Western Knowledge Gap Widens with Shift to the East According to Research by the University of Sheffield and Aston Business School

Researchers at the University of Sheffield and Aston Business
School have found investment in Research and Development (R&D) is
rapidly shifting from North America and Europe to Asia, resulting in a
small elite club of regions, in both the advanced and developing
world, that are dominating the global knowledge economy. In the new
findings published today (date), the researchers found that companies
in advanced regions such as Silicon Valley in the US, Cambridge in the
UK, Ottawa in Canada and Helsinki in Finland, are increasingly
establishing partnerships and networks with companies and universities
in fast-developing Asian regions.

They found that of the US$50 billion invested by multinational
companies in R&D projects around the world between 2002 and 2005,
Asian economies received 58% of this investment, with Europe receiving
22% and North America 14%. The majority of the investment in Asia is
concentrated in a very small number of locations such as Bangalore,
Hyderabad, and Mumbai in India and Beijing, Guangzhou, Hangzhou and
Shanghai in China.

While Asia was the dominant destination of R&D investment, North
America was the primary source, accounting for 50% R&D investment,
followed by Europe with 28%. This resulted in North America having net
R&D investment deficit of US$18 billion and Europe a deficit of US$3
billion.

According to the authors of 'Competing for Knowledge', Dr Robert
Huggins, of the University of Sheffield's Management School, and Dr
Hiro Izushi, of Aston Business School, the key impact of this global
redistribution of knowledge is that many regions in North America and
Europe are losing out and the competitiveness gap between these
locations and the elite regions is becoming even wider.

The research also shows that companies in advanced economies are
finding it increasingly difficult to create innovations resulting in
market-leading goods and services. For example, between 1996 and 2006
productivity growth resulting from innovation in the United States
amounted to only 1.5% per annum, considerably lower than that achieved
in the 1950s or 1960s.

Dr Huggins said: "As the knowledge required to produce innovations
becomes more specialised and located in new locations around the
world, companies are having to ensure that they are closely linked and
aligned with these new sources wherever they may be. Since China is
now the second highest research spender it is increasingly likely that
it will feature more prominently as one of these new sources."

Notes to Editors:

'Competing for Knowledge: Creating, Connecting and Growing' by
Robert Huggins and Hiro Izushi is published by Routledge. For further
details go to: http://www.cforic.org/pages/competing-for-knowledge.php

Dr Robert Huggins and Dr Hiro Izushi are the Directors of the
Centre for International Competitiveness (www.cforic.org)