January 31, 2026

As Singapore positions itself as a leader in sustainability and innovation, understanding how business cycles influence Research and Development (R&D) decisions is essential for shaping future growth. Aligned with the Research, Innovation, and Enterprise 2025 Plan (RIE2025), Singapore continues to build a knowledge-based, innovation-driven economy with steady and sustained investment in R&D as a key pillar of its economic development strategy. This commitment is especially critical as the global economy transitions towards sustainability, where clean technologies and green innovations are becoming central to long-term growth and competitiveness. 

Like other investments, R&D is profit-driven, and the cyclical nature of business influences the decisions that firms make about their innovation efforts. However, the cyclical nature of these projects may vary between Green R&D, which focuses on clean technologies, and Brown R&D, which is associated with traditional polluting industries. Understanding how business cycles affect these R&D choices is critical for fostering sustainable growth, as firms may prioritise short-term profitability over long-term environmental benefits during periods of economic downturn. 

Supported by the Ministry of Education Social Science and Humanities Research Thematic Grant (MOE SSHR-TG) from 2024 to 2027, ‘Medium-term Business Cycles, Green Innovations, and Sustainable Growth’ is led by Assistant Professor Donghai Zhang (NUS Economics). The project investigates the relationship between business cycles, R&D decisions, and the broader transition towards Green technologies.  

The project aims to develop a novel medium-term business cycle model to explain how firms decide between Green and Brown R&D projects, particularly in response to economic cycles. Crucially, the project will introduce a separate model that distinguishes between these two types of R&D, highlighting the unique factors that influence investment in each.  

On a broader scale, the project aims to provide guidance to relevant government institutions, including Singapore’s Ministry of Trade and Industry (MTI), in promoting economic growth and enhancing the nation’s global competitiveness. Utilising the insights gained from the research, ‘Medium-term Business Cycles, Green Innovations, and Sustainable Growth’ will help guide strategic decisions on funding and innovation, keeping sustainability central to Singapore’s long-term economic strategy.