2019 3rd International Conference on Data Science and Business Analytics (ICDSBA)
Study on The Investment Structure of Basic Research
Benxian Tang
Guangzhou Maritime University, Guangzhou
Guangdong, PRC
e-mail: 81013171@qq.com
Abstract—This paper describes the investment structure of
basic research from three dimensions: intensity of basic
research, proportion of main investing bodies and application-
orientation of basic research. Intensity of basic research in
China in 2015 was less than 5%, while that of the United States
and Britain was about 17%,that of South Africa was 25%.
The proportion of basic research funds from the government
in China was about 98% , South Africa’s was about 87%,the
proportion of the United States and the United Kingdom was
about 70% . The proportion of main investing bodies in China
is imbalanced .The proportion of basic research funds from
enterprises in Korea is as high as 55%, followed by Japan,
which is as high as 43%. In China, the proportion is less than
2%. There is application-oriented imbalance in basic research .
This paper analyses the policies and effects of the United States
in promoting basic research investment, and puts forward
policy suggestions for optimizing China's basic research
investment.
Keywords- structure of basic research investment; intensity
of basic research; application orientation of basic research
I. INTRODUCTION
In order to implement the innovation-driven development
strategy, China has continuously increased R&D investment.
By 2018, R&D funds ranked second in the world for six
consecutive years and patent applications ranked first in the
world for seven consecutive years. However, industrial core
technology has low self-sufficiency, high external
dependence, serious lack of core parts and chips, and less
than 40% of chip self-sufficiency. High-end chips almost
rely on imports, and more than 90% of key components in
equipment manufacturing industry rely on imports. China's
original innovation is at a low level, which has not played a
significant role in economic growth. Innovative factors have
not formed a new driving force for economic growth (Tian
Jietang, 2018; Zhang Jie, 2016; Fu Yuanhai, 2016). Why
does the continuous growth of R&D input fail to achieve the
synchronous growth of innovation quality and the
transformation of economic growth power? The
improvement of the quality of innovation output in China
can not be solved by simply increasing R&D investment, but
also depends on the intensity of basic research in R&D
structure (Wei ping, 2013). The intensity of basic research
(basic research/R&D) is an important index to measure
whether a country's R&D resource allocation is reasonable or
not. However, the intensity of basic research in China is far
from that of developed countries in Europe and America,
978-1-7281-4644-7/19/$31.00 ©2019 IEEE
DOI 10.1109/ICDSBA48748.2019.00108
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Ping Huang*
Guangdong University of Finance
Guangdong, PRC
e-mail: Hppjf030417@163.com
even though there are some gaps with Brazil, India and other
emerging economies. Now basic research should be
strengthened to provide strong support for building a strong
country in science, technology and quality. Innovation in
China is at the critical stage of upgrading from quantity
accumulation to quality. How to strengthen investment in
basic research scientifically? How to diversify main
investing bodies of basic research? It is undoubtedly of great
theoretical and practical significance to study and answer
these questions so as to deepen innovation and promote the
effective allocation of R&D resources to realize the power
transformation of economic growth.
II. CHARACTERISTIC FACTS OF CHINA'S BASIC
RESEARCH INVESTMENT
A. Intensity of basic research
Basic research embodies the original innovation ability
facing the frontier of science, is the engine to enhance the
ability of independent innovation. The intensity of basic
research is an important index to measure the rationality of
R&D resource allocation in a country or region. In 2016, the
intensity of basic research in China was 5.23%. Except
Beijing (14.2%) reached the strength of basic research in
developed countries, even though the intensity of basic
research in developed provinces such as Shanghai and
Guangdong was very low (see Fig. 1). Fig. 2 shows the
comparison of the trends of basic research intensity between
China and the United States, Britain and Japan in 2008-2015.
Fig. 2 shows that the basic research intensity of China
maintained 4.8% in 2008-2015, while that of the United
States and Britain ranged from 16% to 19%. Since 2008,
South Korea has continuously increased its basic research
intensity from 16% to about 18%. Even in South Africa,
which is also an emerging economy, basic research intensity
is more than 20%. Compared with developed countries and
emerging economies, China's basic research intensity is too
low, and does not increase with the increase of R&D
intensity. China's basic research input structure shows a
proportion imbalance. Basic research is the motive force of
regional or national innovation. The structural imbalance of
China's basic research investment proves that the original
R&D innovation ability is not strong.
B. The main body of basic research investment
Fig. 3 is a comparative chart of the proportion of basic
research funds from the government in nine countries: China,
the United States, Japan, France, Israel, Italy, South Korea,
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 the United Kingdom and South Africa. From Fig. 3, we find
that the proportion of basic research funds from the
government in China has increased in recent years, from C. Application-oriented imbalance in basic research input
95.7% in 2008 to 98.4% ,which was the highest among the Since the 1990s, the time of transformation from basic
nine countries, followed by South Africa, which was 73% - research achievements to applied technology has been
87%. The United States and Britain showed a downward
trend, the proportion of the United States is from 70.8% to
61.3% , the proportion of the United Kingdom is from 74.9%
to 67.3% . The proportion of government funds in France
and Japan is relatively stable, accounting for 83% ,55%
respectively. The proportion in South Korea is only about
43%. Funds for basic research in China mainly depend on
government input. The source of funds is single, and the
proportion of main investing bodies is imbalanced. Although
investment in basic research has continuously increased in
recent years, there is a huge gap in investment in basic
research. The single channel of investment is one of the
important reasons. It is necessary to broaden the channel of
investment in basic research, so as to realize the
diversification of the main investing bodies in basic research.

