A new study suggests that China and other countries are increasingly capitalizing on product development breakthroughs from the U.S.
The analysis by Boston Consulting Group found that China overtook the U.S. in spending on late-stage product development in recent years while the U.S. continued to lead the world in overall research and development spending.
USA Today reported that the pattern shows that although the U.S. continues to churn out new technology, other countries are reaping more of the rewards.
The U.S. dedicates about one-third of total R&D spending to the commercialization phase; in China, that share is 84 percent. Late-stage R&D spending is also growing at a 20 percent clip in China compared to just 5 percent in the U.S.; by next year, China's late-stage investment will double that of the U.S.
“Other countries are free-riding on the U.S. investment," study co-author Justin Rose told the paper.
The report also said that slower investment in commercializing products in the U.S. effectively took tens of billions of dollars and thousands of jobs out of the nation's manufacturing economy in recent years.
China, analysts noted, offers a number of advantages for late-stage investment. The government often directs industry goals and state-owned enterprises are better able to absorb losses. The country is also frequency blamed for intellectual property theft.
In the U.S., meanwhile, universities conduct most early-stage work — with the help of federal grants — and private-sector companies bring new research toward the commercial market.
BCG analysts argued that the U.S. could restore its dominance in R&D through better collaboration between universities, industry and research groups.
USA Today also noted that although the Trump administration sought to reduce the nation's trade deficit, the White House budget proposal to cut federal R&D spending could hinder those efforts.