Innovation Boom: Top Investors in Research and Development
- dfilipenco
- May 13
- 4 min read
If there is one important indicator of a country’s progress that never makes the mainstream headlines, it is the investments in the research and development (R&D) sector, which is considered to be the cornerstone of innovation.
The most recent statistics convey a positive message: innovation dynamism is alive and thriving globally, despite the fact that many nations are still struggling to appropriately fund their research and development ecosystems.
What is research and development (R&D)?
Research and development lead to businesses and governments making innovative decisions when creating new goods or services. It is essential to a nation's economic progress and, as such, helps to reduce poverty.
The World Intellectual Property Organization’s (WIPO) Global Innovation Index (GII) 2024 End-of-Year Edition shows that investment in global innovation has proved to be very resilient.
Indeed, over the last two decades global investment in R&D has shown an almost 300% increase from around US$1 trillion in 2000 to more than US$2.75 trillion in 2023.
This indicates that, regardless of economic downturns, pandemics, and geopolitical unrest, nations are spending significantly more on science and technology.
Research and development have proven to be of great importance within the global economy, registering growth from less than 1.5% of global GDP in 2000 to about 2% in 2023. This increase in global GDP led to an additional US$1 trillion being allocated to R&D.
Innovation investment shifts by region
While innovation was once primarily associated with wealthy nations, today the geography of R&D is much broader and constantly evolving.
The list of the top 15 nations ranked by the amount spent on R&D therefor,e includes a number of middle-income countries such as China, India, Turkey, Brazil, and Russia, according to the WIPO.
Within the European Union, several countries stand out in terms of R&D expenditure. The data for 2023 shows that the list of EU countries investing the most in R&D includes Germany, France, Italy, Spain, and the Netherlands.
The graph below lists the EU as one entity, which is why Egypt also features.
Top 15 R&D spenders in 2023
1. Asia
Without a doubt the number one region for R&D is Asia which now accounts for 46% of the world’s investment in R&D (in 2000 this figure was around 25%).
The main driver of this growth is China, whose global R&D spending rose dramatically from just 4% in the early 2000s to 26% in 2023.
Other significant contributors to R&D in the region are Japan, the Republic of Korea, and several nations from Southeast Asia, including Indonesia and Thailand.
West Asia, including Israel, Turkey, and Iran, increased their share from 2% to almost 4%
2. North America and Europe
Countries and regions that have traditionally been at the top of the list in terms of R&D expenditure, such as the U.S., Canada, and Europe, now boast a smaller share than previously.
The United States and Canada (number one in the world in 2000) today account for about 29% of global R&D, while the EU stands at 21%.
3. Africa
An increasing number of other regions are showing growing investment in R&D, including Northern Africa.
That said, some countries like Egypt have been able to significantly ramp up their R&D investments over the years, with Egypt’s share increasing from 0.1% of global R&D in 2000 to around 0.6% in 2023.
4. Latin America and the Caribbean
This region has witnessed a decline in spending on innovation, falling from 3% in 2000 to 2% in 2023.
The biggest R&D investor, Brazil, has shown a decrease from 2% to 1.3% over the last two decades.
Top countries by R&D spending relative to Gross Domestic Product
By analyzing R&D spending relative to a country’s economic size - its Gross Domestic Product (GDP) - this picture emerges:
Israel, with a GDP amounting to US$583 billion, is well outside the top 10 largest economies in the world but spends the biggest share of its GDP on R&D – 6%. South Korea comes second with 5% of its US$1.7 trillion GDP being spent on R&D.
These two countries top the list, followed by a handful of other nations that invest around 3% of their GDP in R&D, including the United States and Japan.
China, despite being the country that spends the most in terms of capital, spends 2.4% of its GDP on R&D, which is still a large amount.
The majority of countries analyzed in the WIPO report invest around 1% of their GDP in R&D.
The data reveals a significant disparity whereby only a small number of countries undertake extensive research, while the majority of others are a long way ahead in terms of prioritizing innovation.
What does this all mean at the end of the day?
Investments in research and development are increasing despite the challenges faced by nations around the world over the last two decades.
Middle-income countries are embracing research and innovation, and as their spending increases, progress is achieved. Based on the latest 2024 WIPO report, it can also be argued that:
R&D investments are continuing to rise, with many focusing on innovation
An increasing number of middle-income nations, mainly in the Asian region, particularly China, have registered considerable investments in R&D expenditure
Disparities do remain, with some countries spending heavily on R&D, while others are investing very little.
Since global investments in R&D are approaching US$3 trillion, an increasing number of players in various industries require timely, specialized knowledge in order to foster innovation.
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