I think that rising D&I budgets are a recognition of this truth.
It seems like common sense to me, but I'd be interested to know if it has been studied/measured...
In the US, they're only doing this at hire time for D&I so far. We'll see where it goes from there.
What can be a drag on innovation is if there is nepotism. If the leader appoints his good-for-nothing nephew to science minister. Or if there is corruption, and well connected incumbents throw up endless barriers for innovative upcomers. Or if organized crime steal too much value from the productive people.
Unless you innovate in some field detrimental to the government, e.g. education, anonymity, freedom etc.
Even if the repressive societies have lower overall research effectiveness, it may be higher in some areas that really matter geopolitically (e.g. military R&D). IIRC, many talented Western scientists boycott military projects for moral reasons, because they live in societies that celebrate taking personal moral stands like that. The talented scientists in a repressive society have different social influences, any may be far less likely to have a problem with military research.