Global Innovation Index 2013

By Catherine Jewell, WIPO Communications Division and Sacha Wunsch-Vincent, Economics and Statistics Division, WIPO

Amid ongoing global economic uncertainty, policymakers are focusing on innovation as a means of stimulating growth, generating employment and enhancing competitiveness. Measuring the innovation capabilities and performance of countries around the world is essential for policymakers to evaluate progress and identify priorities. The Global Innovation Index (GII), now in its sixth year, has become a leading reference for benchmarking the innovation performance of countries around the world. It offers detailed metrics and a practical guide for policymakers to more easily identify what needs to be done to foster innovation and improve a country’s innovation performance. In addition to ranking the innovation capabilities and outputs of countries, the GII seeks to deepen understanding of the dynamics of the multi-faceted process of innovation. This year it focuses on the local dynamics of innovation, reflecting the importance of innovation hubs, such as Silicon Valley in the United States and Daedok Innopolis in the Republic of Korea (ROK), in fostering a virtuous cycle of innovation, growth and employment. GII 2013 offers some interesting insights into the evolving global innovation landscape. We explore its main findings.

Amid slow and uneven global economic recovery, the GII underlines the importance of innovation as a foundation for future growth. “Innovation is a major contributor to economic growth and the major component of economic success in a global economy in which knowledge and intangibles are increasingly a component of production and distribution. It is the source of competitive advantage for enterprises, industries and companies and, as such, increasingly the basis of competition between them,” said WIPO Director General Francis Gurry at the launch of GII 2013. “Innovation is also the major source of improvements in the quality of our material life,” he said pointing to its potential in improving health outcomes, ensuring food security and overcoming the threat of climate change.

GII 2013 was launched at the High-Level Segment of the United Nations Economic and Social Council (ECOSOC) on July 1, 2013 which focused in particular on the role of science, technology and innovation and the potential of culture in achieving the Millennium Development Goals and promoting sustainable development

R&D spending on the rise

GII 2013 shows that innovation is “alive and well”. Despite the ongoing global economic challenges, the overall picture for innovation is positive with research and development (R&D) spending exceeding 2008 levels in most countries. “At no other point in history has so much money been spent on R&D worldwide,” the report notes. After a steep decline in 2009, “countries and firms have resumed investing in R&D and innovation,” said Soumitra Dutta, co-editor of the Report and Anne and Elmer Lindseth Dean, Samuel Curtis Johnson Graduate School of Management, Cornell University. Gross R&D expenditures in many developed and emerging economies show a positive upward trend with countries like China, India, Indonesia and Malaysia enjoying double-digit growth. Emerging markets, in general, have increased R&D spending faster than high-income countries.

Rankings

For the second consecutive year, Switzerland and Sweden, topped the GII’s rankings, demonstrating high levels of performance across all indicators, followed by the United Kingdom, the Netherlands and the United States. “The top 25 ranked countries on the GII are a mix of nations from across the world – North America, Europe, Asia, Oceania and the Middle East,” said Professor Dutta, underlining the changing geography of innovation and its global nature. “Never before has innovation been so well distributed among countries,” he said.

While high-income countries dominate the top 25 rankings, the good news is that various new players, such as China, Costa Rica, India and Senegal are rapidly outpacing their peers.

Persistent innovation divide

The rankings, however, point to a “persistent innovation divide”. While individual countries within the top 25 innovators have swapped positions no individual country moved in or out of the group in 2013. One way of interpreting this, Professor Dutta suggested, is that innovation success leads to the emergence of a virtuous cycle – once a critical threshold has been reached countries attract greater levels of investment and talent which in turn spur innovation.

Rapid progress of innovation learners

The rankings indicate the significant and rapid progress of a number of “innovation learners”. Eighteen emerging economies are outperforming other countries in their respective income group. These are (in order of performance) the Republic of Moldova, China, India, Uganda, Armenia, Viet Nam, Malaysia, Jordan, Mongolia, Mali, Kenya, Senegal, Hungary, Georgia, Montenegro, Costa Rica, Tajikistan and Latvia.

Among all regions, Latin America demonstrated the most significant improvement in GII rankings with Costa Rica taking the lead regional position.

“Although our findings show that daunting challenges remain for many new players, we also see exciting examples of innovation success, including in some of the poorest countries. This is a source of optimism about the future of global innovation and economic recovery,” said Bruno Lanvin, the report’s co-editor and Executive Director of INSEAD’s European Competitiveness Initiative.

A new dimension: the dynamics of local innovation

This year’s GII sheds new light on the dynamics of local innovation. “Dynamic innovation hubs are multiplying around the world despite the difficult state of the global economy. These hubs leverage local advantages with a global outlook on markets and talent,” said Mr. Gurry. Local hubs or concentrations of universities, enterprises, service providers and specialized suppliers are of great importance in facilitating innovation,” he continued, noting their particular relevance to developing countries seeking to improve their innovation capabilities.

Clusters enhance competiveness by pooling talent, know-how, capabilities and resources. They have a multiplier effect on the economy by encouraging high-tech, knowledge-based or creative industries; building up research excellence; attracting global companies; and stimulating spin-offs. The GII shows that while different models of innovation hub exist, in each case large enterprises acting as hub champions play a key role in a hub’s development and success. “These champions support innovation hubs by providing capital and connections, by facilitating knowledge creation and sharing, and by providing a bridge for the commercialization of ideas,” noted Cesare R. Mainardi, Chief Executive Officer of Booz & Company.

The GII’s analysis of the ways in which innovation is influenced and shaped by unique local factors and tacit knowledge provides valuable insights into how “successful models of innovation have taken shape in different conditions and their recipes for success. It can also help determine how these models can be replicated where the conditions are identical or adjusted where the conditions are similar,” noted Mr. Chandrajit Banerjee, Director General of the Confederation of Indian Industry.

GII 2013 explores every stage of the value chain, identifying and analyzing elements that are critical to the success of local innovation systems and their ability to move ideas to the market, including, for example, access to finance and markets and the role of incubators and technology transfer programs.

The GII builds on traditional innovation metrics and offers a holistic view of the “alchemy of innovation” and the importance of mindset in fostering innovation. “Innovation itself is more than just a process. It is a belief, a philosophy that embeds itself in the fundamental elements of governance, sustainability, efficiency and the competitive agility needed to deliver value,” noted Osman Sultan, CEO of Emirates Integrated Telecommunications Company PJSC (du).

A key strength of the GII is that it provides a framework to continuously monitor and capture the evolving nature of innovation and the many new ways in which it is being fostered. “It offers a framework that evolves in response to both the availability of data across a diverse range of countries and our growing understanding of innovation,” Mr. Gurry said. “It aims to provide a blueprint of the inputs and outputs of the innovation ecosystem and to benchmark the respective performances of countries in relation to those inputs and outputs, thereby providing measures that countries may use to improve their innovation capacity. We believe the GII is paving the way for better and more informed innovation policies around the world.”

“In the global economy, innovation from anywhere can drive change and create new opportunities everywhere. Everyone concerned with innovation as a catalyst for economic and social development needs to remain focused on how innovation can transform industries, businesses and people’s lives, not just locally but across the world,” notes Mr. Li Yingtao, President of Huawei Technologies’ 2012 R&D Laboratories.

The GII is a “must read” for policymakers seeking to harness the transformative power of innovation to tackle issues of economic growth, jobs and competitiveness.