Taiwan ranks No. 3 in ratio of R&D spending to GDP in 2023

Taipei, Aug. 30 (CNA) Taiwan ranked third worldwide in research and development (R&D) spending as a share of gross domestic product (GDP) in 2023, with a ratio of 4 percent, trailing only Israel's 6.3 percent and South Korea's 5.0 percent, according to the Ministry of Economic Affairs (MOEA).

In a report released Friday, the MOEA said that Taiwan's R&D spending reached NT$937.3 billion (US$30.63 billion) in 2023, up from NT$898.0 billion in 2022. Companies in the computer, electronics, and optoelectronics industries accounted for 78.1 percent of the total, driven by demand for emerging technologies amid the artificial intelligence boom.

Taiwan overtook Japan in 2017 to claim the No. 3 spot in the R&D-to-GDP ratio and has maintained this position in the years since, according to the MOEA. In 2023, Japan's ratio stood at 3.4 percent, tying with the United States.

The data showed Taiwan's R&D-to-GDP ratio in 2023 was 1.3 percentage points higher than the average of 2.7 percent among members of the Organization for Economic Co-operation and Development (OECD).

Enterprises accounted for 85.1 percent of Taiwan's total R&D spending in 2023, the second-highest in the world behind Israel's 93.0 percent. In most other countries, the figure was closer to 80 percent, the MOEA said.

The manufacturing sector contributed the most to Taiwan's R&D expenditure in 2023, making up 91.8 percent of the total, with the computer, electronics, and optoelectronics industries leading the way as the semiconductor supply chain ramped up investment in innovation.

Meanwhile, government and higher education institutions accounted for 8.5 percent and 6.3 percent, respectively, of Taiwan's total R&D spending, according to the MOEA.

From 2014 to 2023, Taiwan's R&D expenditure nearly doubled, with an average annual growth rate of 7.4 percent. The computer, electronics, and optoelectronics industries posted an average annual growth rate of 9.5 percent over the decade, supported by Taiwan's comprehensive electronics cluster, the ministry said.

The increase in R&D spending also reflected government initiatives in recent years, such as the Global Research & Development Innovation Partnership Program launched in 2015 and the Pioneers for Innovation Leadership on Technology Program introduced in 2020, which have attracted foreign tech companies to establish R&D centers in Taiwan, particularly in the electronics sector, the MOEA added.