The World’s Most Innovative
Countries, 2015
Innovation-led growth is no longer the
prerogative of high-income countries alone. Middle-income countries are
catching up fast, but they still need some crucial ingredients to compete.
Countries around the
world are trying to emulate Silicon Valley’s success by trying to construct
similar frameworks in the hope of building the next Google. There are three key
policy elements that can mean the difference between success and failure.
First, policies matter. From tax incentives to regulations and from grants to
funding, the role of policies is crucial. During the Cold War, the US Defence
Department threw massive amounts of funding at semiconductor firms creating
ever-faster integrated circuits and computing capacity, which give Silicon
Valley its name. It was computer research at the Defense Advanced Research
Projects Agency (DARPA) that led to the creation of computer networking that
later became the internet. Its nearby universities also received federal
funding for networking hardware that was later commercialised as Cisco. Working
at the National Science Foundation’s Digital Library Initiative, Sergey Brin
created the algorithm that later became Google.
Secondly, as Jean
Monnet, one of the founders of the European Union famously said, “nothing starts
without people, nothing lasts without institutions.” Innovators need political
stability, streamlined tax structures, inter-agency cooperation, supportive
research institutions and fluid links between public researchers and private
companies.
Thirdly, risks need to
be made attractive. Entrepreneurs and innovators need clear legal frameworks,
clear fiscal frameworks and clear business frameworks to mitigate risk and
investment confidently. These three qualities have made the United States the
5th most innovative country in the world according to this year’s Global Innovation Index.
Innovation achievers Similar characteristics
defined the top 10 in the GII, with Switzerland leading the pack for the
5th year in a row. The Swiss recipe stands out for its historical
engineering culture, its strong emphasis on education, especially of the
vocational sort, and its open mindset where talent comes and goes freely.
2015 TOP 10
|
|
1.
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Switzerland
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2.
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United Kingdom
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3.
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Sweden
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4.
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Netherlands
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5.
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United States
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6.
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Finland
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7.
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Singapore
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8.
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Ireland
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9.
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Luxembourg
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10.
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Denmark
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While the top 10 are to
be celebrated, this year’s report takes specific steps to understand how policy
is being leveraged by what we call the “innovation achievers”, economies that
perform at least 10 percent better than their peers in the same income group.
While high-income countries dominate the index and maintain their positions,
noticeable ranking moves are happening more frequently within lower-income
groups.
Among such achievers are
China, Malaysia, Vietnam, India, Morocco and Jordan. They are all making
improvements to institutional frameworks, the skills of the labour force with
expanded tertiary education, better infrastructure and a deeper integration
with global credit investment and trade markets.
Malaysia for example, has outperformed its
middle income peers in all seven pillars of the GII over the last three years,
due to institutional stimulation of innovation, an improving business
environment and the government’s increasing focus on research funding, which
has increased its R&D expenditure as a percentage of GDP and the number of
workers in R&D fields. The Ministry of Science, Technology and Research
(MOSTI) supports creation, research and development, as well as
commercialisation of innovative activities in Malaysia. MOSTI also coordinates
with Malaysia Industry-Government Group for High Technology, the Multimedia
Development Corporation, the Malaysian Technology Development Corporation, the
National Science Research Council and five research universities, which expands
both scientific input and output.
HOW THE GII RANKS COUNTRIES
|
|
Innovation Inputs
|
• Institutions (political, regulatory, business
environment)
• Human capital and research (education, tertiary education, R&D) • Infrastructure (ICTs, ecological sustainability) • Market sophistication (credit, investment, trade) • Business sophistication (knowledge workers, innovation linkages, knowledge absorption) |
Innovation Outputs
|
• Knowledge and technology outputs (creation, impact and diffusion
of knowledge)
• Creative outputs (intangible assets, creative goods and services, online creativity) |
Closing rich-poor
divides
The proliferation of
cheap and simple technology is helping such countries. While gaps remain in
overall innovation performance between rich and poor countries, the technology
gap is narrowing. This is due to the fact that recent new technologies are globalised
from the start, such as 3D printing, cloud computing, and big data analytics,
lowering production and labour costs for firms in emerging countries.
But the innovation
achievers realise that technology alone is not enough to foster an innovative
environment. Getting the right talent and an institutional framework in place
appear to be the most difficult of all inputs to achieve both in general but
for low-income countries in particular. In Malaysia for instance, the
government has created the institutional setting for solving collective action
problems but much remains to be done to establish linkages between these
organisations and private firms. In talent, strong university-industry links
have been built in industrial training of undergraduates, but those linkages
are not so obvious in R&D and in the placement of academics in firms. It
has not yet reached Taiwan’s level of sophistication in incubating,
commercialising and spinning off local tech firms. In addition, large numbers
of Malaysian professionals are living in Singapore, the US, Australia and the
UK and contributing to the innovative potential of those countries. Attracting
and retaining knowledge workers is a pressing issue.
Countries at higher
income levels benefit from established education and research facilities and
traditions that allows them to translate their inputs into innovative outputs.
Immigration openness in the UAE, Singapore and Switzerland has made these three
countries strong performers.
Don’t stop now
Despite slowing growth,
we don’t anticipate a slowdown in R&D spending and investment. This should
always be protected even at times of economic uncertainty. Countries have
learned that stop-and-go policies in R&D costs more in the long run and is
hugely disruptive to innovation potential. A commitment to fostering innovation
goes hand-in-hand with investment and policies.
Emphasis in emerging
countries should be placed on gaining knowledge as much as on providing the
right framework conditions that stimulate a process of innovation and knowledge
diffusion: political stability and supportive institutions; good and widespread
technical and tertiary education to enhance absorptive capacity; reliable and
widespread basic infrastructure; provision of information and communication
technology (ICT) property rights; and stronger links and interaction between
publicly funded research institutes and private companies.
The ultimate policy mix will depend on a
country’s broader development objectives, and will have to be made in
collaboration with all the stakeholders to maximise the chances of success.
Good coordination between ministries and between the private and the government
sectors is therefore essential.
Bruno Lanvin, Executive Director for Global Indices at INSEAD and co-author of the Global Innovation Index
Read
more at
http://knowledge.insead.edu/entrepreneurship/the-worlds-most-innovative-countries-2015-4261?utm_source=INSEAD+Knowledge&utm_campaign=43d78e3d20-17_Sept_mailer9_17_2015&utm_medium=email&utm_term=0_e079141ebb-43d78e3d20-249840429#iR7F1im1Sy204ALQ.99
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