Stagnant growth in innovation funding at a 15-year record low, as announced by the United Nations.
In a recent announcement, the World Intellectual Property Organization (WIPO) has raised concerns about the slowdown in global innovation, citing a decline in Research and Development (R&D) investments and venture capital (VC) activity.
According to WIPO's projections, R&D growth is expected to slow further this year, reaching 2.3 percent. This figure is significantly lower than the 4.6-percent average of the past decade and marks the lowest rate since 2010. Business R&D expenditures, which account for over 70 percent of total global R&D, are projected to grow just 1.4 percent in 2024 and 2025.
Daren Tang, the WIPO chief, emphasised the importance of sustained upstream and financial commitment for innovation, stating that the growth of innovation funding has notably slowed. He also warned that the global innovation engine is not firing on all cylinders.
The decline in VC deals signals persistent investor caution outside a narrow set of sectors and geographies, as per WIPO. Excluding such investments, VC values would have contracted, according to the organisation. The rise in VC funding was largely driven by US-based megadeals and surging investment in generative AI.
Despite these concerns, there is some positive news. The global value of VC funding for new ideas rose 7.7 percent last year. Sacha Wunsch-Vincent, head of WIPO's department for economics and data analytics, expects interest-rate cuts by central banks to push down inflation, which could boost innovation spending.
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The World Intellectual Property Organization placed Switzerland at the top of the annual ranking of the world's most innovative economies for the 15th consecutive year. Sweden and the United States retained their second and third place positions for the third year running. Interestingly, China edged its way one spot higher and into the top 10.
Wunsch-Vincent stated that this is good news for the future of innovation. Despite the challenges, it seems that the global innovation landscape continues to evolve, offering both challenges and opportunities.
