Emerging markets are closing in on their more developed counterparts, with China’s patent and research growth now dwarfing that of the United States, writes Bob Stembridge of Thomson Reuters
There’s an arms race for the modern era, but it comes in the form of patents and papers, not missiles and machine guns. The rise of emerging markets such as China and India has become a global phenomenon, and a glimpse into the innovation portfolios of the G20 group of major economies has revealed that trend is not slowing down anytime soon. On the contrary, the production frenzy is growing, but at what pace? Are these markets pulling away from the rest of the world? Our research team at Thomson Reuters embarked on a project to identify the innovation footprints of the G20 nations. The report – compiled using data from our Web of Science, InCites and Derwent World Patents Index resources – analysed the contributions of each country to the global innovation framework. The findings are stark, as China’s dramatic surge in both scientific research and patenting over the last decade continues at an unprecedented level. Chinese peer-reviewed paper output and patent activity has climbed to new heights, leading one to wonder if a changing of the guard is about to take place. China’s push leads landscape shift China’s projected rise to innovative dominance has often come with a caveat: China is the beneficiary of many Western firms protecting their intellectual property in the region, creating a false inflation in China’s performance. Our research shows that simply isn’t the case. The Chinese patent portfolio shows that, over a decade, the ratio of domestic to foreign applications has shifted from just under 50% to over 75%. In 2011, over 314,000 patent applications were filed in China, and only about 75,000 of those were filed by foreign companies. The rest were homegrown. As a result, the Chinese rate of patent growth over the evaluated 10 year span (29%) dwarfs all nations – including the United States – as the country increased its overall invention patent applications from 40,000 in 2003 to over 400,000 in 2012. Meanwhile, China has built a broad capacity for scientific research which has manifested into a massive increase in publication output. China’s peer-reviewed papers accounted for 14% of the world’s share in 2012, up from 5.6% in 2002, and less than 0.5% at the start of the 1980s. India patent volumes remain volatile, papers rise Indian patent applications show a more volatile and internationally-reliant trend. Two thirds of all Indian patent applications originate from foreign entities, in contrast with China’s domestic surge. Since 2005 – the earliest year where data was fully available – patent applications originating from India have fluctuated between 4,000 and 7,000 per year, but maintained an average over the period of around 5,900, which is comparable to Australia and the United Kingdom. When India’s population of over 1.2 billion is taken into account, however, compared to 22 million for Australia and the United Kingdom’s 62 million, the country’s overall level of patenting is relatively low. On the scientific research front, India is rapidly enlarging its presence globally. Its output expanded nearly three times the world average over the last decade, some 146%, from 21,269 Web of Science papers in 2003 to 45,639 in 2012. That’s twice as many published research papers in 2012 as 2003, though the country did experience its first year-over-year dip in 10 years from 2011 to 2012. However, only in comparison to China does this look like underperformance – it is in fact impressive growth as it gained for the nation an increase in world share of 1.1%, from 2.5% to 3.6%. United States and European Union lead shrinks While China has taken off, the United States has showed a slowing growth trend. US domestic patent volume has steadily risen by an annual rate of 2%, from less than 150,000 priority applications in 2003 to over 180,000 in 2012, but that is miniscule in comparison to China. In addition, US innovation accounts for 56% of all US patent applications, down from 63% in 2003, and seven of the top 10 patenting companies in the United States have headquarters in Asia (four Japanese, two Chinese, and one Korean). Innovative activity in Europe has gone through a series of ebbs and flows. Innovation, as measured by European Patent Office priority patent applications, grew significantly from 50,000 in 2003 to a peak of 60,000 in 2008, but then dropped to around 56,000 in 2011, only to see a slight resurgence in 2012 to 56,500. Forty-two percent of those applications originated from European concerns in 2012, representing a fall from just short of half in 2003. Although applications originating from Europe rose over the period, applications from outside Europe grew faster. Senior research producers, such as Australia (2.9% of world share in 2003, 3.6% in 2012), France (51,317 papers in 2003, 65,685 in 2012), and the United Kingdom (33% output increased from 2003 to 2012), recorded significantly higher rates in their production of highly cited research papers between 2003 and 2012, while the United States was the only major developed nation to lose ground over the same period by this measure. The winds of change There is an investment being made in the culture of innovation in emerging markets and it is driving a global boom in intellectual property and scientific output. Countries who are investing in their futures by increasing their exposure to science, such as China and India, are being rewarded by seeing their share of the world’s innovation output multiply exponentially. As emerging economies continue to make this investment, the onetime stranglehold of the United States and European Union is starting to loosen. The winds of change are coming, and unless the traditional innovation giants can step up, emerging markets will soon pass them by.