The Gold For The Gold-Standard: the State of Science Funding Worldwide

 

By Mariana Meneses

Research and development (R&D) has long been a cornerstone of scientific progress, fueling innovation, solving global challenges, and fostering economic growth. Yet, to truly “reach the gold standard” in science and innovation, we must recognize a fundamental, often overlooked element—adequate, sustainable funding. 

This article explores how global disparities in funding for R&D and higher education impact the ability of countries, institutions, and researchers to meet high standards of research excellence, contributing to a more equitable global knowledge economy. It also highlights how the increasing proportion of business funding is shifting priorities toward shorter-term goals, potentially challenging long-term research initiatives.

Business Sector’s Dominance in R&D Funding

The OECD report entitled Main Science and Technology Indicators – Highlights from the March 2024 edition (PDF available here) shows that business enterprises remain the primary drivers of growth in R&D spending. In 2022, the business sector saw a 5.1% increase in its R&D investments, while government institutions and higher education sectors grew by just 1.9% and 1%, respectively. The business sector’s dominance is evident, accounting for 74% of the total Gross Domestic Expenditure on R&D (GERD) in the 38 member countries of the OECD, compared to 66% in the 27 nations of the European Union. This highlights the growing role of the private sector in funding research and development.

 

 

Not only is business direct investment increasing as a proportion of total R&D spending, businesses are also increasingly funding research in academic institutions to foster profitable innovations. A 2023 report by the US National Science Board found that the US government’s share of academic research funding decreased from 61% in 2012 to 55% in 2021. The report also notes that since 1993, the proportion of doctorate holders who leave academia to work for industry has increased from 31% to 37%.

The US National Center for Science and Engineering Statistics notes that “Expenditures on the performance of basic research funded by the business sector have increased dramatically over the past 2 decades.” The increasing influence of business in R&D funding and priorities is illustrated in the following charts, showing in orange the dramatic increase of profit-motivated investment in science.

 

The Role of the US and China

The OECD data also reveals gross domestic expenditure on R&D (see chart below), emphasizing the substantial contributions of the United States and China, which lead globally in R&D spending. Gross domestic expenditure on R&D captures the total investment from all sectors—government, business, higher education, and non-profit organizations—reflecting the overall commitment to advancing research and development within an economy. The data are presented in constant PPP (purchasing power parity) prices that adjust for differences in currency values and cost of living between countries, enabling more accurate international comparisons of R&D investments over time.

 

 

Government R&D budget trends

Government R&D budget trends reflect the priorities and strategic focus of public investments in research and innovation. This metric tracks the planned fiscal allocations by governments to R&D, including funding for public research institutions, grants, and policy-driven initiatives. Unlike GERD, which measures total expenditure from all sources, government R&D budgets highlight the role of the state in addressing national challenges, fostering scientific progress, and supporting areas where private investment may fall short, such as basic research or long-term innovation projects. 

Business funding often prioritizes short-term gains and quick returns to satisfy investors, while government funding may have a longer-term focus on societal impact or national security. For instance, James Dow (London Business School), Jungsuk Han (Seoul National University), and Francesco Sangiorgi (Frankfurt School of Finance and Management) discussed the “short-termism trap” in their article published in the Journal of Financial Economics in 2024. They argue that the short-term focus of informed investors forces publicly traded firms into a harmful cycle of prioritizing short-term projects to attract these investors, undermining long-term value creation. This competition leads to shorter project durations across the market. This disparity can exacerbate the influence of the military-industrial complex, as defense contracts often offer long-term, guaranteed revenue streams, incentivizing businesses to prioritize military production over other sectors. 

The OECD data (image below) highlights Japan and Korea as having some of the highest government R&D budgets globally, reflecting a strong commitment to technological leadership and strategic scientific advancement.

 

 

“As the enrolment in higher education has doubled in the past 20 years and the number and diversity of providers continues to grow, adequate financing has become all the more important for ensuring equality and affordability in higher education.” (UNESCO – PDF available here).

Regional variations 

The image below comes from the UNESCO Higher Education Global Data Report (PDF available here). The data, on total public spending on higher education, shows significant regional variations in investment levels. Public spending on higher education reflects government investments in expanding access to education, improving quality, and fostering the skills needed for economic growth. Over the period from 2006 to 2018, North America and Europe consistently allocated substantial resources to higher education, while emerging economies showed increasing trends, signaling efforts to strengthen human capital and compete in the global knowledge economy.

 

 

Higher education

The UNESCO data on public and private funding to tracked public higher education institutions across 41 countries, measured in billions of 2018 US dollars adjusted for PPP, reveals that from 2006 to 2018, public funding consistently outpaced private funding, as shown in the two lines of the graph. This trend underscores the critical role of government investment in ensuring access to education, addressing affordability and maintaining institutional quality.

 

 

The readiness of higher education institutions to transition to online education is closely tied to a country’s income level, according to UNESCO (see image below).

Low-income countries face more significant challenges, with fewer resources across the board, including limited power supply, which further impedes their ability to move online and compete in the global job market. However, even high-income countries struggle in key areas such as cybersecurity and videoconferencing. These issues in preparedness are especially concerning given the growing importance of digital infrastructure for both education and entry into the global workforce.

 

 

The UNESCO report highlights that sustainable and equitable funding for higher education is essential to support the significant increase in global enrollment and ensure access for diverse populations, while revealing disparities in funding sources; specifically, public financing in Europe and North America has grown, but private financing has also increased in these regions, contrasting with many other areas of the world. 

We should note the obvious, which is that the quality of R&D is directly tied to the resources available. Underfunding can lead to incomplete or ineffective research, gaps in knowledge, and missed opportunities for breakthroughs. In low-income countries, the lack of financial resources, including basic infrastructure, hinders the ability to conduct essential research. Meanwhile, even in high-income countries, uneven funding distribution and reliance on private sector involvement in R&D often results in a focus on commercially viable innovations rather than fundamental scientific progress.

 

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UK Research and Innovation (UKRI) is a public body that funds research and innovation in the United Kingdom.

A study published by UKRI and authored by Dr. Panagiota (Peny) Sotiropoulou (PDF available here) presents a literature review that identifies significant barriers that hinder access to postgraduate research funding: financial difficulties, a lack of awareness and role models, insufficient mentorship and support, and an inequitable research culture. Moreover, students from disadvantaged socio-economic backgrounds face further barriers to accessing funding due to financial constraints, institutional disparities, and a lack of awareness and support regarding the application process.

Achieving the gold standard in science demands a global commitment to equitable funding, particularly for low-income countries that face systemic barriers in competing on equal footing. Ensuring access to research grants, technology, and infrastructure is critical, not only for fostering scientific innovation but also for addressing global challenges such as climate change and public health.

Governments play a central role in funding research that may not have immediate commercial returns, particularly in basic science and long-term projects with global impact. While the private sector is focused on commercial innovation, public funding is essential to support public goods research that benefits society. 

By creating an ecosystem that balances both public and private investment, we can ensure that the gold standard in science is within reach for all regions. Only by ensuring equitable access to funding can we empower the next generation of researchers to contribute to the global knowledge economy and tackle the most pressing challenges of our time.

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