Center for Research on Science, Technology and Society

Priscila Koeller[1]

Expenditure on research and development (R&D) continues to be one of the main measures of national effort in research, development, and innovation (RDI) (Godin, 2004; United Nations, 2007; OECD, 2023; European Union, 2025). Measured according to the guidelines established by the Frascati Manual, the key indicators are total R&D expenditure as a share of gross domestic product (GDP).

The national R&D expenditure indicators recently released by the Ministry of Science, Technology and Innovation (MCTI) show signs of recovery in the share of R&D spending relative to GDP in Brazil over the past two years. After falling from 1.22% in 2020 to 1.13% in 2021, expenditure recovered, reaching 1.19% of GDP in both 2022 and 2023—still below its highest share in the 2000–2023 period, when the previous growth trend (starting in 2004)  peaked at 1.28% in 2015.

Figure 1 — Total R&D expenditure as a percentage of GDP, 2000–2023.

Source: MCTI. Accessed on 31 July 2025. Prepared by the author.

But how does Brazil compare with other countries? To answer this question, we considered the countries selected by the MCTI in the release of the most recent statistics. The international comparison of expenditure indicators is used to assess whether the efforts made are on the same level or whether additional actions and policies are required to stimulate them (OECD, 2023; European Union, 2025). In the analysis, countries were grouped according to the World Bank’s income classification for the 2023 calendar year. Brazil is in the upper-middle-income group, alongside South Africa, Argentina, China, and Mexico. The remaining countries fall into the high-income group (Germany, Canada, South Korea, Spain, United States, France, Israel, Italy, Japan, Portugal) and the lower-middle-income group (India).

An analysis of Brazil’s position in relation to high-income countries shows that its expenditure as a share of GDP came close to that of Spain, Italy, and Portugal in the period 2000–2023. As the data show, in recent years there have been two groups of countries: those with expenditure above 2.5% of GDP—more than double Brazil’s rate (1.19%) in 2023 (Germany, Japan, United States, South Korea, and Israel)—and those at a lower level (France, Canada, Portugal, Spain, Italy).

For almost the entire period considered, Brazil remained below all the high-income countries analysed. In 2023, the gap compared with the countries making the greatest R&D efforts was about four times smaller (compared with South Korea) to five times smaller (compared with Israel) (Figure 2).

Figure 2 — Evolution of R&D expenditure as a percentage of GDP — high-income countries and Brazil, 2000–2023

Source: MCTI. Accessed on 31 July 2025. Prepared by the author.

Note: Countries for which no information was available in 2023 (Singapore, United Kingdom, and Russia) were excluded.

It is worth noting that in 2020, the year marked by the onset of the Covid-19 pandemic, all high-income countries considered—except Germany—made additional R&D efforts (as a percentage of GDP) compared to the previous year. This trend was also observed in Brazil, which in 2020 recorded R&D expenditure of 1.22% of GDP, contrasting with previous years, when efforts had reached at most 1.15%. This indicates that R&D expenditure has been used by governments as a counter-cyclical measure in times of economic crisis or exceptional events such as the Covid-19 pandemic, as highlighted in studies by the Organisation for Economic Co-operation and Development (OECD) (OECD, 2009; OECD, 2023).

Overall, the selected middle-income countries showed lower expenditure than Brazil. However, China, which in 2000 and 2001 had lower R&D effort (as a share of GDP) than Brazil, recorded significant growth, reaching 2.58% of GDP in 2023—more than double Brazil’s share (Figure 3)—and drawing closer to the group of countries with R&D expenditure above 2.5% of GDP.

Figure 3 — Evolution of R&D expenditure as a percentage of GDP — upper-middle- and lower-middle-income countries, 2000–2023

Source: MCTI. Accessed on 31 July 2025. Prepared by the author.

In summary, Brazil appears to be reversing the downward trend in R&D expenditure observed after 2015. Even so, it has not yet returned to the levels of its earlier relative ranking in 2000, when, considering the 13 countries (high-, upper-middle-, and lower-middle-income) for which data were available in 2023, it occupied the 8th position, but since 2017 has held the penultimate position in this group. Brazil’s pace of R&D effort contrasts with that of China, another upper-middle-income country, which ranked behind Brazil in 2000, occupying the 10th position, and rose to 6th place from 2019 onwards. Moreover, it is evident that the rate of growth in expenditure in the years following the pandemic—especially in Israel, South Korea, and China—was higher than that recorded in Brazil, widening the gap between these countries’ efforts and those of Brazil.

Business R&D expenditure

The Frascati Manual recommends separating government and business expenditure as one way of accounting for R&D efforts. This distinction between government and business is important as it makes it possible to track the effort of each institutional sector and to identify the policy measures needed to stimulate RDI. Business R&D expenditure is considered one of the central elements of the innovation process in companies, and the literature has long recognised the positive impact of innovation on productivity and economic development (Aghion and Howitt, 1996; Stiglitz, 2002; Rodrik, 2004).

