Switzerland is world’s most innovative; China joins Top 25

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Fotoflug_Cuxhaven_WilhelmshavenChina has joined the ranks of the world’s 25 most innovative economies, while Switzerland, Sweden, UK, U.S., Finland, and Singapore lead the 2016 rankings in the latest Global Innovation Index (GII).

China’s entry into the top 25 marks the first time a middle-income country has joined the highly developed economies that have historically dominated the top of the GII throughout its nine years of surveying the innovative capacity of 100-plus countries across the globe.

“China’s progression reflects the country’s improved innovation performance as well as methodological considerations such as improved innovation metrics in the GII,” said the report.

Published annually since 2007, the GII ranks the innovation performance of 128 countries and economies around the world, based on 82 indicators. The GII 2016 was published by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO).

Despite China’s rise, an “innovation divide” persists between developed and developing countries amid increasing awareness among policymakers that fostering innovation is crucial to a vibrant, competitive economy, it added.

Innovation requires continuous investment. Before the 2009 crisis, research and development (R&D) expenditure grew at an annual pace of about 7%. GII 2016 data indicate that global R&D grew by only 4% in 2014. This was a result of slower growth in emerging economies and tighter R&D budgets in high-income economies—this remains a source of concern, said the report.

“Investing in innovation is critical to raising long-term economic growth,” said WIPO director general Francis Gurry. “In this current economic climate, uncovering new sources of growth and leveraging the opportunities raised by global innovation are priorities for all stakeholders.”

The Top 25 for 2016 are Switzerland, Sweden, UK, U.S., Finland, Singapore, Ireland, Denmark, Netherlands, Germany, South Korea, Luxembourg, Iceland, Hong Kong, Canada, Japan, New Zealand, France, Australia, Austria, Israel, Norway, Belgium, Estonia, and China.

Of these, four economies—Japan, U.S., UK, and Germany—stand out in “innovation quality,” a top-level indicator that looks at the caliber of universities, number of scientific publications and international patent filings. China moves to 17th place in innovation quality, making it the leader among middle-income economies for this indicator, followed by India which has overtaken Brazil.

Regional innovation front runners

In Europe, heading the list are Switzerland (No. 1 overall), Sweden (2), and UK (3). The region boasts having 15 of the top 25 economies in the GII coming from the area. Among them are Finland (5), Ireland (7), Denmark (8), the Netherlands (9), and Germany (10), which joins the top 10 in 2016.

Europe benefits from comparatively strong institutions and well-developed infrastructure, and does particularly well in environmental performance, ICT access, and school life expectancy, said the report.

In Northern America, the U.S. (4) and Canada (15) are the best in the region. The strengths of the U.S. include the presence of firms conducting global R&D, the sophistication of its financial market, the quality of its universities and scientific publications, software spending, and the state of its innovation clusters.

Canada, on the other hand, has top scores in its regulatory environment, the ease of starting a business, the sophistication of its financial market, the quality of its universities and scientific publications, as well as online creativity.

Singapore (6), South Korea (11), and Hong Kong (14) are the big names in Southeast Asia and Oceania. Also outstanding innovators in the region are Japan (16) and New Zealand (17). Among upper-middle-income economies, China (25), Malaysia (35), and Thailand (52) rank first in the region. Vietnam (59) maintains its top place among lower-middle-income economies, followed by the Philippines (74,) and Indonesia (88). Low-income economy Cambodia maintains its ranking in the top 100 economies overall (95th).

The region’s strongest average performance is in the number of teachers per pupils and productivity growth.

Meanwhile, Israel (21), Cyprus (31), and the United Arab Emirates or UAE (41) are the most innovative in Northern Africa and Western Asia.

Of the top five GII performers in this region, two are from the six-member Gulf Cooperation Council (GCC): UAE and Saudi Arabia (49). Many of the GCC countries are diversifying their economies following a decades-long dependence on oil, turning their focus towards more innovation-driven and diverse sources of growth, said the paper.

The region shows its highest average scores in ICT access and ICT-driven business model creation, as well as in e-government and productivity growth.

In Latin America and the Caribbean, the brightest innovators are Chile (44), Costa Rica (45), and Mexico (61). The region has untapped innovation potential, the report noted. The GII rankings of local economies have not significantly improved relative to other regions in recent years, and no country in the region currently shows a performance higher than its GDP.

For Sub-Saharan Africa, the innovation leaders are Mauritius (53), South Africa (54), and Kenya (80). Since 2012, Sub-Saharan Africa has counted more countries than any other region among the group of “innovation achievers”—countries that perform better than their level of development would predict. This year, Kenya, Madagascar, Malawi, Mozambique, Rwanda, and Uganda stand out.

Better rankings on the indicators for institutions, business sophistication, and knowledge and technology output have allowed the region to catch up to Central and Southern Asia, and to overtake Northern Africa and Western Asia.

Average regional performance shows strengths in the ease of starting a business, ICTs, business-model creation, and relative expenditure on education.

In Central and Southern Asia, India is ahead of the pack (66), followed by Kazakhstan (75), and Iran (78). India shows particular strengths in tertiary education and R&D, and also over-performs in innovation relative to its GDP. It ranks second in innovation quality amongst middle-income economies, overtaking Brazil.

Photo: Martina Nolte, Lizenz