Global Innovation Index 2021: Tracking innovation through the COVID-19 crisis

By Catherine Jewell, Information and Digital Outreach Division, WIPO

The 2021 Global Innovation Index (GII), launched in September in Geneva, Switzerland, captures the innovation performance of 132 economies and innovation trends during the COVID-19 crisis. Now in its 14^th edition, the GII published by WIPO supports policymakers’ understanding of how to foster innovation in support of their national social and economic development goals. Sacha Wunsch-Vincent, Senior Economist in WIPO’s IP and Innovation Ecosystem Sector, and Co-editor of the GII 2021 at WIPO, discusses some of the report’s key findings.

How has investment in innovation fared during the COVID-19 crisis?

The GII 2021 shows that investment in innovation has been resilient during the COVID-19 crisis and even reached new peaks in some sectors and regions. Before the pandemic, innovation investments were at an all-time high with R&D expenditure growing by 8.5 percent in 2019. When the pandemic hit, it was unclear what its impact would be on innovation. History suggested that innovation investments would be hard hit. However, throughout 2020, key indicators of innovation investment, namely, scientific output, R&D expenditure, IP filings and venture capital deals continued to increase. These data point to a growing acknowledgement among governments and enterprises that new ideas, products and services are critical for post-pandemic recovery and growth. However, more data are required before a full assessment is possible.

How have different sectors been impacted by the pandemic?

The impact has been highly uneven across industries. The GII’s Global Innovation Tracker, a new feature of this year’s report, reveals firms with outputs relating to software, information and communications technologies, hardware and electrical equipment, pharmaceuticals and biotech, increased their investments in R&D and innovation. Whereas firms with business models that rely on in-person contact, such as transport and travel, were hit hard by pandemic containment measures, and experienced significant cutbacks.

Which economies continue to deliver peak innovation performance?

High-income economies continue to dominate the rankings. Switzerland remains the world’s innovation leader for the 11th consecutive year, followed by Sweden. Switzerland, Sweden, the United States and the UK have all ranked among the top five in the past three years. And this year, for the first time, the Republic of Korea enters the top five. The majority of the top 25 most innovative economies continue to be in Europe. This year, ten European economies rise in the rankings, most notably, France (11) and Estonia (21).

Five Asian economies feature among the top 15: the Republic of Korean (5), Singapore (10), China (12), Japan (13), and Hong Kong, China (14). Since 2013, China has steadily established itself as a global innovation leader, rising in the GII rankings and getting ever closer to the top 10.

What’s happening among middle-income economies?

A number of middle-income economies are starting to pull their weight and are changing the global innovation landscape. They include China, Turkey (41), Viet Nam (44), India (46) and the Philippines (51).

China remains the only middle-income economy in the top 30 most innovative economies. Nine other middle-income economies fall within the GII top 50 and are catching up. These are Bulgaria (35), Malaysia (36), Turkey (41), Thailand (43), Viet Nam (44), the Russian Federation (45), India (46), Ukraine (49) and Montenegro (50). As sizeable economies, Turkey, Viet Nam, India and the Philippines together, have the potential to re-shape the global innovation landscape.

Which economies are exceeding expectations in terms of their innovation performance?

India, Kenya (85), the Republic of Moldova (64) and Viet Nam hold the record for over performing on innovation relative to their level of development, having now done so for 11 years in a row.

In 2021, for the first time, Brazil (57), the Islamic Republic of Iran (60) and Peru (70) over performed on innovation. As in previous years, Sub-Saharan Africa is the region with the largest number of economies that are over performing on innovation. They include Cabo Verde (89), Kenya (85), Mauritius (52), South Africa (61) and the United Republic of Tanzania (90).

What changes to the global innovation landscape does GII 2021 reveal?

We see that the geography of global innovation is changing unevenly. Northern America and Europe are the regions that continue to stand out as global innovation leaders, well ahead of other economies.

The innovation performance of South East Asia, East Asia, and Oceania (SEAO) has been the most dynamic over the last decade and is the only region to close the gap on Northern America and Europe.

Northern Africa and Western Asia, Latin America and the Caribbean, Central and Southern Asia, and sub-Saharan Africa then follow, in that order. GII 2021 shows strong performances by the Islamic Republic of Iran, Chile (53), the United Arab Emirates (33) and South Africa (61).

In Central and Southern Asia, India (46) leads the way and has consistently gone up the ranks since 2015, when it entered the top 50, followed by the Islamic Republic of Iran and Kazakhstan (79).

And in the Northern Africa and Western Asia region, Israel (15), Cyprus, and the United Arab Emirates (UAE) top the rankings. Turkey also leaps into the top 50 and continues to move up the rankings. Eight other economies in the region, including Oman (76), Egypt (94), and Algeria (120), move up the rankings.

