Global Trends: Slower Funding Doesn't Halt Innovation Breakthroughs
The National Progress Plan has set a goal for Lithuania to rank no lower than 35th in the Global Innovation Index. This year, the country achieved this target.
“Leading positions in unicorn valuations reflect a significantly strengthened Lithuanian startup ecosystem in recent years. A strong ranking in ICT usage also highlights the country’s robust digital infrastructure and residents' openness to digital innovations, driving economic growth and enhancing Lithuania’s competitiveness. However, we still have work to do to accelerate innovation implementation, which remains one of our top priorities,” said Economy and Innovation Minister Lukas Savickas.
Lithuania still has progress to make in the creative industries, human capital and research, infrastructure, and business sophistication. Overall, Lithuania’s investments in innovation need to yield higher and more balanced returns, a trend also observed in Latvia and Estonia.
The Global Innovation Index evaluates 133 countries’ innovation ecosystems using approximately 80 indicators. Although Lithuania improves annually, other countries are also advancing. The top five – Switzerland, Sweden, the US, Singapore, and the UK – set inspiring examples.
“The overall index results highlight three trends: reduced innovation investments returning to pre-pandemic levels, a decline in scientific publications, and a drop in patent filings for the first time in 15 years. However, despite slower funding, technological progress continues, especially in areas like supercomputing, ICT, health, and green technologies,” said Kotryna Tamoševičienė, Head of Research and Analysis Unit at the Innovation Agency Lithuania.
Europe: Lithuania Among "Moderate Innovators"
In the European Innovation Scoreboard, Lithuania ranks 19th among EU countries.
Looking at long-term progress, business contributions are notable. Since last year, non-R&D innovation expenditures have grown significantly, alongside an increase in lifelong learning program participants and innovation spending per worker.
Areas for improvement include business sector spending and government support for R&D, as well as the export of knowledge-intensive services. According to Tamoševičienė, this signals the critical importance of enhancing R&D support and focusing on high value-added sectors to ensure the vitality of Lithuania's innovation ecosystem.
The Innovation Scoreboard evaluates the innovation ecosystem development of EU and select European countries. Lithuania is among the EU leaders in cumulative innovation index growth, with a 22% increase since 2017. Despite rapid growth, it is insufficient to catch up to or surpass Europe’s innovation leaders. As a result, Lithuania remains a “moderate innovator,” achieving 70-100% of the EU average.
This report also categorizes countries by their Summary Innovation Index (SII) relative to the EU average in 2024. “This methodology enables comparisons between countries and sets a standard—the EU average. For some countries, this will be a goal, while for others, a threshold they strive to surpass,” said Tamoševičienė.
Academic Investments in R&D Surpass Business
For the first time, the higher education sector invested €2 million more in R&D activities than the private sector. This shift indicates that universities are increasingly funding not only academic but also practical R&D activities. Declining business investments may be attributed to reduced foreign investments, the global energy crisis, and inflation that struck last year.
Total R&D expenditures across all sectors (higher education, business, and government) amounted to €772 million, or 1.07% of GDP. However, the number of innovation-implementing companies continues to decline, with the ICT sector and large enterprises (250+ employees) leading the way.
Political changes in Lithuania and abroad may shift priorities, but all nations will undoubtedly strive to maintain competitiveness and foster innovation.
“This effort is reinforced by the structural and competitive challenges facing traditional industries, such as construction, automotive, and agriculture: slow-declining interest rates, competition from China, potential changes in U.S. trade agreements, and stricter environmental regulations. Therefore, it is crucial for Lithuania to continue and strengthen innovation-oriented state policies, improve the business environment, and bolster ecosystems,” said Tamoševičienė.
