Switzerland Most Innovative Economy, Global Divide Persists, Says WIPO/INSEAD Index

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The Global Innovation Index 2012 launched today by the World Intellectual Property Organization and INSEAD shows a clear innovation divide in world economies. It advises countries to maintain their efforts to support and foster innovation despite the lingering economic crisis, as a key element of sustainable growth.

Some 141 countries are ranked by the Index [pdf] on the basis of their innovation capabilities and results, with Switzerland, Sweden and Singapore in the leading positions for overall innovation performances, followed by Finland, the United Kingdom, the Netherlands, Denmark, Hong Kong, Ireland, and the United States.

Last year’s ranking [pdf] gave the same top leaders, but the US dropped to 10th position this year from 7th last year, and Canada fell to 12th this year after placing 8th last year.

The full report is available here.

A key report graphic is here or here [pdf].

There has been considerable policy discussion on how to deal with the global economic crisis, WIPO Director General Francis Gurry told a press briefing today. Some suggestions, he said, are that “we should achieve an appropriate policy mix between, on the one hand, achieving sustainable public finances,” and on the other hand adopt policies that encourage growth and employment.”

“It is important to resist downward pressure on investments in innovation,” Gurry said.

The Global Innovation Index is published by international business school INSEAD, and WIPO, with “knowledge partners”, including Alcatel-Lucent, global consulting firm Booz & Company, the Confederation of Indian Industry and an advisory board of experts.

WIPO joined the Global Innovation Index in 2001 as one of the knowledge partners, Gurry said, and this year became co-publisher. He said this decision came from the recognition that intellectual property is an essential part of the innovation ecosystem.

“IP encourages innovation and encourages those who innovate to be able to have a framework in which to trade their intellectual assets,” he said.

The definition of innovation has evolved over the last decade, said Soumitra Dutta, professor of business, technology and academic director of eLab at INSEAD and editor of the Index.

“Historically, innovation was often thought of as specialised improvements of products and processes done by a few specialised scientists inside research laboratories of companies” or organisations, but today there is a broader perspective of innovation, he said. Innovation is not just happening in product laboratories of companies, he added, but across multiple actors, including governments, other non-governmental organisations, and society as a whole. The theme of this year’s index is “Stronger Innovation Linkages for Global Growth.”

The Global Innovation Index conceptual framework is built around two main elements, said Dutta. The first is the innovation input, analysed through five pillars: institutions, human capital and research, infrastructure, market sophistication, and business sophistication. The second is the innovation output with two pillars: knowledge and technology outputs, and creative outputs. This shows the capabilities of economies to innovate and their ability to make use of their innovations.

This year, Dutta said, two additions were made: the ecological sustainability in the infrastructure inputs pillar, and the online creativity to the creative outputs pillar to reflect changes in the area of innovation.

Several rankings are offered in the Index, most of them showing the same leading countries. The innovation input sub-index rankings show Singapore in the lead position, followed by Hong Kong, Sweden, Switzerland and the United Kingdom. The innovation output sub-index rankings present Switzerland in the lead, before Sweden, the Netherlands, Malta and Finland.

However, the innovation efficiency index rankings tells a slightly different story. There, China scored highest, followed by India, Moldova, Malta and Switzerland. According to Dutta, the innovation efficiency index is calculated as the ration of the output over the input sub-index. This shows “countries particularly good at surmounting relative weaknesses on their input sub-indices, with robust output results,” the Index says.

Shifts in the Middle-Income Countries; EU Divide

The 2012 Index also confirmed that high-income economies dominate the innovation landscape “and tend to have a significant lead around the various elements of innovation,” Dutta said, but some interesting changes and trends are showing up in some middle income and lower income economies also “pushing the innovation frontier,” he added. He cited China and India, creating new innovative business models.

Inside Europe, Dutta said a gap is emerging on innovation capabilities between northern and southern European countries, with some eastern European countries exhibiting signs of being fast learners.

The Index also showed a slight setback in the United States position in the area of innovation, and found that the so-called BRIC countries (Brazil, Russia, India and China) need to renew their innovation drivers to “live up to their expected potential,” Dutta said at the launch event for the Index held today at WIPO.

Innovation Linkages Essential, Speakers Say

Most speakers at the launch of the Index emphasised the importance of linkages to reach success in innovation strategy. In particular, Per-Ola Karlsson, senior partner and managing director of Europe for Booz and Company in Sweden, said economies with a strong innovation culture have managed to link people, capital and research to introduce novelty and to create economic wealth.

Many successful companies with high innovation performance in Switzerland or the Netherlands once invested heavily in innovation inputs such as academic institutions, he added. Top innovative countries have figured out how to transform ideas into outputs, knowledge, technology, and goods and services, Karlsson said. This success also reflects the ability of those countries to create effective linkages across a number of different stakeholders, he said.

Success is not only about the amount of researchers, the amount of funds in research and development, or the amount of patents being filed, he said. It also is about the focus on qualitative aspects around innovation, and how to transform strategies into capabilities required to be successful.

“The tighter the connexions between strategy, culture and innovation, the greater the leverage companies and countries will have in bringing innovation inputs into the marketplace in successful products and services,” he said.

The amount of money spent on R&D is a poor predictor of how successful these companies are in innovation, he said. A study carried out by Booz and Company on the “top R&D spenders” reveals that other aspects than money are much more important, he said. An example is companies’ focus on their innovation strategy and their ability to establish a capability system to implement this strategy.

Linking different elements in the corporation is essential, he said, adding that coherence is equally important for countries, involving several stakeholders in companies and aggregating them in an effective ecosystem. In developing countries, it is important to figure out what is the natural model that establishes these coherent linkages, he said.

Innovation Should Promote Economic Inclusion

During the launch of the Index, a high-policy panel gathered several speakers, including Sibusiso Sibisi, president and chief executive officer of the Council for Scientific and Industrial Research, and member of the National Advisory Council on Innovation of South Africa.

He said innovation should promote social transformation, poverty reduction and job creation. It is essential, he said, that innovation lead to economic growth and enable a greater ability for people to be involved in the economy. A key expression is “inclusive growth through innovation,” he said.

Sibisi also suggested a subtitle of the Index: “Innovation linkages for global growth and global public good.”

Also speaking on the panel were Mohammed Al-Suwaiyel, president of King Abdulaziz City for Science and Technology in Saudi Arabia, Werner Bauer, executive vice-president, executive board and chief technology officer at Nestlé, and Jeong Kim, president of Bell Labs, Alcatel-Lucent. Main points of their interventions are here.

In concluding words, Gurry advised that innovation be kept free of political bantering, arguing, “Innovation is too important as an economic and social phenomenon to be overly-politicised.”

Catherine Saez may be reached at info@ip-watch.ch.

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