Meghan Ostertag

For policymakers to bolster their regional innovation capacity and global competitiveness, they first must know where they stand. This report benchmarks 48 regions across Albania, Bosnia and Herzegovina, North Macedonia, and Serbia on 13 commonly available innovation indicators.

The Western Balkan have excelled in attracting foreign direct investment, with average inflows as a share of gross domestic product equaling 6.4 percent between 2020 and 2023. In contrast, the average rate for the EU was 1.5 percent and about 0.9 percent in the United States.

EU regulations, many have cost European businesses about $176 billion annually, equivalent to almost 1 percent of the bloc’s GDP, and this cost doesn’t include the lost innovation and forgone growth that may have occurred if those rules were not in place.

U.S. automotive competitiveness has severely faltered. The federal government needs a comprehensive national strategy to revitalize the industry’s competitiveness, especially in the face of Chinese EVs.

China has overtaken the United States in R&D investment for the first time amid slowing U.S. R&D growth. Without stronger policy action, America risks falling further behind.

China now produces nearly one-quarter of global output in the 10 advanced industries that make up ITIF’s Hamilton Index, outpacing all other nations. America and the West must recognize that China’s gains are coming at the expense of their techno-economic and national power.

In 2024, researchers and scientists in China were responsible for developing more than 1,250 new drugs, more than the EU and just slightly less than the United States, which developed 1,440. In total, China developed 30 percent of the world's new innovative drugs.

R&D intensity of the United States federal government, measured as R&D investment relative to GDP, experienced a marked decline, from 0.62 percent to 0.28 percent.

Over the past 26 years, researchers on the International Space Station have produced roughly 4,000 research papers and have helped to develop treatments for several diseases, including cancer, Alzheimer’s, and heart disease.

The competitiveness of the auto industry of the United States has waxed and waned over the past 60 years and is clearly not the globally dominant behemoth it once was. To bolster the industry’s competitiveness, policymakers first must understand why it has faltered and the challenges it faces moving forward.

China should come into full and immediate compliance with its WTO commitments; otherwise, as a last resort, the U.S. government should revoke China’s PNTR status. But policymakers should mitigate second-order effects, particularly on national power industries.

As of 2022, China is producing over 35 percent of the publications in top-tier journals, up from nearly zero in 1980. At the same time, the United States has seen its share fall rapidly to about 25 percent.