In Latin America and the Caribbean, Chile (53) ranks first in the region, followed by Mexico (55) and Costa Rica (56). Only Chile, Mexico, Costa Rica and Brazil rank among the top 60. In 2021, 11 of the region’s economies improved their ranking, with Argentina (73), Paraguay (88), and Ecuador (91) making the most progress. With the exception of Mexico, few economies in this region have consistently improved their ranking over the last decade.

And in sub-Saharan Africa, only Mauritius and South Africa rank in the top 65. In 2021, 10 economies climbed the rankings, including Cabo Verde, Namibia (100), Malawi (107), Madagascar (110), Zimbabwe (113) and Burkina Faso (115). Rwanda (102) regains the lead position among low-income economies.

Moreover, only Kenya and the United Republic of Tanzania have improved their performance over time to remain firmly in the top 100.

And in terms of new science and technology clusters, what does GII 2021 show?

GII 2021 shows that new science and technology (S&T) clusters are emerging, and that the majority of them are located in a handful of countries. Tokyo–Yokohama is once again the top performing S&T cluster, followed by Shenzhen–Hong Kong–Guangzhou, Beijing, Seoul and San Jose–San Francisco.

The United States continues to host the highest number of top science and technology clusters (24), led by the San Jose-San Francisco cluster, followed by China, Germany, and Japan.

China boasts 19 of the top science and technology clusters worldwide - with Shenzhen-Hong Kong-Guangzhou and Beijing ranked 2 and 3, respectively. Clusters in China recorded the largest increases in S&T output.

S&T clusters are also found in a number of middle-income countries, including Brazil, China, India, the Islamic Republic of Iran, Turkey, and the Russian Federation, with significant growth in Delhi, Mumbai and Istanbul.

Tell us about the Global Innovation Tracker.

The GII Global Innovation Tracker looks at a variety of data points at three broad stages of the innovation journey to capture key innovation trends. These are science and innovation investments; technological progress; and socioeconomic impact.

Monitoring the pulse of innovation is not easy. It can take months or years to transform an idea into a new product or service, and even longer before technological advances are widely adopted, or create new jobs, boost economic productivity and improve people’s lives. No single indicator captures every aspect of innovation performance. That’s why the GII relies on a broad set of indicators to measure the innovation performance of economies. Similarly, the Global Innovation Tracker looks at a variety of data points to capture key innovation trends.

What insights does the Global Innovation Tracker reveal?

As noted above, overall, we see a high level of resilience. For example, there is no evidence that the pandemic has affected scientific publishing. In 2020, the number of scientific articles published globally grew by 7.6 percent, faster than the 10-year average growth rate. Unsurprisingly, health-related scientific outputs, both pandemic-related and non-pandemic related, saw record growth. Environmental sciences also grew by 21.2 percent in 2020, overtaking electrical and electronic engineering as the second most active publication field. Artificial intelligence stands out as another field showing strong growth in 2020.

We see that government budget allocations for the top R&D spending economies continued to grow as did R&D expenditure of the top global corporate R&D spenders for which data are available. While available data indicate R&D expenditures were more resilient than historical experience would suggest, more complete data are required for a fuller assessment of the pandemic’s impact on corporate R&D performance.

GII 2021 also shows that advances in frontier technologies show great promise, as powerfully demonstrated by the rapid development of COVID-19 vaccines. Advances in ICTs and renewable energy, which have the potential to improve livelihoods, human health and protect the environment, are also showing great promise.

International patent filings under WIPO’s Patent Cooperation Treaty reached an all-time high in 2020, up 3.5 percent on the previous year. Medical technology, pharmaceuticals and biotechnology were key drivers of this growth. However, it’s important to note that most of the inventions underlying international patent filings in 2020 predate the pandemic. As such, strong patenting of health-related technologies does not reflect an invention response to the pandemic but rather indicates that the pandemic has led innovators in the healthcare sector to upgrade the commercial potential of their recent inventions.

The Tracker also shows that venture capital (VC) deals grew by 5.8 percent, exceeding the average growth rate of 3.6 percent for the past decade. The exceptional resilience of innovation financing is all the more remarkable given the sharp decline in VC deals in Northern America and Europe amid soaring economic uncertainty in mid-2020. Strong growth in VC deals in the Asia Pacific region more than compensated for these declines. In Africa and in Latin America and the Caribbean, such deals saw double-digit growth, albeit from lower levels. And data for the first quarter of 2021 indicate a vibrant year for VC deals. In that period, the Asia Pacific region alone has already reached an all-time high of 1,260 deals.

So, overall, we see remarkable resilience in the face of the greatest economic downturn in decades, with great promise at the frontiers of technological development.