China’s top-25 entry marks the first time a middle-income country has joined the highly developed economies that have historically dominated the top of the Global Innovation Index (GII) throughout its nine years of surveying the innovative capacity of 100-plus countries across the globe. China’s progression reflects the country’s improved innovation performance as well as methodological considerations such as improved innovation metrics in the GII.
Despite China’s rise, an “innovation divide” persists between developed and developing countries amid increasing awareness among policymakers that fostering innovation is crucial to a vibrant, competitive economy.
Innovation requires continuous investment. Before the 2009 crisis, research and development (R&D) expenditure grew at an annual pace of approximately 7%. GII 2016 data indicate that global R&D grew by only 4% in 2014. This was a result of slower growth in emerging economies and tighter R&D budgets in high-income economies – this remains a source of concern.
“Investing in innovation is critical to raising long-term economic growth,” says WIPO Director General Francis Gurry. “In this current economic climate, uncovering new sources of growth and leveraging the opportunities raised by global innovation are priorities for all stakeholders.”
Top Rankings
- Switzerland (Number 1 in 2015)
- Sweden (3)
- United Kingdom (2)
- United States of America (5)
- Finland (6)
- Singapore (7)
- Ireland (8)
- Denmark (10)
- Netherlands (4)
- Germany (12)
- Republic of Korea (14)
- Luxembourg (9)
- Iceland (13)
- Hong Kong (China) (11)
- Canada (16)
- Japan (19)
- New Zealand (15)
- France (21)
- Australia (17)
- Austria (18)
- Israel (22)
- Norway (20)
- Belgium (25)
- Estonia (23)
- China (29)
Among the GII 2016 leaders, four economies — Japan, the U.S., the UK, and Germany— stand out in “innovation quality,” a top-level indicator that looks at the caliber of universities, number of scientific publications and international patent filings. China moves to 17th place in innovation quality, making it the leader among middle-income economies for this indicator, followed by India which has overtaken Brazil.
Soumitra Dutta, Dean, Cornell College of Business, and co-editor of the report, points out: “Investing in improving innovation quality is essential for closing the innovation divide. While institutions create an essential supportive framework for doing so, economies need to focus on reforming education and growing their research capabilities to compete successfully in a rapidly changing globalized world.”
Infographic: Who is leading innovation?
Infographic: In a perfect world for innovation, who would do what?
GII 2016 Theme: “Winning with Global Innovation”
The GII theme this year is “Winning with Global Innovation.” The report explores the rising share of innovation carried out via globalized innovation networks, finding that gains from global innovation can be shared more widely as cross-border flows of knowledge and talent are on the rise. The report also concludes that there is ample scope to expand global corporate and public R&D cooperation to foster future economic growth.
Bruno Lanvin, INSEAD Executive Director for Global Indices, and co-author of the report, underlines: “Some may see globalization as a trend in search of its ‘second breath.' Yet, the relative contraction of international trade and investment flows does give even more strategic importance to the two sides of global innovation: on one hand, more emerging countries are becoming successful innovators, and on the other hand, an increasing share of innovation benefits stem from cross-border co-operation.”
At the national level, the report says that innovation policies should more explicitly favor international collaboration and the diffusion of knowledge across borders. New international governance structures should also aim to increase technology diffusion to and among developing countries.
Johan Aurik, Managing Partner and Chairman of GII Knowledge Partner A.T. Kearney, the global consultancy, says: “Digital has become a primary driver of strategy development and innovation for business in almost all sectors; I am convinced we are only at the beginning. Notably for established organizations, the challenge lies in finding ways to successfully innovate by using and transforming existing resources and business practices. Realizing success in today’s new landscape requires creative, forward-thinking strategies that embrace digital and address the need to change the fundamental ways of working in the company.”
Europe
Fifteen of the top 25 economies in the GII come from Europe, including the top three. Switzerland retains the top position for the sixth consecutive year, followed by Sweden (2nd), and the United Kingdom (3rd). Following these top 3 regional leaders are Finland (5th), Ireland (7th), Denmark (8th), the Netherlands (9th), and Germany (10th), which joins the top 10 in 2016.
Europe benefits from comparatively strong institutions and well-developed infrastructure, while room for improvement is found in business sophistication and knowledge and technology outputs. Europe does particularly well in environmental performance, ICT access, and school life expectancy. At the same time, there is room for improvement in R&D financed by businesses, R&D financed by foreign firms, high-tech exports, and international patent filings.
About the Global Innovation Index
The Global Innovation Index 2016 (GII), in its 9th edition this year, is co-published by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO, a specialized agency of the United Nations).
Published annually since 2007, the GII is now a leading benchmarking tool for business executives, policy makers and others seeking insight into the state of innovation around the world. Policymakers, business leaders and other stakeholders use the GII to evaluate progress on a continual basis. This year’s study benefits from the experience of its Knowledge Partners, A.T. Kearney and IMP³rove – European Innovation Management Academy, the Confederation of Indian Industry and du, as well as of an Advisory Board of international experts.
The core of the GII Report consists of a ranking of world economies’ innovation capabilities and results. Recognizing the key role of innovation as a driver of economic growth and prosperity, and the need for a broad horizontal vision of innovation applicable to developed and emerging economies, the GII includes indicators that go beyond the traditional measures of innovation such as the level of research and development.
To support the global innovation debate, to guide polices and to highlight good practices, metrics are required to assess innovation and related policy performance. The GII creates an environment in which innovation factors are under continual evaluation, including the following features:
- 128 country profiles, including data, ranks and strengths and weaknesses on 82 indicators
- 82 data tables for indicators from over 30 international public and private sources, of which 58 are hard data, 19 composite indicators, and 5 survey questions
- A transparent and replicable computation methodology including 90% confidence interval for each index ranking (GII, output and input sub-indices) and an analysis of factors affecting year-on-year changes in rankings.
The GII 2016 is calculated as the average of two sub-indices. The Innovation Input Sub-Index gauges elements of the national economy which embody innovative activities grouped in five pillars: (1) Institutions, (2) Human capital and research, (3) Infrastructure, (4) Market sophistication, and (5) Business sophistication. The Innovation Output Sub-Index captures actual evidence of innovation results, divided in two pillars: (6) Knowledge and technology outputs and (7) Creative outputs.
The index is submitted to an independent statistical audit by the Joint Research Centre of the European Commission. To download the full report visit: www.globalinnovationindex.org