According to the data released by the MCTI for Brazil, in addition to the reversal of the downward trend in total R&D expenditure as a share of GDP, it is noteworthy that in the period 2020–2023 business efforts surpassed those of the government, a movement that had only previously occurred in 2004 and 2005 (Figure 4). However, it is worth noting that between 2022 and 2023, after the decline observed since 2015, government expenditure increased, while business expenditure fell, keeping total expenditure at the same level.

Figure 4 — Evolution of government and business R&D expenditure as a percentage of GDP, 2000–2023

Source: MCTI. Accessed on 31 July 2025. Prepared by the author.

Even though businesses are no longer regarded as the sole institutional sector driving innovation (OECD/Eurostat, 2018), they still play a predominant role and account for a significant share of R&D efforts, especially in developed countries (OECD, 2023; European Union, 2025). As the OECD (2023) notes: “Since the private sector accounts for more than two-thirds of R&D expenditures in the OECD, a country’s R&D intensity is heavily influenced by the R&D activities of its firms.” (OECD, 2023, p. 19).

Figure 5 — Evolution of business R&D expenditure as a percentage of GDP — high-income countries and Brazil, 2000–2023

Source: MCTI. Accessed on 31 July 2025. Prepared by the author.

Note: 1. Postgraduate expenditure has been excluded. 2. Countries without data for 2023 (Singapore, United Kingdom and Russia) have been excluded.

And how does business R&D expenditure in Brazil compare with these countries? The data (Figure 5) show that, compared with high-income countries Brazilian businesses spend far less on R&D as a share of GDP throughout almost the entire period.

When comparing the performance of businesses in Brazil with those in upper-middle- and lower-middle-income countries, the pattern is reversed: Brazilian businesses appear in second place in terms of R&D efforts relative to GDP (Figure 6). Once again, the highlight is China, whose businesses consistently occupied the leading position.

Figure 6 — Evolution of business R&D expenditure as a percentage of GDP — upper-middle- and lower-middle-income countries, 2000–2023

Source: MCTI. Accessed 31 July 2025. Prepared by the author.

Note: Postgraduate expenditure has been excluded.

In summary, regarding business R&D efforts as a share of GDP, Brazil continues to occupy the penultimate position among the 14 countries (high-, upper-middle- and lower-middle-income) for which data were available in 2023. Although it ranked 11th in 2000 and 2001 and 12th in the period 2002–2006, this penultimate position has been held since 2007, indicating that businesses in other countries have been spending proportionally more throughout the period. By contrast, China, in addition to consistently ranking first among upper-middle-income countries between 2000 and 2023, also rose several positions overall, moving from 9th place in 2000 to 6th in 2023.

Challenges and prospects

The data on total R&D expenditure in Brazil indicate signs of a reversal of the downward trend observed since 2015, considering the effort made in relation to GDP in 2022 and 2023. The confirmation of this reversal, however, depends on the expenditure in 2024, as there was no growth between 2022 and 2023.

A concerning aspect relates to the stagnation of business expenditure relative to GDP. Although such expenditure exceeded government spending in the period 2020–2023—a trend similar to that observed in high-income countries—business expenditure as a share of GDP fell between 2022 and 2023.

The expectation is that business efforts will resume growth in 2024, given that from the second half of 2023 several measures were adopted to stimulate innovation in the private sector, notably differentiated interest rates for innovation and the revival of industrial policy. In August 2023, the Ministry of Development, Industry, Trade and Services (MDIC) announced differentiated interest rates for innovation financing; in early 2024 the federal government resumed industrial policy with the launch of the New Industry Brazil plan, which includes innovation incentives as one of its priorities. This expectation is at least partially supported by the results of the Innovation Survey—Pintec Semestral 2023, conducted by the Brazilian Institute of Geography and Statistics (IBGE). Although the survey does not cover all economic activities, as it is limited to industrial firms with 100 or more employees, the results show that a portion of innovative firms (37.4%) and of non-innovative firms (26.8%) intended to increase R&D expenditure in 2024.

Nevertheless, despite the measures adopted, even if they do have an effect on business expenditure relative to GDP and it starts to grow again, there are warning signs when compared with trends in other countries. It is clear that R&D efforts as a share of GDP have been higher than in Brazil, particularly in high-income countries and in China. Brazil’s efforts have been relatively modest, both in terms of total expenditure and business expenditure, and the country has not even regained the position it held in 2000.

[1]Researcher at the Center for Research in Science, Technology, and Society of the Institute for Applied Economic Research (CTS-Ipea)