Not just cuckoo clocks. Why Switzerland is the world’s most innovative country

In Orson Welles’ famous scene-stealing cameo in The Third Man, his character Harry Lime comes out with that (in)famous speech about Swiss culture. “In Italy for thirty years under the Borgias, they had warfare, terror, murder, and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance,” he says. “In Switzerland, they had brotherly love, they had five hundred years of democracy and peace, and what did that produce? The cuckoo clock.” This does the Swiss a disservice in a number of ways, not least that a major new report claims that Switzerland is maintaining a long tradition as the most innovative country in the world.

The World Intellectual Property Organization (WIPO) has published its latest Global Innovation Index, offering what it claims is a detailed snapshot of the shifting global research and development landscape. The 2025 edition highlights widening disparities between innovation leaders and laggards, with investment flows increasingly concentrated in a small number of countries and firms. Switzerland retains its long-standing position as the world’s most innovative economy, followed closely by the United States, Sweden, the United Kingdom, and Singapore.

This mirrors findings in recent years, but the gap between these leaders and the rest of the field has grown. While many middle-income countries are increasing their efforts, only a handful are successfully converting inputs such as spending on education and infrastructure into measurable innovation outputs. China remains the only middle-income nation in the global top 15, largely thanks to scale in patent activity and manufacturing.

One of the report’s starkest findings is the concentration of private sector investment. The Global Innovation 1000 list of corporate R&D spenders shows that the top 100 companies now account for more than two-thirds of global business research investment. Technology giants, led by firms in the US and East Asia, dominate the tables. This concentration raises concerns about resilience and inclusivity in global innovation. Smaller economies and firms may struggle to compete, especially in sectors such as artificial intelligence, semiconductors, and pharmaceuticals, where barriers to entry are high.

Shock to the system

The Index also captures the uneven effects of recent global shocks. The COVID-19 pandemic, energy crises, and geopolitical tensions continue to shape national strategies. While some governments have doubled down on R&D spending as a route to resilience, others have scaled back under fiscal pressure. The data tables in chapter two of the report show that public R&D budgets have risen sharply in the United States and several Asian economies but remain stagnant in much of Europe. Emerging economies in Africa and Latin America, meanwhile, continue to invest at very low levels relative to GDP.

A recurring theme in the 2025 report is the acceleration of artificial intelligence research and deployment. Patent data and publication metrics show extraordinary growth in AI-related activity, with China, the United States, and South Korea accounting for the bulk of filings. The technology cluster maps on pages 85–87 show AI hubs expanding rapidly in Shenzhen, San Francisco, Seoul, and Bengaluru. These clusters are now magnets for talent and investment, reinforcing the virtuous circle between research concentration and economic growth. At the same time, WIPO notes concerns about governance, ethics, and the accessibility of these technologies to smaller economies. The concentration of intellectual property may deepen divides rather than bridge them.

The report highlights shifts in the global geography of innovation. Europe remains a strong performer in basic science and higher education but risks falling behind in commercialization. Several European countries have slipped down the rankings as venture funding and tech start-up activity lags behind the US and parts of Asia. By contrast, Gulf states are climbing the Index thanks to targeted investments in research institutions, renewable energy, and digital infrastructure. Saudi Arabia, the United Arab Emirates, and Qatar all improved their positions compared to the 2024 edition. Africa remains the least represented continent, although there are pockets of progress. Kenya, South Africa, and Rwanda show relative strength in mobile technologies and fintech innovation.

Cash is king

Financing remains a bottleneck for many. The Index shows global venture capital flows slowed significantly in 2024 after the exuberant highs of the early 2020s. Start-ups in sectors outside AI and clean energy have found it particularly difficult to raise funds. This is reflected in the capital flows data on page 112, which show year-on-year declines in venture activity across Europe and most of Latin America. By contrast, funding into generative AI ventures more than doubled, underlining how capital is chasing specific technological trends.

The 2025 edition continues to emphasise the role of human capital. Nations investing consistently in higher education and technical skills tend to perform better across the Index. Finland, Denmark, and the Netherlands rank highly on education inputs, while Singapore and South Korea remain leaders in STEM graduate output. The skills pipeline charts on page 143 underscore how a handful of countries are supplying the majority of globally mobile researchers and engineers. This dynamic may exacerbate talent shortages elsewhere, particularly in emerging markets that already struggle to retain skilled workers.

Although the Global Innovation Index is primarily a macro-economic ranking, the findings have clear implications for workplaces and labour markets. Employers in leading economies face intense competition for skilled talent, rising salary costs, and the need to continually invest in upskilling. For countries further down the Index, the challenge is often the opposite: a mismatch between available skills and the demands of modern industry. This contributes to under-employment and reinforces a cycle of low productivity and limited innovation capacity.

WIPO’s report concludes with recommendations for governments and institutions. These include strengthening collaboration between universities and industry, diversifying sources of financing, and investing in long-term skills development. It also stresses the importance of openness in science and cross-border collaboration. The Index notes that many of the most significant innovations in recent years, from vaccine development to clean energy, were the result of international partnerships.