Figure 3. Funds of basic research form government in 2008-2015

greatly shortened. Basic research includes pure basic

research and applied basic research. In order to achieve the
sustainable development of technology, large enterprises
actively invest in basic research, making basic research
investment demand-oriented and application-oriented,
improving the breadth and depth of enterprise’s knowledge
base, and enhancing the leading role of technological
innovation. At present, there is no data that countries directly
invest in applied basic research. Under the principle of
interest-driven, enterprises have a Pasteur quadrant tendency
to conduct basic research. Fig. 4 shows the proportion of
Figure 1. Comparison of Intensity of basic research in 2010-2016
basic research conducted by enterprises in China, the United
States, the United Kingdom, Japan and Israel from 2008 to
2015. We find that the proportion of basic research funds
from enterprises in Korea is as high as 55%, followed by
Japan, which is as high as 43%. In recent years, the
proportion of basic research carried out by enterprises in the
United States, Britain and Israel has been increasing steadily,
reaching more than 25%. Even in South Africa, the
proportion of enterprises ranges from 11% to 25%. In China,
the proportion of enterprises is low. It did not exceed 2% in
2008-2015. In 2016, although it increased, it was only 3%.To
a certain extent, it shows that Chinese enterprises seldom
engage in basic research, and they focus on applied research
and experimental development. To a certain extent, it shows
that the application orientation of basic research investment
in China is unbalanced. The lack of application orientation in
basic research results in difficulties in transformation and
fails to play the role of the source of independent innovation.
Figure 2. Intensity of basic research in nine countries in 2008-2015

