What the Global Innovation Index Reveals About National and Industry Performance in R&D Progress and Potential

19 Nov

Authors: Joel Spotswood, Jacqueline Heighway

The World Intellectual Property Organization (WIPO) has released its 18th edition of the Global Innovation Index (GII), offering a comprehensive snapshot of the world’s innovation ecosystems. The 2025 report, themed “Innovation at a Crossroads: Charting the Future,” ranks 139 economies using over 80 indicators, including R&D spending, venture capital activity, high-tech exports, and intellectual property filings.

The report calls for thoughtful policy frameworks, increased public-private collaboration, and sustained investment in education and research. It also warns against the growing concentration of innovation in a few sectors and regions, urging broader inclusion and diversification. We present a dive into the reports contents, including top performing countries, sectors, funding situation and the Australian perspective.

Top performers

Switzerland retained its position as the world’s most innovative economy for the 15th consecutive year, followed by Sweden, the United States, the Republic of Korea, and Singapore. These nations continue to lead across multiple pillars, including high R&D intensity, world-class institutions, a strong educational system and a strongly innovative private sector.

Notably, China entered the top 10 for the first time, marking a significant milestone in its transformation into a global innovation powerhouse, ranking 2nd in R&D expenditure, and leading in patent filings.

Australia on the Global Innovation Map

Australia ranks 22nd overall and continues its upward trend within the top 25. It performs exceptionally well in university quality (3rd), regulatory quality (2nd), the impact of its scientific publications (6th), and tertiary inbound mobility (5th), reinforcing our appeal as a hub for global talent and research. The report notes that Australia’s corporate R&D intensity and venture capital activity lag behind global leaders with comparably developed economies. Strengthening academic-industry collaboration and expanding support for early-stage innovation are identified as key areas for improvement.

The specific challenges to Australian innovation include commercialisation gaps and low venture capital density. Australia’s innovation ecosystem is rich in potential, especially in clean tech, life sciences, and digital finance. The challenge now is to convert that potential into scalable, exportable outcomes.

Sectoral Strengths in Australia’s Innovation Economy

The GII report reveals how innovation is evolving across major industries, highlighting disparities in investment, output, and transformation. Below is a summary of the top performing industries in Australia:

1. Information & Communication Technology (ICT): High-performing but under-leveraged

R&D Investment: ICT firms in Australia contributed approximately $6.2 billion to R&D in 2024.
Patent Activity: ICT-related patents accounted for 28% of resident filings.
Exports: ICT exports made up 0.7% of total exports—well below global leaders.
Challenges: Limited scale-up funding and talent retention in AI and cybersecurity.

2. Healthcare & Life Sciences: Strong research, moderate commercialisation

Academic Output: Australia ranks 11th globally in biomedical publications.
R&D Spend: Life sciences firms invested $4.1 billion, with strong government co-funding.
Clinical Trials: Australia hosts over 1,200 active trials, a regional leader.
Challenges: IP monetisation remains low—only 2.4% of patents are commercialised within 3 years.

3. Energy & Clean Tech: Strategic growth sector

Federal Investment: $22.7 billion committed over 10 years via Future Made in Australia.
Clean Tech Patents: Up 19% year-over-year, led by hydrogen and battery innovations.
Exports: Critical minerals exports reached $14.3 billion, up 12% from 2023.
Challenges: Infrastructure bottlenecks and slow commercialisation timelines.

4. Advanced Manufacturing & Materials: Rebuilding momentum

R&D Spend: Manufacturing firms invested $3.8 billion, up 6% from 2023.
High-Tech Exports: Valued at $7.76 billion, comprising 25.6% of manufactured exports.
Innovation Hubs: Growth in regional clusters like Geelong and Western Sydney.
Challenges: Automation adoption remains below OECD average.

5. Automotive & Mobility: Emerging innovation niche

EV Uptake: EVs accounted for 9.2% of new car sales in 2024, doubling from 2023.
Battery R&D: $1.1 billion allocated to lithium and solid-state battery research.
Challenges: No major domestic EV manufacturer; reliant on imports and global supply chains.

6. Finance & Fintech: Digitally mature, globally connected

Fintech Investment: $2.3 billion in VC funding, with Sydney ranked #12 globally for fintech innovation.
Digital Payments: Represent 78% of consumer transactions nationally.
Challenges: Regulatory complexity and limited DeFi adoption.

Uneven sectoral progress globally

Indicators of technological progress remained largely positive globally. The cost of renewable energy technologies and lithium-ion batteries continued to decline, with electric cars sales up by 45%, sustaining the green technology transition. In health innovation however, trends were mixed: the cost of genome sequencing decreased, but at a slower rate than in the past, and the number of new drug launches fell by 19%, marking a reversal from previous highs. Overall, progress remained sectorally uneven – buoyant in digital and green technologies, but fragile in health innovation.

Funding and Innovation Under Pressure

Despite pockets of progress, the global innovation landscape faces headwinds. Following a sharp downturn in 2023, science and innovation investment showed only a partial and uneven recovery in 2024. R&D investments slowed to 2.9% in 2024, down from 4.4% the previous year, and is projected to decline further to 2.3% in 2025—the weakest pace since the 2010 financial crisis.

Corporate R&D spending grew just 1%, hampered by persistent inflation and declining revenues in key sectors. Venture capital (VC) investment showed a mixed picture. Deal values rebounded by 7.7% in 2024, largely driven by U.S.-based megadeals and surging interest in generative AI. However, the total number of VC deals fell by 4.4% globally, marking the third consecutive year of decline. This signals growing investor caution in R&D and a retreat to traditional capital investment industries.

The Road Forward

The GII 2025 paints a complex picture of global innovation. While technological breakthroughs in AI, green energy, and digital biology offer immense promise, the uneven distribution of innovation capacity and investment poses risks to inclusive growth.

WIPO emphasised that the GII should be utilised as a strategic tool for governments, businesses, and academia to assess and strengthen their innovation ecosystems. “The fastest-advancing economies are those that view innovation as a fundamental engine of resilience, growth, and competitiveness,”

As economies navigate inflationary pressures, geopolitical tensions, and shifting regulatory landscapes, the need for resilient and adaptive innovation systems has never been greater. The report concludes with a call to action: to treat innovation not merely as a luxury, but as a necessity for sustainable development and global competitiveness.

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