Singapore Displaces Hong Kong as Asia's Most Innovative Economy

Singapore displaces Hong Kong to lead Asia in overall innovation performance, according to the Global Innovation Index 2014 (GII), published by Cornell University, INSEAD and the World Intellectual Property Organization.

Moving from 8th position in 2013 to 7th in 2014, Singapore has climbed back to top the regional rankings this year thanks to its well-linked innovation ecosystem, strong innovation infrastructure and investments in human capital.

Hong Kong fell to 10th place, from 7th in 2013.

Switzerland, the United Kingdom and Sweden topped this year’s GII, while Sub-Saharan Africa posted significant regional improvement in the annual rankings published by Cornell University, INSEAD and the World Intellectual Property Organization.

A new entry into the top 10 this year is Luxembourg (9th).

Amid a newly documented slowdown in the growth of global research and development, the theme of the Global Innovation Index (GII) 2014 is “The Human Factor in Innovation,” exploring the role of human capital in the innovation process and underlining the growing interest that firms and governments have shown in identifying and energizing creative individuals and teams.

These GII leaders have created well-linked innovation ecosystems, where investments in human capital combined with strong innovation infrastructures contribute to high levels of creativity.

In particular, the top 25 countries in the GII consistently score high in most indicators and have strengths in areas such as innovation infrastructure, including information and communication technologies; business sophistication such as knowledge workers, innovation linkages, and knowledge absorption; and innovation outputs such as creative goods and services and online creativity.

Quality of innovation

The quality of innovation is assessed as well. In terms of innovation quality – as measured by university performance, the reach of scholarly articles and the international dimension of patent applications - the United States of America (USA) holds the top place within the high-income group, followed by Japan, Germany and Switzerland.

Top-scoring middle-income economies are narrowing the gap on innovation quality with China in the lead, followed by Brazil and India.

"China significantly outperforms the average score of high-income economies across the combined quality indicators," says Soumitra Dutta, Anne and Elmer Lindseth Dean, Samuel Curtis Johnson Graduate School of Management, Cornell University and co-author of the report.

The GII 2014 confirms the persistence of global innovation divides. Among the top 10 and top 25, rankings have changed but the list of economies remains unaltered.

A difficult-to-bridge divide exists where less-innovative economies have difficulty keeping up with the rate of progress of higher-ranking economies, even when making notable gains themselves.

This can be partially explained by their difficulties to grow and retain the human resources necessary for sustained innovation, which is the focus of this year’s report.

Innovation learners

Economies that perform at least 10 percent higher than their peers for their level of gross domestic product are called “Innovation Learners.”

The 12 high- and middle-income countries outperforming other countries in their respective income groups - in order of performance - are the Republic of Moldova, China, Mongolia, Viet Nam, India, Jordan, Armenia, Senegal, Malaysia, Thailand, Ukraine, and Georgia, and among low-income countries Kenya, Uganda, Mozambique, Rwanda, Malawi, Gambia, and Burkina Faso.

These “innovation learners” demonstrate rising levels of innovation results because of improvements made to institutional frameworks, a skilled labor force with expanded tertiary education, better innovation infrastructures, a deeper integration with global credit investment and trade markets, and a sophisticated business community—even if progress on these dimensions is not uniform across their economies.

The BRICS Economies

Among the BRICS (Brazil, Russia, India, China, and South Africa), four improved their positions (Brazil by 3 places to reach the 61st rank, the Russian Federation by 13 places to reach 49th, and China by 6 places to reach 29th, and South Africa by 5 places to reach 53rd).

The progress of China and the Russian Federation in the rankings is among the most notable of all countries; China’s ranking is now comparable to that of many high-income economies.

India, however slips 10 places to 76th position this year.

The essential spark to innovation

This year’s report highlights the human factor in innovation and the critical role talent plays in driving innovation.

In terms of education as a subset of human capital formation the top performers within the high income group are the Republic of Korea, Finland and the UK.

China, Argentina and Hungary take the top positions among the middle-income countries.

All of these countries have made visible efforts to maintain or enhance the quality of their human resources through education and life-long learning.

The GII shows that better educated citizens are more successful in higher-income economies in leveraging the favorable contexts for driving innovation.

As countries move up the scale of innovation sophistication, the quality of its talents in science, engineering, but also in business and management for example become even more critical.

Global R&D spending

A fall in the growth of public R&D support coupled with the continued hesitancy of company R&D expenditures seems to be leading to slower overall growth of total R&D expenditures worldwide; this is the case especially in high-income countries.

In many advanced countries, fiscal consolidation also seems to have negatively affected public spending on education since 2010.

Second, although governments have effectively included a significant number of future innovation-related growth projects in stimulus packages in 2009, support for such efforts seems to have lost momentum in some countries.

To be sure, the majority of countries for which data are available continue to show positive R&D expenditure growth in 2013 and 2014.

Yet strong R&D spending growth in 2013 and 2014 is expected to take place mostly in Asia, in particular in China, the Republic of Korea, and India.
 

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