Unless we spend more on R&D, China will crush us

A report by HSBC says the only way for the UK to compete in the technology sector is to dramatically increase R&D investment.

by Emma Haslett
Last Updated: 17 Jun 2014

The trade deficit may have more than doubled in January, but it’s not all bad news: a report by HSBC reckons exporters are more confident than they have been for four years.

Apparently, 63% of exporters expect trade volumes to rise over the next six months, up from 61% during the second half of last year. Of course, confidence doesn’t always equal actual increases – but it’s certainly an encouraging sign.

What isn’t an encouraging sign is the UK’s expenditure on R&D: over the past 20 years we have pretty much consistently spent 1.77% of GDP on developing new ideas, compared with the US’ 2.77%.

But Asian countries are overtaking: China, for instance, now spends 1.8% of GDP on R&D. That’s twice what it used to spend. Korea is up to 3.7%, and Japan is up to 3.3% (as the graphic below suggests).

HSBC reckons the UK will be ‘outpaced in the growth of technology exports by both developing economies, including China, Malaysia, Indonesia and Turkey, and developed markets such as the US, France and Germany, over the next 15 years’. Given we’re supposedly trying to grow in the high-tech manufacturing sector, that’s potentially disastrous.

‘The world economy is becoming more knowledge-intensive,’ said Mark Emmerson, head of global trade and receivables finances at HSBC UK. ‘It is essential for the UK to invest in research and improve links between education and business to retain competitiveness and enhance future growth.’

Universities, take note…

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