Global Innovation Index 2016: Winning with global innovation
By Catherine Jewell, Communications Division, WIPO and Sacha Wunsch-Vincent, Economics and Statistics Division, WIPO
Global innovation is a win-win proposition – everyone stands to gain from it. That is the message of the Global Innovation Index (GII) 2016, the latest edition of the annual innovation study that WIPO produces in collaboration with Cornell University and INSEAD.
Focusing on the theme of “Winning with Global Innovation”, the GII 2016 calls on governments to support consistent investment in innovation and research. The GII 2016 findings suggest that a new corporate innovation culture built around novel partnerships and innovation platforms has significant potential to drive long-term economic growth.
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An authoritative annual reference
The GII 2016 benchmarks the innovation performance of 128 economies representing 92.8 percent of the world’s population and 97.9 percent of global GDP (in current US dollars). The individual performance of each country is evaluated against a broad range of qualitative and quantitative indicators to measure both innovation inputs – what countries are doing to strengthen their innovation ecosystems – and innovation outputs – their performance and results. These metrics are reviewed and updated every year to provide the best and most current assessment of global innovation.
While the GII ranks the innovation performance of the countries surveyed, its overriding aim is to generate insights, identify good practices and provide practical support to policymakers and business executives in their efforts to improve innovation performance. Now in its ninth edition, it has become a leading reference on global innovation.
This year’s GII highlights the mutual benefits of increased international cooperation for innovation. Global innovation is often seen as a zero-sum proposition, with imports of technology or technology-intensive services perceived as a cost. The GII shows, by contrast, that international investment in innovation has huge scope to complement national systems and drive long-term economic growth.
“Investing in innovation is critical to raising long-term economic growth,” explains WIPO Director General Francis Gurry. “In the current economic climate, uncovering new sources of growth and leveraging the opportunities raised by global innovation are a priority for all stakeholders.”
Innovation is more global but gaps remain
The GII 2016 reveals a multipolar world of research and innovation, albeit one where most innovation is still concentrated in high-income and selected middle-income economies.
The top ten country rankings remain largely unchanged from 2015, with Switzerland maintaining first place for the sixth year running. Germany is the only new entry, as Luxembourg, ranked ninth last year, drops to number 12.
But for the first time, a middle-income country, China (ranked 25), joins the ranks of the world’s 25 most innovative economies. China’s progression reflects the country’s improved innovation performance, in particular with respect to the quality of its innovation infrastructure and robust investment in research and human capital, as well as methodological considerations such as improved innovation metrics in the GII.
Despite China’s rise and a growing awareness among policymakers about the central importance of innovation to economic growth, a significant gap remains between upper middle-income economies and their high-income counterparts. Many upper middle-income economies still depend on technology transfers from high-income economies for solutions to mainly domestic problems, for example in the areas of health and energy.
On a brighter note, low-income economies are continuing to close the innovation divide that separates them from middle-income economies, and some countries outside the top 25 are outperforming their income group. These “innovation achievers” include many economies in Africa, such as Kenya, Madagascar, Malawi, Rwanda and Uganda, and economies in other regions such as Armenia, India, Tajikistan and Viet Nam.
Better technology diffusion to and within middle- and low-income economies, through expanded innovation collaboration, will help to further narrow these gaps.
Leveraging global innovation to boost growth
The GII 2016 highlights the central importance of investment in research and development (R&D) and innovation for economic growth. Countries that consistently perform well or are showing improvement in innovation performance all make R&D spending and innovation key priorities.
The challenge is to boost the innovation performance of other economies. How can over-reliance on a handful of countries to drive global R&D growth be avoided? How can R&D be systematically spread to low- and middle-income economies where appropriate innovation is desperately needed?
The report suggests that international collaboration is a major part of the solution. By stepping up public investment in innovation, policymakers can boost short-term demand and improve long-term growth potential. Investing in innovation and expanding global corporate and public R&D cooperation is a win-win scenario. The goal must be to boost global innovation cooperation through more inclusive governance mechanisms that support the diffusion of knowledge and ideas across borders.
The GII 2016 calls for a new global innovation mindset underpinned by smart, globally oriented innovation policies. This, it argues, will enable companies to benefit from the untapped potential of global innovation while also helping to quell rising sentiments of nationalism and fragmentation.
For policymakers, facilitating increased international collaboration and complementing inward- with outward-looking approaches are central to sustained success in innovation. Similarly, for firms to succeed they must simultaneously build global R&D capacity and develop localized solutions in response to the needs of local customers.
