The UK moves up to the third spot, the Netherlands rises two places fourth, after a gap of four years the US rejoins the top five and Switzerland retains its place atop the ranking, in the Global Innovation Index 2013, published this week.
In face of economic crisis, innovation is alive and well, with R&D spending surpassing 2008 levels in most countries and local hubs technology hubs thriving, according to the Index.
This year’s report compiled by INSEAD, the World Intellectual Property Organization (WIPO) and Cornell University, casts additional light on the local dynamics of innovation, pointing to the emergence of original innovation eco-systems, and signalling a shift from a usual tendency to try and duplicate previously successful initiatives.
“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 WIPO Director General Francis Gurry. “For national-level policy makers seeking to support innovation, realising the full potential of innovation in their own backyards is often a more promising approach than trying to emulate successful innovation models elsewhere.”
The 2013 Index looks at 142 economies around the world, weighing 84 indicators including the quality of top universities, availability of microfinance, venture capital deals, to gauge both innovation capabilities and measurable results.
Switzerland and Sweden’s performance reflects the fact that both countries are leaders in all components of the Index, consistently ranking in the top 25. The UK has a well-balanced innovation performance (ranking 4th in both input and output), in spite of a relatively low level of growth in labour productivity. The US continues to benefit from its strong education base, especially in terms of top-rank universities, and has seen strong increases in software spending and employment in knowledge-intensive services. The US was last in the Index top 5 in 2009, when it was number one.
The results provide highlight the global nature of innovation, with the top 25 featuring countries from across the world. “While high income economies dominate the list, several new players have increased their innovation capabilities and outputs. On average, high-income countries outpace developing countries by a wide margin across the board in terms of scores; a persistent innovation divide exists,” said Soumitra Dutta, co-editor of the report.
Business, government and civil society are coming up with fresh ways of collaborating to spur innovation at local, national and even global levels, notes co-editor Bruno Lanvin, who is Executive Director of INSEAD’s European Competitiveness Initiative. “Innovation is rapidly becoming a rallying symbol for forces of progress and reform around the world. 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,” Lanvin said.
Innovation leaders and innovation learners
The Index shows a striking pattern of stability among the most innovative nations, as highlighted by the fact that within the top 10 or top 25 innovators, individual countries swap rankings within these two groups, but not a single country moved in or out of these groups in 2013.
One interpretation is that innovation success leads to the emergence of a virtuous circle: once a critical threshold has been reached, investment attracts investment, talent attracts talent, and innovation generates more innovation.
The Index also considers how innovation has benefitted from local factors in different parts of the world, concluding too many innovation strategies have been focused on trying to replicate previous successes elsewhere, such as in Silicon Valley in California. Fostering local innovation requires strategies that are deeply rooted in local comparative advantages, history and culture. They should be combined with a global approach to reach out to foreign markets, and attract overseas talent.
The local dynamics of innovation varies considerably across the globe and influences innovation measurement at the unit level. Learning from the local innovation systems adds newer dimensions to existing measurement approaches and challenges.
Cautious optimism on R&D
On the R&D front, the Index brings a dose of cautious optimism: despite adversity and tightened budgets, R&D expenditures have grown since 2010. On the business front, the R&D expenditures of top 1,000 R&D spending companies grew by between 9 and 10 per cent in 2010 and 2011. A similar pattern was observed in 2012.
Emerging markets have increased their R&D faster than high-income countries. Over the last five years, China, Argentina, Brazil, Poland, India, Russia, Turkey and South Africa (in that order) have been at the forefront of this phenomenon. Emerging markets, and notably China, are also largely driving the growth in patent filings worldwide.
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