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iiiTable of Contents ContentsPreface: Stronger Innovation Linkages v Chapter 3: Academia-Industry Innovation Linkages in 89for Global Growth the Case of Saudi Arabia: Developing a University-IndustryBy Soumitra Dutta, Roland Berger Professor of Business and Triple-Helix Framework to Promote Research andTechnology, Academic Director, INSEAD eLab, INSEAD and Development CollaborationFrancis Gurry, Director General, World Intellectual Property By Khaled S. Al-Sultan and Dr. Iyad Alzaharnah, King FahadOrganization University for Petroleum & Minerals of Saudi ArabiaForeword: Embracing New Types of Partnerships vii Chapter 4: Accounting for Science-Industry 97to Drive Open Innovation Collaboration in Innovation: Existing Metrics andBy Ben Verwaayen, Chief Executive Officer, Alcatel-Lucent Related Challenges By Sacha Wunsch-Vincent, World Intellectual Property OrganizationForeword: The Coherence Premium in Innovation ixBy Cesare R. Mainardi, Chief Executive Officer, Booz & Company Chapter 5: The Role of Coherent Linkages in Fostering 109 Innovation-Based Economies in the Gulf CooperationForeword: Why Innovation Linkages? xi Council CountriesPerspectives from an Emerging Economy By Barry Jaruzelski, Chadi N. Moujaes, Rasheed Eltayeb, Hadi Raad,By Chandrajit Banerjee, Director General, Confederation of and Hatem A. Samman, Booz & CompanyIndian Industry Chapter 6: The Russian Federation: A New Innovation 121Contributors to the Report xiii Policy for Sustainable Growth By Leonid Gokhberg and Vitaly Roud, Higher School of Economics,Advisory Board to the Global Innovation Index xv Russian Federation Chapter 7: Shaping the National Innovation System: 131 Rankings The Indian Perspective By Yagnaswami Sundara Rajan, Indian Space Research OrganizationGlobal Innovation Index 2012 Rankings xviii Annex: Acronyms.........................................................................................................141 Chapter 8: An Integrated Policy Approach in 143 Chapters Science, Technology, and Innovation for Sustainable Development: A UNESCO Idea in ActionChapter 1: The Global Innovation Index 2012: 3 By Irina Bokova, UNESCOStronger Innovation Linkages for Global GrowthBy Soumitra Dutta and Daniela Benavente, INSEAD; and Sacha Wunsch- Chapter 9: Broadband, Inevitable Innovation, 149Vincent, World Intellectual Property Organization and Development By Robert Shaw, ITU, and Bruno Lanvin, INSEAD eLab and Broadband Annex 1: The Global Innovation Index Conceptual...............................43 Commission Framework Annex 2: Adjustments to the Global Innovation Index ......................67 Chapter 10: The Internet: An Unprecedented and 157 Framework and Year-on-Year Comparability of Results Unparalleled Platform for Innovation and Change THE GLOBAL INNOVATION INDEX 2012 Annex 3: Statistical tests on the Global Innovation Index.................71 By Lynn St. Amour, Internet Society By Michaela Saisana and Dionisis Th. Philippas, European Commission Joint Research Centre (Ispra, Italy) Chapter 11: We Are All Content Creators Now: 163 Measuring Creativity and Innovation in theChapter 2: The Role of Public-Private Partnerships in 81 Digital EconomyDriving Innovation By Derek Slater and Patricia Wruuck, GoogleBy Louis Witters, Revital Marom, and Kurt Steinert, Alcatel-Lucent
ivContents Appendices Appendix I: Country/Economy Profiles 173 Appendix II: Data Tables 319 Appendix III: Sources and Definitions 409 Appendix IV: Technical Notes 427 Appendix V: About the Authors 433THE GLOBAL INNOVATION INDEX 2012
vi variables capture innovation linkages only imperfectly,Preface and improved metrics are sorely needed. The theme of this year’s GII puts a spotlight on this important future measurement agenda. Continuing the journey for better innovation metrics and policies INSEAD began its journey to find better ways to mea- sure innovation in 2007, increasingly helped by its Knowledge Partners. WIPO joined INSEAD as one of the Knowledge Partners in 2011 and is now co-publisher of the GII. Over the years, the GII model has evolved in response to our growing understanding of innovation parameters. We take pride in continually adapting the model to better ref lect the modern dynamics of innova- tion and the better availability of data. The 2012 edition, for instance, places greater emphasis on measuring econ- omies’ ecological sustainability and online creativity. We thank the GII’s Knowledge Partners—Alcatel- Lucent, Booz & Company, and the Confederation of Indian Industry—for bringing true enterprise perspec- tives to our debates. Last but not least, we welcome two new members to our eminent Advisory Board who have greatly strengthened its ranks: Sibusiso Sibisi, President and Chief Executive Officer of the Council for Scientific and Industrial Research in South Africa; and Rob Steele, Secretary-General of the International Organization for Standardization. From the outset, we said that measuring innova- tion, identifying its main drivers, and fostering adequate policies would be a multi-year journey. INSEAD and WIPO, along with our partners, look forward to con- tinuing this journey. Soumitra Dutta Roland Berger Professor of Business and Technology and Academic Director of eLab, INSEAD Francis Gurry Director General, World Intellectual Property Organization (WIPO)THE GLOBAL INNOVATION INDEX 2012