Innovation is a global public good: regardless of who invests heavily in bringing about scientific advances or innovations, the results often diffuse well beyond borders to enrich other countries. In the same spirit, the national innovation policies of different countries – whose innovators and firms often compete against one another – have largely positive effects.
Creating sound innovation systems: no magic formula
When it comes to creating effective innovation systems there is no “silver bullet” solution. Establishing innovation systems with solid innovation inputs, sophisticated markets, a thriving business sector and robust linkages among innovation actors is a complex process.
And the question of how to create self-perpetuating, organic innovation systems is an enduring dilemma for governments. On the one hand, it is now accepted that governments have an important role to play in generating innovation. But on the other hand, if they overreach, they may inhibit the emergence of self-sustaining organic innovation ecosystems.
Providing enough space for entrepreneurship and innovation, the right incentives and a certain “freedom to operate” that challenges the status quo are also part of the equation. Finding the right policy balance has never been more challenging.
Preserving the momentum in Sub-Saharan Africa
For several years, the GII rankings have tracked the positive innovation performance of countries within Sub-Saharan Africa, which since 2012 has laid claim to more innovation achievers than any other region. Kenya, Madagascar, Malawi, Mozambique, Rwanda and Uganda – often oil-importing countries – are performing better than their level of development would predict. But this trend is not uniform across the region, nor is there any guarantee that it will continue. If the predicted economic slowdown in Africa occurs, African economies will need to redouble their efforts to maintain the current innovation momentum and reduce their reliance on oil and commodity revenues.
Latin America’s untapped potential
Latin America’s has significant innovation potential, but the GII analysis suggests little progress has been made in realizing it. In the GII 2016, Chile, Colombia, Costa Rica, Mexico and Uruguay are the top-ranking countries in the region, but no country or economy in Latin America has been identified as an innovation achiever. Although the innovation agenda remains an important priority, the region has been engulfed by considerable economic turbulence. In this context, it will be very important for these economies to overcome short-term political and economic constraints and to hold fast to their longer-term innovation commitments and results. Greater regional cooperation in the areas of R&D and innovation may help in this process.
North America
Ranked fourth in the GII 2016, the United States remains one of the world’s most innovative countries. It shows strengths in the presence of firms conducting global R&D, software spending and the state of its innovation clusters. Canada, in 15th place, rates highly for the ease of starting a business and online creativity. While both countries score well for the sophistication of their financial markets (including venture capital) and the caliber of their universities and scientific publications, they each show scope to improve economy-wide investment and productivity, which are crucial to future growth.
Central and Southern Asia
Six of the ten economies within this region have moved into the top 100 in 2016. India, ranked 66, maintains its top position among them. India scores highly for the quality of its universities, scientific publications and R&D, along with market sophistication and ICT service exports, for which it ranks first in the world. Kazakhstan, at number 75, is second in the region, followed by the Islamic Republic of Iran (78), Tajikistan (86), Sri Lanka (91) and Bhutan (96).
Northern Africa and Western Asia
Among the top five in the region are two of the six economies in the Gulf Cooperation Council (GCC), the United Arab Emirates (ranked 41) and Saudi Arabia (49). This reflects the fact that many GCC countries are diversifying their economies away from oil production to more innovation-driven sources of growth.
Israel (21) and Cyprus (31) achieve the top two spots in the region for the fourth consecutive year.
South East Asia, East Asia and Oceania
All 14 economies within the region figure in the world’s top 100 in the GII 2016. The top seven of these – Singapore (ranked 6), the Republic of Korea (11), Hong Kong (China) (14), Japan (16), New Zealand (17), Australia (19) and China (25) – are ranked among the top 25 economies. The region’s strongest average performances are in the pupil–teacher ratio and in productivity growth. However, the results indicate scope to improve R&D financed by foreign firms, ICT services exports and imports, and IP receipts.
Europe
Fifteen of the top 25 economies in the GII 2016 come from Europe, including the top three – Switzerland, Sweden and the United Kingdom.
Europe benefits from comparatively strong institutions and well-developed infrastructure, but could improve business sophistication and knowledge and technology outputs. Europe does particularly well in environmental performance, ICT access and school life expectancy.
Quality is key
The GII offers a holistic approach to assessing innovation performance. It moves away from purely quantitative measures to look at the quality of innovation. Quality is a hallmark of innovation leaders such as Germany, Japan, the United Kingdom and the United States.
UN Secretary General Ban Ki-Moon has called the GII a “unique tool for refining innovation policies … for providing an accurate picture of the role of science, technology and innovation in sustainable development.” The lessons from the GII 2016 will help policymakers and business leaders improve innovation quality around the world.
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