It is encouraging that even through the recent recession the U.S. continued to focus on innovation. Total U.S. R&D spending rose from 2.7 percent of GDP in 2006 to 2.8 percent in 2011; however, while competitive, the nation is clearly not dominant in this arena. U.S. investment is modestly below that of Germany, which has been rising since 2004. Further, Japanese R&D spending as a share of GDP remains notably above those of these countries, although it fell between 2008 and 2010, it is back on the incline in 2011.

While China’s level of investment remains far behind those of the U.S. and other rich nations, it has been rising steadily and significantly. At 1.8 percent, China’s R&D investment as a share of the economy during 2011 was more than twice that seen in 1999. While R&D spending is one important investment metric, economists increasingly recognize that innovation results from a complex ecosystem. Research from MAPI and other sources reveals the contribution of cutting-edge scientific output from academic institutions, capital investment, and the growth of the science and engineering workforce. Such research demonstrates that even a modest increase in these innovation inputs can generate a sizable increase in product and process innovation output.

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