Global R&D spend surpasses $700 billion, Amazon leader in the world
The world's 1,000 most innovative companies increased their R&D spending by 3.2 percent in 2017, pushing it to an all-time high of $702 billion (€597 billion), according to the Global Innovation 1000 survey published by consultancy PwC on Tuesday.
The figure marked a resumption of meaningful growth in innovation spending following flat results in 2016, and means the global private-sector spending is now 2.7 times as high as it was in 1999 – the first year for which PwC assembled data.
The rise in R&D spending came despite a 2.5 percent decline in revenue for those 1,000 companies surveyed by PwC. As a result, the combination of overall spending growth and lower revenues led to a record-high R&D intensity rate of 4.5 percent.
For the first time in the study's 13-year history, a software and internet company, Amazon, is leading the top 20 R&D spenders, with outlays of $16.1 billion.
According to PwC's Strategy&, the firm's strategy consulting unit, Amazon intends to invest around 16.1 billion U.S. dollars in research and development until the end of the current fiscal year in June 2017.
Amazon was followed by Google's mother corporation Alphabet in second place, software firm Intel in third, and Korean electronics giant Samsung in fourth place.
"A glance at this year's top three is sufficient to underline the dominance of the U.S. digital giants when it comes to innovation," a statement by Strategy& European Head Peter Gassmann read.
German carmaker Volkswagen (VW) dropped to fifth place in 2017, with spending of $12.2 billion, and after leading the tables for the five previous years. Annabelle Kliesing, co-author of the survey, attributed the fall mainly to currency effects, saying that in euro terms VW's spending decreased by only 400 million euros compared with 2016.
Thirteen of the top 20 spenders in 2017 were headquartered in the United States, reflecting the country's dominance in the high-tech and healthcare industries, which tend toward high R&D intensity, followed by Europe and Asia with four and three corporations respectively.
Nevertheless, the United States only accounted for 368 entities, or around a third of the total, in Strategy&'s wider list of the 1,000 global firms.
The first Chinese decline, falling by 3.3 percent, tracks an 11.4 percent drop in spending in the country's industrials sector due to an economic slowdown and increasing financial constraints.
John Potter, partner in PwC’s Strategy&, said: “To deliver innovation, many of world’s largest companies rely on shifting talent, money, and ideas across borders." “If policies in the major global economic powers start to focus more inwardly, however, this would cast uncertainty over companies’ innovation plans and their current models would need to evolve.”
He added: “Uncertainty only serves to slow innovation. Given that R&D activities ultimately help to create the jobs, growth and wealth of our communities, we need to ensure clarity over policy to keep innovation centres around the world working effectively.”