Global innovation: China joins top 25, Singapore climbs a notch

  • China's entry marks the first time a middle-income country is in the top 25
  • Japan, the US, the UK, and Germany, stand out in “innovation quality,”
Global innovation: China joins top 25, Singapore climbs a notch
 

CHINA joins the ranks of the world’s 25 most-innovative economies in the Global Innovation Index (GII).

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 GII throughout its nine years of surveying the innovative capacity of 100-plus countries across the globe.

Switzerland, Sweden, the United Kingdom, the United States of America, Finland and Singapore lead the 2016 rankings in the GII, which was jointly released on Aug 22 by Cornell University, Insead and the World Intellectual Property Organisation (Wipo).

China’s progression reflects the country’s improved innovation performance as well as methodological considerations such as improved innovation metrics in the GII.

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.

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.

“Investing in innovation is critical to raising long-term economic growth,” says WIPO director general Francis Gurry (pic below).  “In this current economic climate, uncovering new sources of growth and leveraging the opportunities raised by global innovation are priorities for all stakeholders.”

Global innovation: China joins top 25, Singapore climbs a notch
 

Among the GII 2016 leaders, four economies — Japan, the US, the UK, and Germany — stand out in “innovation quality,” a top-level indicator that looks at the calibre of universities, number of scientific publications and international patent filings.

Cornell College of Business dean and co-editor of the report Soumitra Dutta 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 globalised world.”

The GII theme this year is “Winning with Global Innovation.” The report explores the rising share of innovation carried out via globalised 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.

GII Knowledge Partner A.T. Kearney managing partner and chairman Johan Aurik says: “Digital has become a primary driver of strategy development and innovation for business in almost all sectors.

"Notably for established organisations, the challenge lies in finding ways to successfully innovate by using and transforming existing resources and business practices. Realising 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.”

South-East Asia, East Asia, and Oceania

Singapore (6th), the Republic of Korea (11th), Hong Kong (China) (14th), Japan (16th), and New Zealand (17th) lead the rankings in this region. The majority of innovation leaders in the GII are in this region or Europe.

Among upper-middle-income economies, China (25th), Malaysia (35th), and Thailand (52nd) rank first in the region. Viet Nam (59th) maintains its top place among lower-middle-income economies, followed by the Philippines (74th,) and Indonesia (88th). Low-income economy Cambodia maintains its ranking in the top 100 economies overall (95th).

The region’s strongest average performance is in the number of teachers per pupils and productivity growth, with lower scores in R&D financed by foreign firms, ICT services exports and imports, and intellectual property receipts.

Central and Southern Asia

India, 66th, is the top-ranked economy in Central and Southern Asia, showing particular strengths in tertiary education and R&D, including global R&D intensive firms, the quality of its universities and scientific publications, its market sophistication and ICT service exports where it ranks first in the world.

India also over-performs in innovation relative to its GDP. It ranks second on innovation quality amongst middle-income economies, overtaking Brazil. Relative weaknesses exist in the indicators for business environment, education expenditures, new business creations and the creative goods and services production.

“The commitment of India to innovation and improved innovation metrics is strong and growing, helping to improve the innovation environment.  This trend will help gradually lift India closer to other top-ranked innovation economies”, says Confederation of Indian Industry director general Chandrajit Banerjee.

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.

Northern America

The US (4th) continues to be one of the world’s most-innovative nations, with particular strengths including the presence of firms conducting global R&D, the sophistication of its financial market, including venture capital, the quality of its universities and scientific publications, software spending, and the state of its innovation clusters.

The US scores lower, however, in expenditures on education, in tertiary education due to its low share of graduates in science and engineering, in energy efficiency, and in economy-wide investment and productivity critical to future growth.

Canada (15th overall in the GII) has top scores in its regulatory environment, the ease of starting a business, the sophistication of its financial market, including venture capital, the quality of its universities and scientific publications, as well as in online creativity.

Singapore highlight

Global innovation: China joins top 25, Singapore climbs a notch
 

Singapore is ranked 6th, up one position from 2015 ranking. This move is driven not only by Singapore’s innovation performance but also by methodological considerations, such as the addition of new indicators.

Most of Singapore’s strengths are found in following four areas:

  • In Institutions (1st), it has strengths in terms of the political and regulatory environments. Singapore is 1st in the world for government effectiveness, regulatory quality and cost of redundancy dismissal.
  • In human capital and research (2nd), Singapore's strengths lie in tertiary education, reading, mathematics, and science sd well as tertiary inbound mobility.
  • In Infrastructure (1st), the variable Government's online service (2nd) is strength.
  • In husiness sophistication (1st), Singapore exhibits strengths in the knowledge absorption, employment in knowledge-intensive services, Intellectual property payments and foreign direct investment net inflows.
  • On the innovation output front, Singapore’s strengths are exhibited in knowledge and technology output where it shows a strong performance in tknowledge diffusion and in High-tech and medium high-tech output, high-tech exports and  foreign direct investment net outflows.

Compared to the more than 120 countries covered, Singapore ranks above Ireland, Denmark, the Netherlands, Germany, Republic of Korea and Japan.

Over the last six years Singapore has exhibited consistency by ranking as the top economy in the South East Asia, East Asia, and Oceania region and has kept its position among the top 10 GII-ranked high income innovation nations.

Singapore consistently ranks as the top economy in the world for innovation input. Singapore’s innovation output rank has substantially improved, reaching the 20th position in 2015 and in 2016. 

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