Investment in research and development (R&D) has become imperative in the post-pandemic era where product innovation will play an important role in enhancing a country’s economic growth.
Here are the top three countries which spend the largest proportion of GDP to fund R&D projects according to data released by The World Bank;
In 2018, Israel spent 4.95% of GDP on R&D, according to the World Bank.
Israel’s Innovation Authority recently granted $585 million in protection to 10 institutions that invest in the country’s high-tech startups.
The country also approved plans to provide a safety net for institutional investors taking part in late-stage funding rounds by high-tech companies, seeking to encourage them back into a sector vital to the economy. Israel benefits from an influx of skilled, educated engineers and technicians who moved there in the early 1990s, according to the OECD.
South Korea is home to tech giants like Samsung and between 1960 and 2019, the country recorded GDP growth averaging 7.3% per year.
Apart from the booming tech industry, the country has an intensive defence sector due to its strategic location on the world map. South Korea has been motivating local suppliers to make and test sophisticated chipmaking materials like photoresist, after Japan last year imposed export curbs on high-tech chip materials.
The country also has stable GDP growth, increasing by an average of 16% per year between 1961 and 2019. It spent 4.81% of GDP on R&D in 2018, according to World Bank data.
R&D and Innovation have been a driving force behind Switzerland’s financial success in recent years and according to data, the country spends 3.37% of GDP on R&D.
The country has the world’s highest R&D spend per capita and was the top-ranked nation in the Global Innovation Index, based on indicators including investments, patent applications, and high-tech exports.
“Switzerland doesn’t have any oil fields, but we have brains,” said Swiss National Science Foundation spokesman Christophe Giovannini. The SNSF distributes 1 billion francs a year to research projects.
Switzerland’s main export market is the European Union – while not a member of the EU, it is a party to a number of treaties that allow it to trade freely with EU nations. The country’s main industrial sectors are pharmaceuticals, luxury items such as watches.
Kraftwerk Tools and Novamem are two companies using their skills to launch new products during the Covid-19 crisis.
Larger economies are falling behind
The world’s two largest economies, the US (2.84%) and China (2.19%) are ranked at numbers nine and thirteen, respectively, in the World Bank list according to 2018 data. While Europe’s largest economy, Germany, comes in seventh, with 3.09% of GDP dedicated to R&D in 2018.