center for Strategic and International Studies|publisher=Center for Strategic and International Studies, International Security Program|access-date=6 August 2017|pages=1|language=en|date=December 5, 2009|archive-date=28 July 2011|archive-url=https://web.archive.org/web/20110728100600/http://csis.org/files/publication/090520_diig_aerospace.pdf|url-status=dead}}</ref> Research is the most risky financing area because both the development of an invention and its successful realization carries uncertainty including the profitability of the invention.
===Benefit by sector===
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===Global===
[[File:1953- Funding for research and development - US.svg|thumb|Since the 1960s, private businesses in the U.S. have provided an increasing share of funding for research and development, as direct federal funding waned.<ref name="NSF_R&D_2023">{{cite web |last1=Anderson |first1=G. |last2=Moris |first2=F. |title=Federally Funded R&D Declines as a Share of GDP and Total R&D |url=https://ncses.nsf.gov/pubs/nsf23339 |publisher=National Science Foundation, National Center for Science and Engineering Statistics |archive-url=https://web.archive.org/web/20231003235103/https://ncses.nsf.gov/pubs/nsf23339 |archive-date=3 October 2023 |date=2023 |quote=NSF 23-339 |url-status=live }}</ref>|198x198px]][[Global R&D management]] is the discipline of designing and leading R&D processes globally, across cultural and lingual settings, and the transfer of knowledge across international corporate networks.<ref>Chiesa, V. (2001). R&D Strategy and Organisation, Imperial College Press</ref>
==Government expenditures==
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===United States===
{{See also|Federally funded research and development centers}}
Former President [[Barack Obama]] requested $147.696 billion for research and development in [[Fiscal year|FY]]2012, 21% of which was destined to fund basic research.<ref>{{Cite book|url=https://fas.org/sgp/crs/misc/R41098.pdf|title=Federal Research and Development Funding: FY2011|publisher=Library of Congress, Congressional Research Service|year=2011|editor-last=Sargent|editor-first=John F Jr|oclc=1097445714}}</ref> According to National Science Foundation in U.S., in 2015, R&D expenditures performed by federal government and local governments are 54 and 0.6 billions of dollars.<ref>{{Cite web|url=https://www.nsf.gov/statistics/2018/nsb20181/assets/1038/research-and-development-u-s-trends-and-international-comparisons.pdf|title=Research and Development: U.S. Trends and International Comparisons, National Science Foundation.}}</ref> The federal research and development budget for fiscal year 2020 was $156 billion, 41.4% of which was for the Department of Defense ([[United States Department of Defense|DOD]]).<ref>{{Cite web|date=17 December 2020|title=Federal Research and Development (R&D) Funding: FY2021|url=https://crsreports.congress.gov/product/pdf/R/R46341|access-date=20 February 2021}}</ref> DOD's total research, development, test, and evaluation budget was roughly $108.5 billion.<ref>{{Cite web|date=February 2020|title=RDT&E Programs (R-1)|url=https://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2021/fy2021_r1.pdf|access-date=20 February 2021|website=Office of the Undersecretary of Defense (Comptroller)}}</ref><gallery mode="packed" heights="120">
File:Learning Research and Development Center, Pitt.jpg|Learning Research and Development Center, Pittsburg
File:National Museum of the U.S. Air Force-Research and Development Gallery.jpg|National Museum of the U.S. Air Force-Research and Development Gallery
</gallery>
=== Israel ===
{{See also|Science and technology in Israel}}
Israel is the world leader in spending on R&D as a percentage of GDP as of 2022, spending 6.02%.<ref>{{Cite web |title=R&D as a percentage of GDP by country 2022 |url=https://www.statista.com/statistics/732269/worldwide-research-and-development-share-of-gdp-top-countries/ |access-date=2024-07-02 |website=Statista |language=en}}</ref> According to CSIS, During the 1970s and 1980s Israel
File:Microsoft Israel R&D Center LTD. (4).jpg|[[Microsoft]] Israel R&D Center
File:General Motors R&D center, Herzliya.jpg|[[General Motors]] R&D, Israel
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===European Union===
Europe is lagging behind in R&D investments from the past two decades.{{According to whom|date=July 2024}} The target of 3% of [[Gross domestic product|gross domestic product (GDP)]] was meant to be reached by 2020, but the current amount is below this target. This also causes a [[digital divide]] among countries since only a few [[Member state of the European Union|EU Member States]] have R&D spending.<ref name=":133">{{Cite web
