Research & Development (R&D)

Funding and expenditure on R&D in Switzerland by sector in 2023

   New:   In Switzerland, as in almost all countries, the majority of R&D funding originates from and flows to business enterprises. However, Switzerland has a comparatively high outflow of R&D funding abroad and a comparatively low inflow. The high outflow of R&D funding is likely due to the strong presence of multinational firms, and among them the very R&D-active pharmaceutical companies.

The federal government primarily funds R&D via the higher education sector, directly via universities (mainly the Swiss Federal Institutes of Technology ETH and EPFL) and indirectly via its national agencies, the Swiss National Science Foundation and Innosuisse. See new FSO graph for more detail: DE / FR.

Source: Federal Statistical Office
Note: Private non-profit organizations (PNP) are included for comprehensiveness; however, they represent only a marginal portion of total funding (CHF 0.1 bn) and expenditure (CHF 0.3 bn).

In the following, we look in more detail at R&D funding from two perspectives:

The Federal Statistical Office (FSO) has just published its data for 2023. However, the OECD's data that allows for international comparison has not been updated yet. We've added data and comments for the year 2023 for Switzerland where we thought it was important and where we could do it with confidence.

R&D Expenditure

Gross Domestic Expenditure on Research and Development (GERD) in % of GDP 2017–2023

   New:    is among the top five of the most innovative countries in R&D spending as a percentage of GDP (3.2% or CHF 25.9 billion). Its GERD has slightly declined by 0.1 percentage point from 2021 to 2023, because the GDP grew faster than the spending on R&D. The R&D expenditures of and have increased significantly, while others stagnate on levels comparable to Switzerland. In the graph above, GERD corresponds to the R&D expenditure in the column on the right minus the expenditure that flows abroad.

GERD by sector in % of GDP 2021

Research and Development in Switzerland is mainly performed by private businesses or higher education institutions and rarely by the government itself. Switzerland has one of the lowest share of R&D performed by government institutions. Sweden and Denmark's pattern of research and development most closely mirrors that of Switzerland. The high proportion of R&D carried out by the private sector in Israel is also striking.

R&D expenditure by type of research in % of GERD 2023

   New:   Compared to other innovation leaders, Switzerland has a relatively high share of R&D expenditure in both basic and applied research, which seek fundamental knowledge without immediate practical goals or target specific practical problems and directed towards application. Consequently, the share of expenditure for experimental development, which more clearly focuses on creating or improving products, processes, or services, is rather small.

R&D Funding

GERD financed by sector in % of GDP 2021

   New:   The main source of R&D funding is the business sector itself. Switzerland's domestic business sector share is among the top 3 of its innovation leader peers. The same holds true for government spending on R&D (see next graph as well). Higher education institutions contribute an average and the rest of the world a below average share to the Swiss R&D funding.

Interesting here are Israel, and to a lesser extent Finland and Sweden, which are able to attract sizeable foreign direct investment into domestic R&D. Israel's funding for R&D would be average if it weren't for the high influx of foreign R&D funding.

GERD financed by government in % of GDP 2017–2022

's government-financed R&D remained stable in the last 5 years, but will likely decrease to 0.83 % in 2023 (official OECD data is not published yet). Meanwhile, and have increased their financing ratio to GDP. Interestingly, has a comparatively low share of government-financed GERD. Its R&D is mainly driven by private funding, especially from abroad (cf. also venture capital investments).

Business expenditure on R&D (BERD) financed by government

's restrained approach to direct funding of BERD stands out clearly in an international comparison. Compared to other countries there has been very little direct financial support for business R&D. The statement still holds if tax incentives for R&D are included, see note below.

The official OECD statistics are not out yet, but in 2023 the value for 's government financed business enterprise expenditure on R&D is likely to rise to 1.7%, probably due to the new Innosuisse instruments Swiss Accelerator and the start-up innovation projects. However, this has very little effect on Switzerland's position.

The picture is similar, if tax incentives for R&D are included and set in relation to GDP.

Sum of tax incentive support for business R&D (GTARD) and government-financed BERD in % of GDP

R&D Personnel

The share of personnel employed in R&D has increased over the years. is no exception and its trend will continue as well in 2023 with 18.2 R&D personnel per 1'000 employment.

Sources