In this article, we will look into the 20 countries that spend the most on research and development. If you want to skip our detailed analysis you can go directly to the 5 Countries that Spend the Most on Research and Development.

Global R&D Outlook

According to the R&D report by AAAS, global investments in research and development have witnessed a significant surge over the past 20 years. The global R&D investments tripled from $672 billion in 1992 to more than $2.2 trillion by 2021. However, the aftermath of the pandemic hindered this growth, with a decline in annual increases to less than 2% in 2020 and 2021, compared to 3.6% in the last decade. Although there are reporting limitations from China to quantify its data, it is evident that it is the largest contributor to non-OECD investments. OECD countries are continuously increasing their R&D spending. In 2021, the R&D investments by OECD countries reached 2.71%. The business sector is the key driver of these investments, accounting for over 60% of R&D investments in 2020. The R&D intensity of the US surpassed 3% in 2019 after ranging between 2.5% to 3% for over two decades. South Korea and China also experienced substantial growth over the past decade, with their R&D spending surging from 2.1% to 4.6% and from 0.9% to 2.2%, respectively. Germany’s research and development spending also reached 3.2% in 2019.

Global Tech Investments

The strong research and development portfolio of countries globally reflects directly on the pace of technological advancements in today’s world. With the growing digital and tech adoption, the world is continuously advancing toward key technology trends such as AI, cloud computing, quantum science, and edge computing. The workforce in the tech sector is a major driver of the growth of the tech sector. Tech-related fields experienced a 15% rise between 2021 and 2022. Nearly 1 million job postings were publicized by applied AI and next-generation software development between 2018 and 2022.

On March 5, Reuters reported that China outlined plans to strengthen its self-sufficiency in the tech sector. The country aims to focus on emerging trends such as quantum computing and AI. This plan is a result of the current trade tensions with the US. China will introduce major science and technology programs and utilize its political systems to integrate capabilities and reduce dependency on foreign suppliers. Moreover, it plans to develop a robust pool of researchers and innovators to fuel domestic advancements across various tech domains.

Some of the most technologically advanced countries such as the US, China, and South Korea are also actively investing in AI. According to research from Bloomberg Intelligence, the global AI market is anticipated to reach $1.3 trillion by 2032, growing at a compound annual growth rate of 42%. PwC estimates that AI could lead to a staggering contribution of $15.7 trillion to the global economy by 2030. Additionally, AI is expected to fuel an increase of 26% in the GDP of local economies by 2030. The United States is leading the ongoing AI  race with the highest number of AI startups. For instance, Anthropic is a leading AI startup in the US, backed by Microsoft Corporation (NASDAQ:MSFT) and Amazon.com, Inc. (NASDAQ:AMZN). On March 4, Reuters reported that the Silicon Valley startup, Anthropic released its latest suite of AI models, Claude 3. The model claims to outshine competitors such as OpenAI’s GPT-4 and Alphabet Inc.’s (NASDAQ:GOOG) Gemini 1.0 Ultra. The Claude 3 Opus will be ideal when dealing with complex tasks such as financial analysis.

Companies Driving Innovation in the Tech Sector

Some of the top companies driving innovation in the tech sector include Amazon.com, Inc. (NASDAQ:AMZN), NVIDIA Corporation (NASDAQ:NVDA), and Alphabet Inc. (NASDAQ:GOOG).

On January 19, the global tech leader, Amazon.com, Inc. (NASDAQ:AMZN) announced that AWS will be making a significant investment of 2.26 trillion yen into its cloud infrastructure in Japan by 2027. This investment will contribute to the rising demand for cloud services in the country and also add to Japan’s digital transformation.  Moreover, the project will induce a positive economic impact, supporting jobs and fueling GDP.

NVIDIA Corporation (NASDAQ:NVDA) is a leading tech company, specializing in robotics, AI, HPC, and autonomous vehicle technology. On February 6, the company announced that it had allied with digital communications technology company, Cisco Systems, Inc. (NASDAQ:CSCO) to provide robust and manageable AI infrastructure solutions to businesses. The partnership aims to manage the growing demand for secure and efficient tools to deploy AI at scale. NVIDIA Corporation (NASDAQ:NVDA) will leverage Cisco Systems, Inc.’s (NASDAQ:CSCO) networking capabilities to offer a diverse suite of solutions. It will also integrate its GPUs into Cisco servers, granting access to NVIDIA AI Enterprise software. Moreover, Cisco Systems, Inc.’s (NASDAQ:CSCO) AI-assisted management and monitoring tools will facilitate infrastructure operations.

On February 15, Alphabet Inc. (NASDAQ:GOOG) launched the next generation of its large language model, Gemini 1.5 with significant improvements compared to its predecessors. The new model will deliver improved performance and will have a novel MoE architecture enhancing its efficiency. The Gemini 1.5 will be capable of processing up to 1 million tokens. Alphabet Inc. (NASDAQ:GOOG) has initially released the language model with a standard context window of 128,000 tokens, with restricted access to 1 million tokens through an early access program.

Methodology

To compile our list of the 20 countries that spend the most on research and development, we utilized the R&D Expenditure as a percentage of GDP data from the World Bank. However, this data does not tell us about the overall economic size of a country. So, we calculated the absolute spending in USD for each country. We used the percentage share of R&D and the GDP data of the country to calculate the absolute spending, utilizing the latest available year for R&D spending data. Our list ranks the 20 countries that spend the most on research and development in ascending order of their absolute R&D spending.

Note: We have not included Israel in our list despite the highest R&D intensity due to the ongoing war in Gaza hindering economic growth and advancements in the region.