The most impressive growth has been in South Korea. In 2007 Samsung spent more on R&D than IBM. The company has jumped to second place in the number of patents granted by America’s patent office (just behind IBM); a decade earlier it was not even in the top ten. South Korean firms spend more on R&D as a percentage of sales (6.5%) than European and Japanese firms (around 5%), and are catching up with American ones (about 8%). South Korea now has more high-tech researchers than Britain and Germany.

The numbers highlight the rivalry between “new Asia” and “old Asia”, says Sacha Wunsch-Vincent of the OECD, one of the report’s authors. Regional stalwarts such as Japan and Taiwan are being challenged by China, India and South Korea. R&D spending relative to sales for the leading technology companies in America, Europe and Japan was either flat or falling between 2002 and 2006, but increased in the three “new” Asian countries.

The starkest shifts are in computer services and manufacturing, where the roles of America and East Asia have diverged dramatically. The amount that American firms spend on research in computer services as much as trebled over the past decade. Japanese and South Korean firms, meanwhile, spend hardly anything developing services, and prefer to concentrate on more tangible, if less lucrative, hardware. In computers and office equipment such as copiers, America and Japan actually traded places: America’s R&D expenditure on such items fell by one-third between 1996 and 2005, while Japan’s more than doubled, to around $13 billion, the amount America used to spend. (India, meanwhile, has concentrated on services, in part because stifling bureaucracy makes it easier to move bytes around than atoms.)

... contd.