The World Intellectual Property Organization (WIPO), in conjunction with INSEAD, released the 2012 Global Innovation Index (GII) on July 3, 2012. The GII model included study of 141 economies, which represent 94.9% of the world’s population and 99.4% of the world’s GDP (measured in US dollars).  Once again, for the second year in a row, Switzerland, Sweden and Sinagpore top the list, which measures overall innovation performance. The report ranks countries on the basis of their innovation capabilities and results. The United States ranked 10th.

The study shows that the dynamics of innovation continue to be affected by the emergence of new successful innovators, as seen by the range of countries across continents in the top twenty, as well as the strong performances of emerging countries such as Latvia (30th), Malaysia (32nd), China (34th), Montenegro (45th), Serbia (46th), Republic of Moldova (50th), Jordan (56th), Ukraine (63rd), India (64th), Mongolia (68th) and Armenia (69th), all of which were in the top half of those 141 countries studied.

“The GII is a timely reminder that policies to promote innovation are critical to the debate on spurring sustainable economic growth,” WIPO Director General Francis Gurry said. “The downward pressure on investment in innovation exerted by the current crisis must be resisted. Otherwise we risk durable damage to countries’ productive capacities. This is the time for forward-looking policies to lay the foundations for future prosperity.”

The Top 25 Overall

The Methodology

The GII uses two indices: (1) the Innovation Input Sub-Index; and (2) the Innovation Output Sub-Index.  For the Innovation Input Sub-Index five elements that enable innovation activities are considered: (1) Institutions; (2) Human capital and research; (3) Infrastructure; (4) Market sophistication; and (5) Business sophistication.  For the Innovation Output Sub-Index two elements that relate to the results of innovative actives are considered: (1) Knowledge and technology outputs; and (2) Creative outputs.  Although there are more items considered under “Input,” both the “Input” and “Output” are given equal weight in the overall scores.

The Top 25 on the Innovation Efficiency Index

Having an input Index and an Output index also allow the GII to calculate a ratio of the Output over the Input, which shows how much innovation output a given economy obtains for its inputs.  Here are the top 25 economies in terms of innovation efficiency.

Before moving forward be warned that it may seem a peculiar list at first glance.  The ratio can favors countries that are particularly good at surmounting weaknesses on Input with robust Output, which means that countries that have poor institutions, lack human capital and infrastructure, and which have low market and business sophistication will naturally sore higher if they can innovate at all.  What is perhaps most surprising, however, is that many of the top 25 overall also scored very well on innovation efficiency.

The Under Performers

New this year in the GII is a figure showing the countries that are “Leaders”, “Learners” and “Underperformers.”  The figures plots overall GII scores against GDP per capita.  What becomes apparent by doing this are the countries that are ahead based on GDP per capita, those that are in the middle and those that are below what would be expected given the state of development of the economy.  There are few, if any, surprises on this list.  Many wealthy nations in the Middle East (Qatar, UAE, Bahrain, Kuwait, Saudi Arabia) are under performing, as are less wealthy Middle Eastern nations (Egypt, Iran, Syria). Also on the under performing list are Mexico, Venezuela, Greece and Sudan.  In other words, the more likely the nation is to be on the evening news in not so laudatory terms the more likely it seems that the country is under performing in terms of innovation generally.  Not at all surprising really.

(Source: IP Watchdog)