The National Science and Technology Council has conducted an annual national science and technology trends survey since 1981 to highlight the state of domestic research and development (R&D) activities and provide input and recommendations to the government for drafting science and technology policies. On Oct. 31, the council released its survey for last year, showing the nation’s total R&D expenditures increased 4.4 percent year-on-year to NT$937.3 billion (US$28.85 billion) and accounted for 3.98 percent of GDP, up 0.02 percent from the previous year.
Of the total R&D spending, NT$135.8 billion was from the government sector, an 8.6 percent annual increase, while NT$801.5 billion came from the corporate sector, up 3.7 percent from the previous year, the council said.
What warrants attention is the 3.7 percent annual increase in the corporate sector’s R&D expenditures last year, which was not only the lowest growth in seven years, but also marked a stark decline from the previous three years, when the growth rates were 11 percent in 2022, 16.4 percent in 2021 and 10.63 percent in 2020.
Affected by the sharp setback in the corporate sector’s R&D investment, the 4.4 percent increase in the nation’s total R&D spending last year also represented the slowest pace in seven years, highlighting the crucial impact of changes in enterprises’ resource deployment on national R&D spending.
The corporate sector plays a key role in progressing the nation’s R&D, as firms’ R&D expenses have accounted for more than 80 percent of the national R&D expenditures over the past few years. The ratio was 85.5 percent last year, down 0.6 percentage points from the previous year, the council’s data showed. While the ratio of government investment in R&D to national R&D spending increased by 0.6 percentage points compared with 2022 to reach 14.5 percent, it remains far behind the government’s goal of approaching a ratio of 40 percent for the public sector and 60 percent for the private sector.
In other words, when firms in the private sector are affected by various factors and reduce their R&D investment, government agencies and affiliates in the public sector must play a counter-cyclical role as a national development stabilizer. They should increase R&D investment to maintain the country’s overall science and technology competitiveness in times of insufficient spending by firms.
The survey also found that Taiwan’s R&D efforts remain focused on technology development. Funding in this area increased 5.5 percent to NT$689.7 billion last year, accounting for 73.6 percent of the overall R&D spending, as rising demand for products related to 5G, artificial intelligence and high-performance computing boosted corporate R&D in computers, semiconductors, electronics and optical components manufacturing. In contrast, about NT$173 billion went to applied research, down 1.4 percent and comprising 18.5 percent of the total R&D spending.
Meanwhile, basic research amounted to NT$74.6 billion, up 8.8 percent and taking an 8 percent share of the total R&D spending last year, but the ratio of basic research to overall R&D spending had fallen below 10 percent for 10 consecutive years. Taiwan’s efforts in this area still underperform other major economies.
If only a small portion of the nation’s overall science and technology spending goes toward fundamental research, which helps lay the foundation for technological innovation and industrial transformation, Taiwan’s competitiveness could be undermined in the long term. As firms are increasingly focusing on technological development, the government must step in and earmark more public sector resources for basic research and encourage higher education institutions to intensify their investment in this area.
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