Introduction
The global map of research and development (R&D) investment within the Organisation for Economic Co-operation and Development (OECD) reveals a persistent gap. While Israel and South Korea maintain record-high investment levels relative to their economies, several Latin American countries within the OECD remain among those with the lowest intensities.
R&D Investment Leaders
In 2022, the OECD area’s R&D intensity was 2.7% of GDP, with Israel and South Korea at the top with approximately 6% and 5.2% of GDP, respectively. The United States and Japan are in the high group at around 3.5% and 3.4%, respectively, while Sweden remains one of Europe’s leaders with slightly over 3%.
Latin American Countries Lagging Behind
Among the Latin American OECD members, Colombia, Mexico, Chile, and Costa Rica are among those with the lowest R&D investment as a percentage of GDP. Colombia allocates around 0.3% of its GDP to R&D, a level far below the OECD average and one that the government seeks to raise through innovation-oriented regulations such as tax credits and royalties.
- Colombia: 0.3% of GDP
- Mexico: 0.3% of GDP
- Chile: 0.36% of GDP
- Costa Rica: 0.34% of GDP
All these countries fall significantly below the OECD average and the leaders. Letonia, though not in Latin America, is often cited among the low levels and remains below 1% of GDP.
European Comparison and Recommendations for Latin America
The European contrast helps to illustrate the lag. The EU averaged 2.26% of GDP in 2023, with countries like Sweden, Belgium, and Austria exceeding 3%. The high-intensity group tends to combine substantial corporate spending with consistent long-term policies.
The OECD evidence emphasizes that it’s not just about how much is invested but also how. Leaders concentrate a high proportion of funding on the business sector, supported by predictable incentive schemes and mature innovation infrastructure. In Colombia, it is recommended to strengthen instruments mobilizing private R&D, optimize tax credits, improve regional focus of resources, and foster linkages between large and small businesses, as low R&D investment limits productivity gains and product diversification.
Key Questions and Answers
- What countries lead in R&D investment within the OECD? Israel and South Korea are at the top, with investment levels of approximately 6% and 5.2% of GDP, respectively.
- Which Latin American countries are among the lowest in R&D investment? Colombia, Mexico, Chile, and Costa Rica are among the lowest, with investment levels around 0.3% of GDP.
- Why is it crucial to focus on how R&D investments are made? It’s essential because leaders concentrate a high proportion of funding on the business sector, supported by predictable incentive schemes and mature innovation infrastructure.
- What steps can Latin American countries take to improve their R&D investment? They should elevate investment, improve its composition in favor of the private sector, and consolidate stable policies to reduce budgetary volatility for R&D.
