The U.S. has dropped out of the top 10 most innovative countries, according to the 2018 Bloomberg Innovation Index. South Korea and Sweden retained their No. 1 and No. 2 rankings.
Bloomberg has been publishing its innovation index for six years, scoring countries across seven equally weighted categories, including research and development spending, and concentration of high-tech public companies.
The U.S. dropped to 11th place from 9th place last year, in part due to losses in the education-efficiency category, which measures the number of new science and engineering graduates in the labor force. The U.S. also lost points in value-added manufacturing, defined as the balance between inputs in the manufacturing process and the value of results.
Research and development (R&D) expenditures reflect a nation's commitment to expanding capabilities in science and technology, which in turn drives innovation. According to the National Science Foundation’s Science & Engineering Indicators 2018 report, China has increased its spending on R&D by about 18% each year since 2000 compared to 4% annual increases in the U.S.
NSF’s report, released every two years, shows the U.S. invests the most in R&D, attracts the most venture capital, awards the most advanced degrees, provides the most business, financial and information services, and is the largest producer in high-technology manufacturing sectors. But China continues to have the most aggressive R&D growth, accounting for nearly one-third of the global increase in R&D spending from 2000 to 2015.