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Majority of Global indexes show innovation is diffusing all over the world, from Europe and US towards Asia,

South Korea is still the world’s most innovative economy ,South Korea topped the 2017 Bloomberg Innovation Index list for the second year in a row, followed by Sweden, Germany, Switzerland, Finland, Singapore, Japan, Denmark, the United States and Israel.

South Korea with a score of 89.00 topped the world in R&D intensity, manufacturing value-added (the net output of the manufacturing sector) – as a percentage of GDP and per capita – and patent activity or the number of resident patent filings per million population and filings per $100 billion GDP. It ranked in the top five in high-tech density– the number of domestically domiciled hi-tech public companies – , tertiary efficiency or the total enrollment in tertiary education  and research concentration. However, its  dismal 32nd rank  in productivity among all innovative economies, has narrowed its lead.

Sweden moved up one spot from 2016 to second place despite the current government’s less business-friendly policies including potentially crippling labor taxes. Fresh ideas tend to pay off big in Sweden, even as the current government is less business-friendly and has imposed labor taxes that could crimp business investment, said Magnus Henrekson, director of the Research Institute of Industrial Economics, a private foundation in Stockholm. The Swedes themselves promote an atmosphere of great personal ambition — unlike some European neighbors that emphasize the collective — and that’s a boon to innovation, he said.

Russia was the most notable loser in the index and fell 14 spots from last year to No. 26. The country suffered from economic sanctions and low energy prices. Israel was the lone country to move into a top 10 spot this year, while France was the lone country to lose its position as one of the top 10 most innovative economies.

The GII remains relatively stable at the top, Switzerland, Sweden, the United Kingdom, the United States of America and the Finland are the world’s five most innovative nations, according to the Global Innovation Index 2016. “Yet among the top ranked 25 innovation nations this year are not only economies from Northern America (such as Canada and the USA) and Europe (such as Germany, Switzerland, and the UK) but also from South East Asia, East Asia, and Oceania (such as Australia, Japan, Korea, and Singapore) and Western Asia (Israel).”

The Global Innovation Index (GII) has been ranking world economies since 2007 according to their innovation capabilities and results using approximately 80 indicators that include measures of human capital development and research, development funding, university performance, and international dimensions of patent applications, among a host of other important parameters.

 Global Innovation Index 2016: Switzerland, UK, Sweden, Finland, USA are Leaders

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

This year some notable changes take place within the top 25, Notably, for the first time a middle-income country—China—is among the top 25. China’s innovation rankings this year also reflect high scores in both the Business sophistication and Knowledge and technology outputs pillars.  For example, the country has a particularly high number of R&D-intensive firms among the top global corporate R&D spenders.

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.

India climbed 15 spots, from 81 last year, to 66 in the Global Innovation Index (GII) and maintained the top spot in the Central and South Asia regions, according to the rankings released by Cornell University, INSEAD and the World Intellectual Property Organization (WIPO).

India scored high on tertiary education and R&D, the quality of its universities and scientific publications, its market sophistication and information and communication technology service exports, where it ranks first in the world, according to the index.

The index said that India has all the ingredients needed to become a global driver of innovation including strong market potential, an excellent talent pool, and an underlying culture of frugal innovation. India ranks second on innovation quality among 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,” it said.

The index said that India has the ability to create a unique spot in innovation history to meet its own market requirements by using its cultural advantages of frugality and sustainability. Stressing that India’s priorities for innovation need to be in the areas of energy, water, transport, health care, food security and digital consumption, the index said that India should strengthen its own talent pool and leverage global talent “in these market-pull areas”.

“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,” said Chandrajit Banerjee, director general of the Confederation of Indian Industry.

“In today’s competitive world, both developed and developing countries need to come up with joint innovative solutions to counter global challenges; simultaneously they need to address the pressing needs of their respective populations. These twin goals can be achieved by empowering global citizens to think independently and to risk transforming their ideas into value propositions,” says Chandrajit Banerjee Director General Confederation of Indian Industry.

 

World Intellectual Property Report 2015: Breakthrough Innovation and Economic Growth

Extraordinary technological breakthroughs over the last 300 years have touched almost every aspect of human activity and transformed the world’s economies, according to a new report by the World Intellectual Property Organization (WIPO). The 2015 report shows how three historical breakthrough innovations – airplanes, antibiotics and semiconductors – fueled new business activity. It examines three current technologies with breakthrough potential: 3D printing, nanotechnology and robotics and found that  Japan, the United States, Germany, France, the United Kingdom and the Republic of Korea accounted for 75 per cent or more of all-time patent filings in these areas. These are three frontier technologies that hold the potential to boost future economic growth,

Meanwhile, China is the only emerging middle-income country moving closer to this group of advanced, industrialized nations, accounting for more than a quarter of patents worldwide in the area of 3D printing and robotics – the highest share among all countries. In the case of nanotechnology, Chinese applicants make up close to 15 per cent of filings worldwide – the third largest origin of patents

Furthermore, the report underlines the elements of successful innovation ecosystems: government funding for scientific research and support in moving promising technology from the laboratory to the production stage; competitive market forces that encourage firms to innovate, supported by vibrant financial markets and sound regulation; and fluid linkages between public and private innovation actors.

Some of the other important findings of the report are: “Research institutions and universities are becoming much more important players, in particular with respect to nanotechnologies, a strong indication that science and technology are coming closer together”; “Knowledge-sharing is an important factor of innovation, facilitated by intellectual property” and “copyright is becoming more visible and relevant for technological innovation”.

 

Successful innovation ecosystems

The report underlines the elements of successful innovation ecosystems: government funding for scientific research and support in moving promising technology from the laboratory to the production stage; competitive market forces that encourage firms to innovate, supported by vibrant financial markets and sound regulation; and fluid linkages between public and private innovation actors.

