U.S. Risks Losing Global Leadership in Nanotech

New research concludes that Japan, Germany and South Korea are doing a better job of bringing technology to market.

In terms of volume, the U.S. dominated the rest of the world in nanotech funding and new patents last year, as U.S. government funding, corporate spending, and VC investment in nanotech collectively reached $6.4 billion in 2009. But according to a new report from Lux Research, countries such as China and Russia launched new challenges to U.S. dominance in 2009, while smaller players such as Japan, Germany and South Korea surpassed the United States in terms of commercializing nanotechnology and products.

The report, titled "Ranking the Nations on Nanotech: Hidden Havens and False Threats," found global investment in nanotech held steady through the recent financial crisis, drawing $17.6 billion from governments, corporations and investors in 2009, a 1% increase over 2008s $17.5 billion. Only venture capitalists dialed back their support, cutting investments by 43% relative to 2008.

"Part of what motivated our research was the emerging possibility that ambitious new government funding in Russia and China represented a threat to U.S. dominance in nanotech innovation," said David Hwang, an Analyst at Lux Research. "But while the field certainly gained momentum in both countries as a result of the increased funding, both countries have economic and intellectual property protection issues that prevent them from being real threats just yet."

Conclusions drawn from the research include:

•The U.S. continues to dominate in nanotech development for now. Last year saw the U.S. lead all other countries in terms of government funding, corporate spending, VC investment, and patent issuances. But its capacity to commercialize those technologies and leverage them to grow the economy is comparatively mediocre. U.S. competitiveness in long-term innovation is also at risk, as the relative number of science and engineering graduates in its population is significantly lower than it is in other countries.

•Other countries stand to get more bang for their nanotech buck. Japan, Germany, and South Korea continued their impressive trajectories from 2008, earning top spots in publications, patents, government funding, and corporate spending. Compared to the U.S., all three also remain more focused on nanotech and appear more adept at commercializing new technology. The relative magnitude of the technology manufacturing sectors in these three countries are the worlds highest, meaning their economies stand to benefit the most from nanotech commercialization.

•Russian and Chinese investment in nanotech yields slow progress. While both governments launched generous nanotech investment programs last year, the technology hasn't gained momentum in either country's private sector, both of which have a history of skimping on R&D. The relative lack of momentum was further underscored by the abysmal number of new nanotech patents for either country last year.

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