 India is producing huge numbers of science graduates |
UK think-tank Demos said China, India and South Korea were "innovation hotspots" and were shifting research dominance from west to east.
It cautioned that the UK must "wake up to what is unfolding" and not respond with "too little, too late".
But it added the developments should not be seen as a threat as they could open up many opportunities for the UK.
Report co-author James Wilsdon, head of science and innovation at Demos, said the pace of innovation had been changing very quickly in Asia. 
There are a lot of opportunities out there 
He said factors such as rapidly growing markets, injections of state spending on research, and the "brain gain" as researchers returned home from the US were driving the boost in science-based innovation.
South Korea, following its rapid industrial development 30 years ago, has recently doubled its investment in research and has augmented its scientific workforce; China has also gained huge amounts of state science funding; while India produces 2.5 million IT, science and engineering graduates a year, the report said.
Both multinational and home-grown companies were taking advantage of this, Demos added, and the US and Europe could no longer take for granted their pre-eminence in science.
The right mix
The report, Atlas of Ideas, commissioned by the UK government and a consortium of public and private sector partners, examined the role British science could play within this changing global scene.
Mr Wilsdon said: "The case we are making very strongly is that there are a lot of opportunities out there.
"If the UK can get the mix of policy and incentives right to encourage our best scientists to collaborate with the best scientists in these countries, that would be for the greater good of everyone."
But the report warned Britain needed to act now to ready itself for a world where innovation was not dominated by Europe and the US - or face being left behind.
The authors made several recommendations, including:
- Boosting international partnerships through a 100m global research and development collaboration fund
- Increasing the number of scholarships and exchanges with Asian countries
- Creating knowledge banks and research programmes that solve the global public interest.
Mr Wilsdon said: "We just can't sit back and think: 'Oh well, I'm sure this will all work out'.
"This may not be adequate given the scale of what is happening and the opportunities that have been presented."
Commenting on the report, Martin Rees, president of the Royal Society, said: "Science is a global endeavour and the UK should embrace rather than be threatened by these developments.
"If we as a nation want to stay at the forefront of international science, we need to retain and create strong scientific links with countries such as India and China.
"For this to happen, the government must be prepared to earmark significant funding for international collaboration, combining our expertise to tackle global challenges such as energy, health and the alleviation of poverty.
"And, for its part, the UK scientific community must be prepared to look to these countries when building research partnerships."
| By Dr Peter Cotgreave Director, Campaign for Science and Engineering |
The best European scientists denounce the European Union's funding of research in terms as colourful as a display of European flags. 
It is inadequate and out of touch with the reality of a modern competitive economy.
Framework Programme 7 is supposed to put that right, recognising the need to invest more in research and development, to be more flexible and to build stronger bridges between excellent science and business innovation, rather than creating artificial links between Aberdeen and Zurich for the sake of it.
The Lisbon agenda set a target that will be difficult if not impossible to achieve. The EU as a whole should be investing 3% of its Gross Domestic Product on research and development (R&D) by 2010.
Almost no European country currently invests as much as 3% of its national wealth in R&D, and certainly none of the big nations like France (2.16%), the UK (1.88%) or Germany (2.49%). FP7 represents about three quarters of 1% of the EU's national product, as far away from the Lisbon target as Helsinki is from Valletta
International competitors perform much better; Japan is already at more than 3%, and the USA and Korea are close behind.
At about 7bn euros annually, FP7 represents about three quarters of 1% of the EU's national product, as far away from the Lisbon target as Helsinki is from Valletta. National governments and the private sector will also need to invest at much higher levels than at present.
Defining priorities
This is frankly unrealistic within the timescale of the Lisbon agenda. It means that within just over three years, the EU countries are going to find another 118bn euros a year for research, enough for every man, woman and child in the EU to fly backwards and forwards from London to Athens twice.
In fact, the British government has already realised there is no chance of the UK achieving its share. It has reduced its aspiration to an investment of 2.5% of national wealth, and has given itself a longer timescale to get there - by 2014 instead of 2010. 
The President of the European Commission, Jose Manuel Barroso, and his team do not seem to fully to understand that the best results come from allowing the science and business communities to define scientific priorities.
The European Institute of Technology (EIT) is one of Mr Barroso's big ideas, and is meant to help turn research theory into wealth-creating reality.
Organic development
He is right about the challenge, but this solution will not work. European institutions are years behind the American competition, and rather than creating yet another expensive acronym, we should invest in organic development in those universities that are already forging ahead, and which have great potential.
Business has failed to pledge any of the private sector investment on which the EIT project depends. It looks to industrialists like an inflexible, bureaucratic institution rather than the flexible network of activity they would like. 
If industrial leaders do not see Europe as an attractive and competitive place to do scientific business, then they will not spend their money here, and the Lisbon target will not be met in a century, let alone by 2010.
Making Europe competitive will involve a whole raft of policies, including low business taxes, which have attracted high-technology investment and jobs to Ireland.
But it will also involve substantial public sector investment in science education, in research, and in building strong networks between universities, businesses and other organisations.
'Blunt process'
FP7 has the potential to make an important contribution to those aims, but only if it avoids the traps of its predecessors.
It has got to cut down on the amount of ridiculous bureaucracy that is inherent in EU research.
It has to realise that people are more important than institutions. Most importantly, it has to learn to distinguish between funding excellent science on the one hand and, on the other, using funds to build scientific capacity in the poorer parts of the continent.
Both are admirable and desirable; indeed, both are essential to the economic success of Europe. But they cannot both be achieved with a single blunt process.
If FP7 focuses on properly achieving these twin aims, and if national governments concentrate on making Europe an attractive place for high-technology industrial investment, the Lisbon target might start to look to sensible, although there is no chance of it being reached by 2010.
If FP7 gets bogged down in the same problems as FP6, it will make itself irrelevant and national governments will need to work even harder to make Europe a competitive economy.
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