The report also documents how innovation is increasingly linked to research at universities and public research organizations. The 3D printing, nanotechnology, and robotics fields show higher shares of academic patenting compared to the three historical cases of airplanes, antibiotics and semiconductors. Nanotechnology stands out, with academic applicants accounting for around a quarter of patenting worldwide.

 

Global Innovation 1000

By 2020, companies will have shifted the majority of their R&D spending away from product-based offerings to software and service offerings, according to the 2016 Global Innovation 1000 Study from Strategy&, PwC’s strategy consulting business. The need to stay competitive is the top reason why companies cited a shift in their R&D budgets towards software and services, and for good reason – according to the study, companies who reported faster revenue growth relative to key competitors allocated 25 percent more of their R&D budgets to software offerings than companies who reported slower revenue growth.

The average allocation of R&D spending for software and services increased from 54% to 59% between 2010 and 2015 and is expected to grow to 63% by 2020.

Meanwhile, the average allocation of R&D spending dedicated to product-based offerings fell to 41 percent (from 46% in 2010), and is expected to fall to 37% by 2020 (an overall decrease of 19% this decade).

Average allocation of R&D spending on software offerings alone will increase by 43% by the end of this decade and R&D spending on services will gradually overtake investment in product-based innovation (39% vs. 37% by 2020).
Global R&D spending on software offerings has increased by 65% between 2010-2015, from US $86 billion to $142 billion.

“Many of the world’s major innovators are in the midst of a transformational journey mostly driven by changing – and rising – customer expectations,” says Barry Jaruzelski, innovation and R&D expert for Strategy& and principal with PwC US. “The shift is also being driven by the supercharged pace of improvement in what software can do, including the increasing use of embedded software and sensors in products, the ability to reliably and inexpensively connect products, customers and manufacturers via the Internet of Things (IoT), and the availability of cloud-based data storage.

In the 2015 Global Innovation 1000 study, Strategy&, PwC’s strategy consulting business, analyzed the flows of R&D spending among companies and countries worldwide. Led by dynamic growth in China and India, Asia is now the number one region for corporate R&D spending, Europe falls to third. More corporate in-region R&D is now conducted in Asia (35 percent) than in North America (33 percent) and Europe (28 percent), which is a change from 2007, when Europe was the top region for R&D spending and Asia was third.

Massive growth in China and India propelled Asia to the top position. From 2007 to 2015, R&D imports to China grew 79 percent, helping to make it the second-largest destination for in-country R&D. India also saw imports increase 116 percent, making it the third-largest destination for imported R&D.

The U.S. holds its position as the largest corporate in-country R&D spender, importer, and exporter. The U.S. is the largest spender on in-country R&D, but its lead is narrowing because its growth isn’t as robust as that of some Asian countries, specifically China. From 2007 to 2015, in-country R&D spending increased 120 percent for China but only 34 percent for the U.S. Although the U.S. is shifting more of its R&D exports to low-cost countries in Asia such as China and India, most R&D imports are from Europe, which provided 63 percent of the U.S. total in 2015.

 

The rise of silicon valley’s worldwide

KPMG survey “The changing landscape of Disruptive technologies”, Global Technology Innovation Insights-2014/2015 concluded that Silicon valley no longer has a lock on technology innovation. Today multiple hubs exist and emerging technologies are in many countries including Japan, Israel, China and India. Technologies such as mobile commerce and digital currencies have taken more hold more rapidly in Asia than in the west, leapfroging over legacy systems. Micro-innovations from China for gaming, instant messaging and smartphones are now being copied in the West-the reverse of a decade ago.

 

KPMG report also found “Significant numbers of emerging technologies are gaining momentum on a global scale, at faster innovation cycles, with the potential to be the next market disruptors.” Growing acceptance of technologies such as Internet of Things (IoT), machine-to-machine (M2M), biotech, digital currencies, data analytics, drones, robotics, 3D printers, and AI in both consumer and enterprise markets are pushing them into the mainstream.

 

Cloud and mobile technologies are increasingly maturing as disruptors. These foundations will remain vitally important to further technology progress and will remain a source of enabling innovation. New tech hubs springing up from Shanghai, Tokyo, New York and Seoul foster more breakthroughs.

 

Global Competitiveness Report

Switzerland, Singapore, and the U.S. are once again taking the top spots in the latest edition of the World Economic Forum’s Global Competitiveness Report, which combines 113 indicators that the WEF believes matter most for countries’ productivity. Here’s a look at this year’s top 10: Switzerland, Singapore, United States, Germany, Netherlands, Japan, Hong Kong, Finland, Sweden and United Kingdom.

 

The Netherlands was the biggest gainer in the top 10, moving up to No. 5, from No. 8 in the previous report. Brazil saw the biggest fall, tumbling 18 spots to No. 75 and taking the title of the worst performer among BRICS countries. However, India was a bright spot, climbing 16 places and coming in at No. 55.

 

Competitiveness is defined as “the set of institutions, policies, and factors that determine the level of productivity of an economy, which in turn sets the level of prosperity that the country can earn.” These indicators include areas such as infrastructure, innovation, and the macroeconomic environment.

 

The ranking is based on 12 pillars to measure the competitiveness for each country. The pillars are Institutions, Infrastructure, Macroeconomic environment, Health and primary education, Higher education and training, Goods market efficiency, Labor market efficiency, Financial market development, Technological readiness, Market size, Business sophistication & Innovation. The productivity growth over the past 10 years has declined in many of the dominant countries, with India and China being the exceptions.

 

Thus many of indexes underline the global shift of technological advancements towards Asia, with Japan and China among the leaders. The position of US as a dominant leader is gradually eroding.

 

References and Resources also include:

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