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 III. CASE ANALYSIS OF THE POLICY EFFECTIVENESS OF
ENCOURAGING FUNDAMENTAL RESEARCH INVESTMENT IN
THE UNITED STATES
Since the 1980s, the sources channels of investment in
basic research in the United States have been on the rise.
Among them, the investment from the federal government
Figure 4. Funds of basic research form enterprises in 2008-2015
has been declining, the proportion of other investment
bodies has been increasing and strengthening, and the gap
between different investment bodies has been convergent.
One of the policies to diversify the channels in the United
States is the Baidu Act, which allows those who receive
federal funding to enjoy the intellectual property rights of
research results, and encourages enterprises and universities
to transform research results of basic research through
cooperation, which arouses enterprises' attention to basic
research.
Tab.1 shows the relevant policies formulated by the U.S.
government to support basic research. Under the incentive of
relevant policies, basic research in the United States has been
paid attention to, the pattern of government-led and
diversified investment bodies has been formed. With the
introduction of relevant policies, the proportion of basic
research carried out by American universities has declined,
and enterprises continue to increase their investment in basic
research. In 1995, the proportion of basic research funds
from enterprise was as high as 25%, about half of
government funding. Most of the basic research carried out
by enterprises has application orientation. At the same time,
the Federal Laboratory, which has the advantages of
sufficient funds and human capital, is also responsible for
some basic research tasks in the United States. Although
non-profit organizations have low investment in basic
research, the proportion of basic research funds has reached
about 10%.
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IV. POLICY SUGGESTIONS ON OPTIMIZING CHINA'S
BASIC RESEARCH INVESTMENT
Firstly, the government should continuously increase the
funds for basic research. While the growth rate of basic
research should keep the same proportion of R&D, the
government should increase the intensity of basic research ,
optimize the proportion among basic research, applied
research and experimental development, optimize r&d
structure and allocation efficiency . Government may build
policies and management systems for basic research,
establish independent organizations and management
agencies for basic research, and ensure long-term and stable
investment in basic research.
Secondly, the proportion between free exploration basic
research and applied basic research ,especially strategic
oriented basic research, should be balanced. Pure basic
research is highly uncertain and has exploratory, while
applied basic research is usually forward-looking, strategic
and applied. Pure basic research is the cornerstone of applied
basic research, and applied basic research is the extension of
pure basic research. In the layout of basic research, the
government should balance the investment in pure basic
research and strategic basic research, increase the support for
free exploratory basic research, and further increase the
investment in basic research aiming at the world's scientific
and technological frontiers and focusing on the major
strategic needs of the country, Maintaining the proportion of
pure basic research to strategic-oriented basic research is in
line with the national conditions, and adjusts dynamically
according to different stages of development, so as to ensure
the funding of pure basic research to enhance the original
innovation ability and seize the commanding heights of
scientific and technological innovation.
ACKNOWLEDGMENT
Project: Guangdong Soft Science Project "Optimal
Intensity Interval of Basic Research in Guangdong and
Diversification of Main Investing Bodies " (2016A0705069);
National Social Science Fund (14BZX081); Guangzhou
Think Tank Project: Building Guangzhou-Shenzhen-Hong
Kong Science and Technology Innovation Corridor
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TABLE I. Policies in Support of Basic Research in U.S.

Time Policy(Report) Contents
1945 Science: The Endless Frontier Government's recognition of the role of basic research
1950 National Science Foundation Act Setting up the national science foundation to highlight the position of basic research
(1)Departments funded by Federal government enjoy intellectual property rights of research
1980 Baidu Act achievements;(2)Encourage universities to cooperate with enterprises to industrialize R&D achievements
funded by government
Renewal of the Promise: Research-
1992 To increase the range of NSF funding for basic research and expand the scope of funding
intensive Universities and Countries
(1)Maintaining a leading position in all frontiers of Science;(2)Enhancing linkages between basic research
1994 Science and National Interests and national goals;(3)Incentive investment in basic science;(4)Improving the overall scientific literacy of
the United States
(1)NSF funding will double in 2006-2011;(2)NASA will increase basic research
2007 American Competitiveness Act expenditure;(3)Establishment of Innovative Acceleration Research Project, 8% of the funds to support
high-risk frontier projects etc.
2009 American Innovation Strategy Rebuilding American Leadership in Basic Research
American Innovation Strategy in (1)Ensuring leadership in basic research;(2)Providing the largest increase in R&D funding in U.S. history
2011
2011 and substantially supporting basic research;(3)Twice funding for three core basic research institutes
American Innovation Strategy in (1)Increase investment in basic research areas leading the world;(2)More than 3% of GDP goes to fund
2015
2015 R&D, etc.

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