By Bertrand Beauté

Consistently exceptional. In September 2023, Switzerland was ranked for the 13th year in a row as the most innovative nation by the Global Innovation Index (GII). Like many other international rankings, this list, published by the World Intellectual Property Organization (WIPO), confirms the sheer excellence of Swiss R&D. This excellence is vital. "We are obligated to be a leader in R&D," said Jérôme Schupp, head of research at Prime Partners. "Given high labour costs and the strong Swiss franc, nothing could be produced here without innovation. We wouldn’t be competitive. Switzerland lives for innovation. Any drop in the rankings would be disastrous for the economy." Luciana Vaccaro, rector at the Haute école spécialisée de Suisse occidentale (HES‑SO) and president of swissuniversities, agrees: "Switzerland’s prosperity and success relies on the excellence of our education system and our very strong focus on research and innovation. If we lose our position as leader, the Swiss economy will suffer the consequences."

To maintain its ranking, Switzerland invests heavily in the industry. According to the Swiss Federal Statistical Office (FSO), 24.6 billion Swiss francs was dedicated to R&D in 2021, which equates to 3.4%of the gross domestic product (GDP). This percentage ranks Switzerland seventh in the world, behind Israel (5.6%) and South Korea (4.9%), but above the average for other OECD countries which invested 2.7% of their GDP to R&D in 2021. Most of this effort is supplied by private companies, which financed 68% of Swiss R&D in 2021. The remainder is paid for by the Hautes écoles, whose funds are primarily public, the Swiss government and private non‑profit institutions. 

But while all indicators seem to be in good shape, the scientific and economic communities are sounding the alarm: Switzerland’s place as the leader in innovation could now be at risk. To maintain this status, 2024 will be a decisive year. In late February, the Federal Council will adopt the dispatch to promote education, research and innovation (ERI dispatch 2025‑2028). According to the draft presented in 2023, the Confederation plans to allocate 29.7 billion Swiss francs for education, research and innovation from 2025 to 2028, an average nominal growth rate of 2%. But for the scientific community, that’s not enough.

In a joint press release published in September 2023, swissuniversities, the ETH Council, the Swiss National Science Foundation, Innosuisse and the Swiss Academies of Sciences expressed regret that the "Federal Council plans to invest less than before in education, research and innovation". According to the group, the 2% nominal growth set by Bern will – at best – account for inflation. But it’s certainly not enough to develop new projects or finance the increase in student workforce that is expected for 2025‑2028, 1.3% on average per year for universities and 1.4% for the HES. To accomplish this, the scientific community called for "average annual real growth of between 2.5% and 3.5%2 over that period.

"Switzerland has no other raw materials besides innovation"

Luciana Vaccaro, rector at the Haute école spécialisée de Suisse occidentale (HES‑SO) and president of swissuniversities

"I understand the Confederation’s financial difficulties. But applying cost‑saving measures in education, research and innovation would result in serious consequences for Switzerland’s scientific and economic standing," said Luciana Vaccaro, rector at the Haute école spécialisée de Suisse occidentale (HES‑SO) and president of swissuniversities. "Education and research should not be viewed as expenses, but rather as an investment. And we could even say this is the most important investment for Switzerland, as it has no other raw materials besides innovation."

But given that the private sector finances more than two‑thirds of investments in R&D, does the public research sector have the right to request more funds? "It’s not possible to separate public research and private research," said Vaccaro. "Private companies focus on research that produces innovation which is close to being market ready. Public funds, on the other hand, finance basic research that will generate transfers to industrial companies, albeit much later. If one part of the machine stops, the entire process is affected."

To explain the importance of basic research and how it differs from applied research, scientists use the analogy that the light‑bulb was not invented by trying to improve the candle. Basic research also resulted in technological disruptions that were not predicted at all. When Einstein described the principle of the laser in 1917, he likely never imagined that it would be developed in 1960 by American physician Theodore Maiman and used in such a wide variety of applications, such as eye surgery and fibre optics transmission. 

"Having a strong basic research system is an absolute necessity for Switzerland," said Professor Rudolf Minsch, chief economist at Economiesuisse. "Innovation is the end of a journey that always begins with basic research."

The concern around Switzerland’s potential downgrade is even more serious given that the Confederation has always acted separately from European research programmes (Horizon Europe, Euratom, Digital Europe, ITER, Erasmus+). "Because of the non‑association with the world’s largest research and innovation programme Horizon Europe, and the education programme Erasmus+, it has already become more difficult for Switzerland to maintain its top position. If Switzerland invests too few funds (...) at the national level, it will further jeopardise its competitiveness. This would put Switzerland’s social and economic progress and thus its above‑average innovative strength at risk," wrote swissuniversities, the ETH Council, the SNSF, Innosuisse and the Swiss Academies of sciences in their joint statement.

Yet again, 2024 will be a vital year. In November 2023, the European Commission and the Confederation announced it would begin exploratory disussions between Switzerland and Horizon Europe – the world’s largest scientific collaboration programme with a budget of nearly €100 billion from 2021 to 2027. "If negotiations go well, it is possible that a partnership could be signed as early as 2024," said Luciana Vaccaro of HES‑SO. 

The stakes are high. In May 2021, after seven years of negotiations, Switzerland removed itself from the EU talks to renew dozens of bilateral agreements on issues such as migration and trade. In retaliation, the Commission decided to demote Switzerland to a third party not associated with the Horizon Europe research financing programme. Since then, Swiss researchers were no longer able to coordinate Horizon Europe projects and no longer have access to the prestigious subsidies from the European Research council. Swiss companies are also excluded from EU innovation programmes.

"Removal from the Horizon Europe programme didn't create chaos. But it was a poison and we're only just now starting to feel the effects"

Rudolf Minsch of Economiesuisse

Despite all that, Switzerland remains the most innovative country in the world. "Removal from the Horizon Europe programme didn’t create chaos," said Rudolf Minsch of Economiesuisse. “But it was a poison and we’re only just now starting to feel the effects." A view shared by Luciana Vaccaro: "Switzerland’s position of excellence is built over decades. And it cannot be destroyed in one day. Today, the situation remains good, but certain elements are already concerning." 

At one university, a professor left Switzerland for a job in Europe. At another, PhD students leave and don’t come back. "We don’t have the data to quantify the brain drain," said Vaccaro. "But it is clear that Switzerland has become less attractive, especially for young researchers."

And for companies as well. "Several Swiss companies have opened offices in the European Union, in order to participate in the Horizon programme," said Minsch. One of these is the startup ID Quantique, which opened a knowledge hub in Vienna in order to participate in the European Quantum Flagship programme, and most importantly, creating around 100 qualified jobs in Austria that could have been in Geneva. "This is a significant loss of jobs and knowledge in a strategic sector – quantum research – which Switzerland was leading until now," said Vaccaro. "It is crucial for us to rejoin the European research programmes as soon as possible, before the damage caused by our isolation becomes irreparable."

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