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Economic analysis - The Nobel Prize in Science and Investments in Research
Published in AL HAYAT on 13 - 10 - 2009

When it comes to the Nobel prizes awarded annually to scientists in Medicine, Chemistry, Physics and other types of sciences, the balance is always tipped in favour of the United States, and of the scientists cooperating with the U.S from other nationalities.
This “tipping” has nothing to do with any political pressure or bias on the part of the Nobel Committee, and everything to do with the uniqueness of the American state of affairs, where there is inherent seriousness in promoting research and development. Such a tendency in fact was the main tenant upon which the post-WWII American economy was built, and which also centred around winning over foreign markets by providing high-quality goods that have a long shelf-life, and achieving competitiveness among the products of national companies in the domestic market, and between these products and the products imported from foreign companies (both domestically and abroad). Such competitiveness cannot be achieved in quality and price except through innovation, which in turn is the product of research and development, whether in the laboratories in the public sector, or in private companies.
Equally, globalization and the liberalization of international trade have made research and development the pedestal upon which global competitiveness rests: without research and development, the United States would not have occupied its place on top of the list of the laureates of the Nobel Prizes in Science. As such, experimentation and innovation are the green light that allows the passage of any country into global competitiveness. For this reason, the interest in “research and development” has become not only one of the foundations of economic globalization, but also one of the decisive factors in achieving competitiveness in this globalized economy.
Meanwhile, the integration of countries and the free flow of foreign capital both reduce the chances of competitiveness being limited to only one country; rather, they increase the challenges facing each country to exploit the foreign capital invested therein to achieve further competitiveness, which in turn relies on innovation. As such, the latter becomes the key to garner more benefits for a given country, and also to secure their own shares of the market, and new foreign economic gateways.
Moreover, research and development attract highly qualified professionals, encouraging them to join this field. Such individuals, for instance, then become human factors that contribute to competitiveness in the member countries of the OECD, which allocates large budgets for scientific research and development. Within the OECD, the G7's share of research and development spending amounts to 83 percent of the total spending of the OECD's thirty member-countries.
An examination of the budgets allocated for research and development prior to the financial and economic crisis reveals that the United States, Europe and Japan were dominant in this regard, hogging more than two thirds of the total worldwide spending estimated at 1124 billion dollars. The United States' share alone of the total global spending on research and development amounts to 353 billion dollars or 31.4 percent, giving the U.S the lead when it comes to innovation and in securing Nobel Prizes in the different scientific disciplines.
Furthermore, the development of scientific research supports the improvement of infrastructure, pushes a rise in the numbers of laboratories, universities and the diversification of [research] interests, and allows the sharing of skilled scientific capabilities (i.e. the number of available scientists). Globalization in this regard also applies, and perhaps at the same rate, on the activities of multinational companies outside of their original countries. In 2004 for instance, the share of foreign institutions of spending on research and development amounted to 17 percent from the total spending on research and development in Britain, and 9 percent in France. This means that the local knowledge-production capacity in each of the two countries is converted into profits for foreign companies.
Another example of globalized investments in research and development is that the emerging market countries, where labour is relatively cheap, are attracting multinational companies, progressively providing them with highly qualified scientists, which in turn boosts the establishment of more research laboratories there. There are in fact 980 multinationals operating in China that use a research laboratory each, in parallel with 255 companies listed on the Fortune 500 list of companies with the highest gross revenues (Fortune magazine) operating in India, and possessing research and development laboratories there.
This is where the difference in competitiveness lies between China and India: most of the research and development laboratories in the former serve the demands of the domestic market, while the research and development laboratories in India provide their services to the global market, especially in areas such as electronics.
A list of the top twenty global companies meanwhile, reveals that seven of them invest in research and development in the fields of pharmaceutics and electronics, while six invest in automotive research; it is worth noting here that researches in electronics and automotives are somehow linked together: in both industries, the perpetual search for competitiveness in prices justifies the relocation of their industrial subunits to the cheap labour zones. As for the search for competitiveness in quality, it also prompts both industries to invest in the areas that simultaneously possess cheap labour and technical competencies.
Globalization as such imposes the “broadest possible” forms of competition: it renders it crucial to couple the search for lower cost in the various types of activities with the need to produce the most innovative products and processes. Within these parameters, the United States has the edge over other countries. Instead of relocating to areas of cheap labour, the U.S attracted a flux of highly qualified international scientists, and provided them with high-tech laboratories and massive budgets, while greatly adjusting the wages of workers. It should be mentioned in this vein that the private sector in the United States contributes about 71 percent of the total spending on research and development in America.
This is where true genius lies.


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