Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

by Ray Dalio

The next chart shows our latest reading on the inventiveness, technological advancement, and entrepreneurship we see in major countries. The arrows on the top of the bars show whether the trend in each country’s standing has been up, sideways, or down. This gauge gives about half its weight to 1) a combination of external rankings and measures of innovation per capita (to help capture how widespread innovation is in the economy) and half to 2) the country’s absolute share of key innovation metrics (e.g., researchers, R&D spending, patents, Nobel Prizes, and venture capital funding). Like all my gauges, it is approximately right but not perfectly right, so it’s meant to be broadly indicative. As shown, the US is at the top of these measures with a marginal lead over China, which ranks second (primarily due to the US’s share of global research spending, researchers, and its lead in other areas such as venture capital funding). But the US’s position is steady, while China’s position in the standings is rising fast. Remember that whoever wins the technology war usually wins the economic and military wars.