▲[[File:Mercedes Benz Research Development North America (13896049248).jpg|thumb|Mercedes Benz Research Development North America (13896049248)]]
▲Europe is lagging behind in R&D investments from the past two decades. The target of 3% of [[Gross domestic product|gross domestic product (GDP)]] was meant to be reached by 2020, but the current amount is below this target. This also causes a [[digital divide]] among countries since only a few [[Member state of the European Union|EU Member States]] have R&D spending.<ref name=":133">{{Cite web |last=Bank |first=European Investment |date=2023-02-28 |title=Innovation overview 2023 |url=https://www.eib.org/en/publications/innovation-overview-2023 |language=EN}}</ref>
Research and innovation in Europe are financially supported by the programme [[Horizon 2020]], which is open to participation worldwide.<ref>{{cite web|url=http://europa.eu/rapid/press-release_MEMO-13-1085_en.htm|title=European Commission – PRESS RELEASES – Press release – Horizon 2020 – the EU's new research and innovation programme|website=europa.eu}}</ref>
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A notable example is the [[European environmental research and innovation policy]], based on the [[Europe 2020]] strategy which will run from 2014 to 2020,<ref>{{Cite web|url=http://europa.eu/rapid/press-release_MEMO-11-848_en.htm?locale=en|title=European Commission – PRESS RELEASES – Press release – Horizon 2020: Commission proposes €80 billion investment in research and innovation, to boost growth and jobs|website=europa.eu|language=en|access-date=2017-12-12}}</ref> a multidisciplinary effort to provide safe, economically feasible, environmentally sound and socially acceptable solutions along the entire value chain of human activities.<ref>{{Cite web|url=http://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:02013R1291-20150704|title=EUR-Lex – 02013R1291-20150704 – EN – EUR-Lex|website=eur-lex.europa.eu|language=en|access-date=2017-03-16}}</ref>
Firms that have embraced advanced digital technology devote a greater proportion of their investment efforts to R&D. Firms who engaged in digitisation during the pandemic report spending a big portion of their expenditure in 2020 on software, data, IT infrastructure, and website operations.<ref name=":34">{{Cite book
As of 2023, European enterprises account for 18% of the world's top 2 500 R&D corporations, but just 10% of new entrants, compared to 45% in the United States and 32% in China.<ref>{{Cite book
As of 2024, the electronics sector leads in R&D investment, with 28% of its total investment dedicated to it. This is followed by textiles (19%), digital (18%), and aerospace (15%). Other sectors allocate less than 10% of their total investment to R&D.<ref name=":204">{{Cite book
While 17% of the world’s top R&D investors are based in the European Union, they accounted for only 1% of acquisitions involving EU-based companies between 2013 and 2023.<ref>{{Cite web |title=The 2023 EU Industrial R&D Investment Scoreboard |url=https://iri.jrc.ec.europa.eu/scoreboard/2023-eu-industrial-rd-investment-scoreboard |access-date=2024-08-29 |website=IRI}}</ref><ref name=":211">{{Cite web |title=The scale-up gap: Financial market constraints holding back innovative firms in the European Union |url=https://www.eib.org/the-scale-up-gap |access-date=2024-07-30 |website=European Investment Bank |language=en}}</ref><gallery mode="packed">
File:Secop R&D Center in Gleisdorf Austria.jpg|Secop R&D Center in Gleisdorf Austria
File:IBM Germany Research & Development Client Center 03.jpg|IBM Germany Research & Development
</gallery>
===Worldwide===
In 2015, research and development constituted an average 2.2% of the [[global GDP]] according to the [[UNESCO Institute for Statistics]].<ref>{{Cite web|url=https://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS|title=Research and development expenditure (% of GDP) {{!}} Data|website=data.worldbank.org|language=en-us|access-date=2017-12-12}}</ref>
By 2018, research and development constituted an average 1.79% of the [[global GDP]] according to the
{{Bar chart
| title = Top countries by R&D spending<ref>
| label_type = Country |
| data_type = R&D as percentage of GDP
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==External links==
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