The World’s Most Innovative
Countries, 2018
Solving
the energy/environment equation requires a significant innovation push.
With
a predicted 10 billion people by 2040, our planet will need up to 30 percent
more energy than today. While we need to generate more energy, we also need to
do it in a way that will not damage the long-term environmental balances of the
planet. Countries around the world have unique approaches to this challenge,
based on their own economic, social and political realities.
That
is why the relationship between energy and the environment features prominently
in the U.N.’s Sustainable Development Goals (SDGs). Goal 7 is
“Ensure access to affordable, reliable, sustainable and modern energy for all.”
International cooperation is necessary to facilitate access to clean energy
research and promote investment in clean energy technology. Goal 9 refers to
innovation and industry.
This
year’s Global
Innovation Index (GII) report, “Energizing the World
with Innovation”, a collaboration between INSEAD, Cornell University and the
World Intellectual Property Organization (WIPO), examines how the leaders in
global innovation bring education, R&D and business together to solve
challenges, such as how to power the future.
Encouraging
signs emerge from all parts of the world, showing how innovative policies and
systems can address the challenge. For example, Costa Rica (54) has been edging
towards complete independence from fossil fuels for several years. Reliance on
renewable energy sources – hydro, geothermal and wind – already provided 98
percent of the country’s electricity
in 2016. It combines natural sources (e.g. volcanoes) and smart grids,
including micro-grids using
solar energy as a back-up source of electricity.
In
2016, the GII had already sounded a warning about diminishing budgets. Over the
past year, the private sector has bounced back (global business R&D budgets
have increased by more than 4 percent), but this has not been matched by the
public sector.
When
public authorities accept the responsibility to drive significant investment policies
towards innovation, we see remarkable results, as in China (17). China’s
embrace of energy innovation has translated into a blend of Chinese and
European technology creating “clean nuclear energy” in Guangdong: The world’s
first Evolutionary Pressurised Reactor (EPR) should connect to the electricity
grid this month. Other countries are
concurrently working on the EPR, but after years of work, China – with a public
policy commitment – is the first to bring this safer nuclear energy technology
to the operational stage.
Energy
innovation
In
this year’s GII, we note that the transition to a green
economy could lead to an increase of around 18
million jobs worldwide. Yet, the energy/environment conundrum we live with
today can only be solved with significant innovation. Such innovation is
necessary in all four components of the energy ecosystem: generation,
transmission, storage and consumption.
Energy
generation or production needs to move continually towards greener fuels and
techniques, specifically becoming more reliant on renewable energies. The transmission
of energy sources could be more efficient, especially as oil and gas reserves
continue to diminish. For example, efficient access to electricity over long
distances is still patchy in many parts of the world. Storage capabilities will
be an important focus of innovation, as the availability of high-powered
batteries will continue to revolutionise transportation (see Tesla/SolarCity).
Storage will also help to reduce troughs and peaks along the production curves
required to face energy demands. Changes in consumption behaviours (e.g.
individual consumers should understand smart grids) will have an important role
to play too.
This
year’s rankings
Such
innovation must be facilitated and encouraged. This requires governments to
come up with incentives and regulations that stimulate energy innovation. The
leaders in our index demonstrate the effect of such crucial attributes.
This
is the first time in the history of the GII that the same countries are in the
Top 10 for two years running.
Switzerland
(1) remains on top for the 8th year in a row, with considerably
improved R&D expenditures continuing to feed its dominance.
The
Netherlands (2) excels in business sophistication and online creativity.
The
GII measures a country’s innovation performance based both on its innovation
inputs (such as regulatory environment, higher education, R&D and
infrastructure) and its innovation outputs (such as online creativity and
knowledge creation). Small countries perform well in the GII and may seem
overrepresented. Although small countries can make changes to spur and advance
innovation more quickly due to spatial factors like distance, there is no
small-country bias. Yet, the more diversified a country’s economy is,
especially a high-income economy, the more innovative it is in our rankings.
Singapore
(5) remains the only Asian country at the top of the rankings, moving up two
slots; it scores well across the GII’s pillars, especially in political
stability and safety, market capitalisation and high-tech exports. It is also
home to the Solar
Energy Research Institute of Singapore (SERIS),
a research institute focused on contributing to global sustainable development
and the solarisation of Singapore.
The
United States (6) moves down two slots, losing ground across several pillars,
including infrastructure. European countries once again dominate the top of the
rankings. Six out of the Top 10 countries in this year’s GII come from the
European Union. The EU is clearly an important force for innovation, especially
in education, R&D expenditures, intellectual property filings and high-tech
manufacturing output.
Top
25 movers and entrants
All
the countries in the Top 25 of the GII are high-income economies – except for
China, an upper-middle income economy. China’s steady climb through the
rankings can serve as a model to other middle-income economies, with
improvements in patents, publications and R&D expenditures.
Other
impressive movers this year include Israel (11) which moves up six places. When
it comes to business sophistication, Israel was better than all other
countries, even Switzerland.
Regional
differences
Northern
America and Europe fare best amongst regions in the GII. In the Latin America
and Caribbean region, potential exists – see Costa Rica – but as a region, it
has not improved in the way we would expect. On the bright side, Mexico (56)
has moved up through the ranks consistently over the years and Colombia (63) is
identified, along with Costa Rica, as an innovation achiever this year.
Last
in the list of regions, sub-Saharan Africa has some strong individual
performers. Six out of our list of 20 innovation achievers (those countries
that outperform on innovation in relation to their development) are from this
region. Kenya (78), Rwanda (99), Madagascar (106), Malawi (114) and Mozambique
(115) have been on this list at least three times in the past eight years.
The
case for optimism
This
year’s GII, although optimistic on some fronts, reminds us that continued
investments in energy innovation are necessary for global economic growth and
mandatory to address environmental challenges. Policy incentives must be
considered to spur the wider acceptance of existing innovations. If the
public or private sector finds solutions to the difficult problem of balancing
global needs for energy and the fragility of our environments, consumers and
businesses must have an easy access to them. Innovation requires ecosystems
that only policymakers can facilitate. Energy innovation is hence crucial to
make our planet not only healthier but also more peaceful and less unequal.
Bruno
Lanvin, Executive Director for Global Indices at
INSEAD and co-editor of the Global Innovation Index report
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