What is the actual return on R&D investment?

It is often common to look at the expenditure on R&D to compare how different countries are doing in terms of innovation. But, what about the outputs from this activity? Which countries are more efficient in terms of R&D investment? Which countries have better return of investment (ROI) in R&D?

To provide a comparative overview on the ROI, specific data on 3 key R&D outcomes has been gathered for the top-10 most innovative economies according to the Global Innovation Index or GII (Cornell University, INSEAD, & WIPO, 2017), and compared to Spain. In particular, the following outputs has been selected:

  • Number of scientific and technical journal articles published (NSF, 2013).
  • Number of patents measured as PCT applications filled by country of origin, considering de sum of resident and nonresident applications (WIPO, 2016).
  • Income received from use of intellectual property (IP), a new indicator which provides insights on the balance of payments according to the International Monetary Fund (IMF, 2015)

The data above has been related to the gross domestic expenditure in R&D for each country, which was reviewed on my previous post Research expenditure by top innovators. As a result (see the figure below), specific ROI measures have been calculated as: number of scientific and journal publications per 1000 USD invested, number of patent applications per 1000 USD invested, and income generated from IP exploitation per 1000 USD in invested.

Return on R&D investment in 2017 for the most innovative economies in the world in comparison to Spain. Prepared by Francisco Velasco (www.fvelasco.com). Source: Selected data from NSF (2013), WIPO (2015) and IFM (2015).

Besides any arguable lack of scientific groundings from this approach (as it relates indicators that are not directly correlated and uses data from different sources and years), the model provides a very useful comparative overview across countries ina visual and intuitive manner. As per the figure above, the return of R&D investment in terms of scientific production places USA (265 articles per $1000 invested) as the most efficient country, followed by UK (139 articles per $1000 invested) and Spain (125,6 articles per $1000 invested). However, the ROI in terms of patent production placed also USA in the first position (378,6 patents per $1000 invested), followed by Ireland (49,5 patents per $1000 invested) and UK (32,6 patents per $1000 invested). Finally, the outputs in terms of direct income from IP exploitation, which is a very interesting indicator being recently collected, highlighted again USA as the country with greatest ROI ($78,5 per $1000 invested), followed by UK ($23,3 per $1000 invested) and Netherlands ($41,2 per $1000 invested).



Cornell University, INSEAD, & WIPO. (2017). The Global Innovation Index 2017. (S. Dutta, B. Lanvin, & S. Wunsch-Vincent, Eds.) (10th ed.). Retrieved from https://www.globalinnovationindex.org/gii-2017-report

IMF. (2015). International Monetary Fund. Retrieved from http://www.imf.org/external/datamapper/datasets/BOP

NSF. (2013). National Science Foundation. Retrieved from https://www.nsf.gov/statistics

WIPO. (2016). World Intellectual Property Organization. http://doi.org/10.1016/0172-2190(79)90016-4