Articles
Two respected rankings on innovation and competitiveness were released recently, one from an agency of the UN called WIPO (the World Intellectual Property Organisation) and the other from the World Economic Forum (WEF).
Both use broadly similar metrics to analyse economies. The WEF's Global Competitiveness Report considers productivity and casts its net slightly wider to look at things such as “labour market efficiency” and “financial market development”. The Global Innovation Index (GII), which is produced by WIPO and Cornell University, focuses on the institutions and structures used for research and development and the knowledge and technology outputs they result in.
Despite the different approaches, the top 10 of each ranking varies only slightly - in ranking order and with three countries different. In the WEF's Global Competitiveness Index, Germany, Hong Kong and Japan are present, but narrowly miss out of the top 10 for the GII, and are replaced by Ireland, Luxembourg and Denmark.
The Global Innovation Index
1. Switzerland
2. UK
3. Sweden
4. Netherlands
5. US
6. Finland
7. Singapore
8. Ireland
9. Luxembourg
10. Denmark
(Full list here)
The Global Competitiveness Index 2015
1. Switzerland
2. Singapore
3. US
4. Germany
5. Netherlands
6. Japan
7. Hong Kong
8. Finland
9. Sweden
10. UK
(Full list here)
No change
So what do the rankings tell us? For the most part it's business as usual. Most of the top 25 in both lists are the same high income economies that appear every year. For the countries left outside of the top 25 it has become difficult to challenge their dominance.
There are exceptions in the GII. The Czech Republic makes 24th and Ireland breaks into the top 10. China and Malaysia are also preforming much better with regards innovation, spending as much as the higher income economies on R&D funding and human capital development.
The WEF says governments have so far failed at introducing “long-term structural reforms” to boost productivity and free up entrepreneurial talent and that this is the reason productivity and innovation remain low. “The new normal of slow productivity growth poses a grave threat to the global economy and seriously impacts the world's ability to tackle challenges like unemployment and income inequality,” says Xavier Sala-i-Martin. “The best way to address this is for leaders to prioritise reform and investment in areas such as innovation and labour markets, this will free up entrepreneurial talent and allow human capital to flourish.”
Bright Spots
However there are improvements on a regional level. The GII reports improvement in a number of Sub-Saharan African countries. Low income economies such as Rwanda (94th), Mozambique (95th) and Malawi (98th) are performing better thanks to improvements to institutional frameworks, better skills and education and better links to international trade and funding.
In Central and Southern Asia, India remains top of the rankings, followed by Kazakhstan and Sri Lanka, which has significantly improved its position. Chandrajit Banerjee, Director General of Confederation of Indian Industry (CII), says: “The GII underlines the steady outperformance of India on innovation relative to its level of development. We applaud the new innovation policies put in place by the new Indian government, which are not yet effectively captured by the data used in the GII. Some of these measures have already had a positive impact on the build-up of innovation momentum and entrepreneurial mood in the country, and we expect this trend to grow in the coming months and years.”
These top ranking economies can serve as a role model to stimulate more innovation-driven development elsewhere in Central and Southern Asia, says the GII, helping the region achieve its potential.
Overall, a mixed picture, but the publication of both indexes so close together illustrates the fact that innovation and economic success go hand-in-hand and that the policies and initiatives that promote innovation are reaching new parts of the world.