AS per OECD Study, the prevailing economic slowdown is all set to hit the business spending on research and development, which could ultimately impact innovation and long term growth.

Aa per the report the current weak economic recovery will likely lead to continued sluggish growth in R&D spending by firms, notably in Southern and Eastern Europe, in the foreseeable future. The outlook for France, Germany, the United Kingdom and the United States is also uncertain.

Spending by Asian economies, such as China, India and Korea, on the other hand continued to increase during the crisis. Year-on-year growth in R&D investment by firms in 2010 was 29.5% in China and 20.5% in Korea and India. 

Government R&D spending moderately offset the fall in business investment, as many governments committed a substantial part of their stimulus packages to support R&D and innovation. Government R&D spending as a share of GDP was 0.82% in 2009, up from 0.78% in 2005.

During the crisis, some countries strengthened their support for public research institutions and educational programmes, including Australia, Canada, China, Italy, Switzerland and the United States. Estonia, Germany and Sweden boosted investment in existing programmes to support innovation.