Switzerland Tops Innovation Rankings

6 July 2011

Switzerland is the world's most innovative economy, according to a ranking released last week in Geneva by the Paris-based INSEAD business school, in collaboration with the World Intellectual Property Organization (WIPO), Alcatel-Lucent, Booz & Company, and the Confederation of Indian Industry (CII). The Global Innovation Index (GII), which has been prepared annually since 2007, aims to establish metrics for measuring innovation to better understand its role in driving economic progress.

Soumitra Dutta, co-author of the report with Daniela Benavente, commented: "The index aims at gauging not only the capacity of an economy to innovate but also the extent of its success in doing so." Both Dutta and Benavente are from INSEAD.

The rankings are based on innovation "inputs" and "outputs." In the case of the former, the input pillars attempt to capture elements of a national economy that enable innovation; these include institutions, human capital and research, infrastructure, market sophistication, and business sophistication. Output pillars focus on evidence of scientific and creative innovation.

Following Switzerland, the top ten includes Sweden, Singapore, Hong Kong, Finland, Denmark, US, Canada, the Netherlands, and the UK. China, at position 29, is the only emerging economy that entered the top 30.

Emerging economies came out ahead when the economies are ranked by innovation efficiency - i.e. the ratio of an economy's innovation output score to its input score - which included some of the world's most densely populated countries. Côte d'Ivoire tops the innovation efficiency index, followed by Nigeria, China, Pakistan, Moldova, Sweden, Brazil, Argentina, India, and Bangladesh.

Gary Nugent of Alcatel-Lucent emphasised that this ranking demonstrates that developing countries "are generating a substantial amount of scientific and creative output from an environment which is not the most heavily invested or mature. That implies that if they are able to maintain that degree of productivity that will have a gearing effect."

Questions about indicators and rankings

The report adopts a broad definition of innovation in line with the most recent developments and standards in this field, such as those of the Organisation for Economic Co-operation and Development (OECD), which is the publisher of the Oslo Manual.

The GII's input and output pillars encompass approximately 80 individual indicators. These covered areas such as tertiary student mobility, microfinance, trademarks, and creative outputs, along with more traditional indicators such as research and development expenditure, patents, and scientific publications.

Authors point out that the ranking was submitted to a thorough statistical audit by the Joint Research Centre of the European Commission.

Nevertheless, questions have been raised about the relevance and quality of some of the selected indicators and the resulting rankings.

For instance, some have pointed to the limitations of patents as a measure of innovation. Speaking on a panel at the GII's Geneva launch, Naushad Forbes, Chairman of the CII Innovation Council and Director of Forbes Marshall, noted that patent counts do not capture sufficiently the full range of new services, products, and business methods brought to the market. Forbes commented that these are key outputs of innovation.

Rolf-Dieter Heuer, Director General of CERN - the European Organization for Nuclear Research - was also at the Geneva launch, and questioned the index's excessive reliance on patents in promoting innovation. Heuer noted that, had CERN patented the World Wide Web, then the world might be a very different place.

WIPO Director General Francis Gurry responded that, had the internet been patented with fair and flexible licensing terms, it might have prompted major investments into future research. He stressed that, overall, intellectual property rights are not rigid and actually enable knowledge sharing, which fosters innovation.

In conclusion, Gurry noted at the report launch that the journey toward understanding innovation remains incomplete. Bruno Lanvin of INSEAD reaffirmed this sentiment, stating that the GII as it stands is not "ultimate," and can be improved through collaboration and further evidence-based research.

ICTSD reporting; "Why did WIPO endorse what looks like a flawed innovation index?" INTELLECTUAL ASSET MANAGEMENT, 4 July 2011; "Switzerland ranked world's most innovative nation," WALL STREET JOURNAL, 30 June 2011; "Global Innovation Index 2011 - Switzerland ranks first among 125 economies on innovation levels," World Intellectual Property Organization, 30 June 2011.

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