Asian countries rise up the global innovation rankings

An old sporting adage that it is easier to remain in a successful team than to break into one plays out also in the innovation realm. For many years now the top 10 economies in the Global Innovation Index has remained unchanged.

2019 is by and large no exception, with the top 10 positions, out of 129 ranked countries, occupied in order by Switzerland (for the ninth year running), Sweden, the United States, the Netherlands, the United Kingdom, Finland, Denmark, Singapore, Germany and Israel. Only the latter is a newcomer this year.

The stability of the top echelons of the Global Innovation Index ranking confirms that the small size of a country’s economy is not necessarily an inhibitor, that patient investment in innovation capability and capacity is required and that a broad-based approach to innovation – comprising strength in input and output domains and a focus on translation from inputs to outputs – is key.

The Global Innovation Index measures:

• • Inputs – Institutions, human capital and research, market sophistication such as access to credit, the investment environment including protection of investors, venture capital and business sophistication (for instance, knowledge workers, innovation linkages and partnerships, knowledge absorption such as imports and foreign direct investment); and
  
  
• • Outputs – Knowledge and technology outputs including patents, advanced manufacturing and services, productivity, high quality publications, intellectual property receipts and creative outputs such as creative services exports, new ICT-based business models, web and mobile telephony-based products and services.
  

China and the Asian advance

Arguably, it is the tier just below the top 10 players that is arousing interest and excitement.

The relentless Chinese advance continues. It is at 14th place this year, up from 17th last year. Of particular interest is that China is now fifth in the world with regard to innovation output and 26th with regard to inputs. Thus, the productivity and efficiency of translating inputs to outputs are key.

China’s growing eminence owes much to a concerted, long-term, focussed investment in innovation building blocks and the diffusion of capability.

It is first in the world for knowledge impact (including productivity, new business development and high and medium technology manufacturing), first for intangible assets (for instance, trademarks and industrial design, although there continues to be some disquiet about its intellectual property laws) and fourth in the world for knowledge creation (including patents, publications and citable documents).

On the input side, it stands out for the strength of its knowledge workers (it is first in the world), infrastructure (it holds second place), QS World University Rankings (it ranks third), R&D performance of companies (it ranks sixth) and pre-tertiary education (13th).

More broadly, as the Global Innovation Index says, and as a pointer for the future, we should note the growing ‘Asianisation’ of innovation. This is reflected in the increasing share of global research and development from Asia, rising from 22% in 1996 to 40% in 2017. In our view, this is evidence of the growing production and innovation hubs in Asia driving and diffusing new and improved products and services.

Of further interest is that immediately beneath the top 10 in the Global Innovation Index, four out of the five next ranked countries are Asian – Republic of Korea, Hong Kong, China and Japan. While it will take time, it is the case that Asian economies are on the heels of established innovators. Beyond this are the solid positions of other Asian nations: Malaysia (ranked 35), Vietnam (42) and Thailand (43).

It is also worth noting from the rankings that half of the world’s top 10 largest science and technology clusters, which are spatially-based innovation hubs (based on papers and patents) at the subnational level, are from Asia, although overall the US has the largest number of clusters globally.

The innovation hubs at the subnational level demonstrate the importance of the spatial dimensions of innovation, including key linkages between education and training institutions and firms that can deploy knowledge.

The Global Innovation Index also measures and ranks the quality of innovation, as reflected in universities rated in the QS rankings (through the average score of the top three ranked institutions), international patenting performance and quality of scientific publications (citable documents in the h-index).

Particularly noteworthy is that China is ranked 15th in the world on these quality measures and is the only nation in the middle-income group that is narrowing the gap between the high-income nations on all parameters.

Indeed, a number of Asian economies are well placed in the quality rankings, for instance Malaysia (32) and Thailand (44). Also worth noting are the relatively strong performances of Brazil, Russia and Mexico.

These findings demonstrate a number of key points: that the quality of innovation is as important if not more so than quantitative measures of inputs and outputs; and that a leading-edge higher education system is vital not only for producing high quality graduates but also in the wider knowledge development and diffusion process.

India

India continues to make strides. It is ranked 52nd in the world on the Global Innovation Index, up from 57th place last year. On the quality innovation rankings, India is an impressive 26th, with key strengths in QS ranked institutions.

Yet for India to continue to make inroads, its patchy performance in various domains needs to be enhanced. It is weaker in areas such as environmental performance (117th), ease of starting a business (104th) and resolving insolvency (95th). In education, India is ranked 110 in the world when taking into account pre-tertiary education. India faces challenges in improving the quality and performance of, and investment in, pre-tertiary education.

Within higher education, while its performance in QS in the innovation quality parameter is to be lauded, the fact is that India’s higher education struggles to provide broad-based, high quality, mass education with strong governance and performance outcomes beyond a very elite set of institutions. The recent move to identify and develop further institutions of eminence could be seen as being inimical to developing a solid tier of middle institutions.

One further data point which arguably relates to India’s weak status is its position on knowledge workers where it is ranked 99. There has been much concern regarding employability issues for graduates in India, ‘disconnects’ between higher education and labour market needs and the absence of ‘soft skills’ among graduates, including critical thinking.

These are challenges that India faces in addition to improving educational access and opportunity for females, and using knowledge to address core challenges such as environmental management, given its low ranking on environmental performance.

The political context

Finally, the Global Innovation Index notes that many parts of Latin America and Africa are yet to play any significant role in innovation. As economies continue to move to more knowledge-based forms of competition, failure to play in this space is likely to exacerbate income and wealth inequalities among nations and regions.

Further, a strong innovation performance needs economies to be open to flows of ideas, technology and knowhow, either directly or embodied in trade and investment, as well as human movement between nations.

The growing protectionist sentiment in various parts of the world is likely to have adverse impacts on the very fabric of innovation and the ability of countries to address national challenges and collectively address global challenges.

Dr Anand Kulkarni is associate director, planning and performance, Victoria University, Australia. Anand’s book India and the Knowledge Economy, is just out, published by Springer.