foreword viiEmbracing New Types of Partnerships Forewordto Drive Open InnovationWe talk a great deal about innovation in the informa- many cases, this means working very differently thantion and communication technologies (ICT) industry, they ever have before. It means forging much closer tieswhere I have spent most of my career. When we speak between previously distinct sectors than ever before. Itabout innovation we are generally talking about break- means sharing resources and responsibilities, dependingthroughs, new technologies, and the companies that on others to do their part in the collaborative action,bring them to market. and embracing these interdependencies. Alcatel-Lucent, Breakthroughs are of course an important aspect with many others, does this in the GreenTouch con-of innovation. Breakthroughs can reduce energy sortium, which is working to help reduce the energyconsumption, create new markets, introduce differ- consumption of telecommunications networks 1,000-ent ways of doing things, generate new revenue, help fold by 2015.people connect better, and help us solve problems in Partnering in this way is difficult. Many countriesareas as diverse as healthcare, agriculture, education, have sought to bring their educational, business, andand transportation. But innovation is about much more NGO sectors together to address specific challenges.than just technological breakthroughs. Increasingly it is Some have been successful, but just as often they haveabout breakthroughs in collaboration—forming link- not: the often divergent motivations of these differentages among different types of companies, industries, and organizations can lead to a mismatch of objectives,public institutions to address challenges and opportuni- expectations, and approaches.ties that reach far beyond the scope or capability of any But innovation is a crucial element of competitive-individual organization. ness. For organizations, companies, and countries to This notion of linkages and the collaborative models remain competitive and to grow, they must innovate,needed to address our biggest challenges is the central and one of the ways they can accomplish this is throughtheme of the 2012 edition of the Global Innovation Index broad collaboration. Given the challenges we face as a(GII), which we are proud to support once again as a global community, we must find ways to partner moreKnowledge Partner. The 2012 GII explores the condi- effectively.tions in which innovation f lourishes and documents The GII offers an opportunity to think through thiswhich countries are most successful in fostering those challenge. By shining a light on successful models ofconditions. The GII also looks at some of the ways old collaboration and innovation, and by documenting whatmodels of innovation are evolving, how new models has worked (or not) and where, the GII is contributingare emerging, why they matter, and the impacts they to an absolutely critical conversation.can have. Chapter 2 of this report, contributed by colleagues Ben Verwaayen Chief Executive Officerat Alcatel-Lucent, explores how an ancient model of Alcatel-Lucentcollaboration—the public-private partnership—is being THE GLOBAL INNOVATION INDEX 2012 applied in novel ways to address some of the large-scalechallenges faced today. The reality is that no organiza-tion—no government, company, research institution,or nongovernmental organization (NGO)—by itselfcan solve our biggest problems, such as the economiccrisis facing Europe or the massive emerging ecologicalthreats. They must partner. They must collaborate. In
foreword ixThe Coherence Premium in ForewordInnovationBooz & Company is honoured to contribute to The direction, and selling products or services that thriveGlobal Innovation Index 2012 for a second consecu- within that system. When these three elements aretive year. This is a critical element in our continuing aligned, a company can be described as coherent and caneffort to support businesses and governments in their move past the competition consistently and with ease.development of innovation-led economies. For almost We recognize that coherence is as relevant anda decade, Booz & Company’s annual Global Innovation critical for countries as it is for companies. Coherence1000 study has ranked the top 1,000 public companies between innovation strategies and capabilities at theby their research and development (R&D) spending and national level requires the stakeholders to be closelyhas analysed how that spending inf luences their overall linked in an effective ecosystem. Developed economiesfinancial performance. Through this work, we continue must continue to strengthen and develop such linkagesto gain significant insight into the nature of innovation. to stay ahead in strategic sectors. At the same time,It is clear that success in innovation is not just a blend of developing economies must institute a national modelquantitative elements such as the number of researchers, that establishes coherent linkages in their innovationthe amount that they receive in funding, and the number systems. This involves forging strong ties among allof patents they file. Rather, the companies and countries stakeholders in the innovation ecosystem, encompassingthat have succeeded in establishing strong innovation policies, stakeholders, and operations. Key to this effortcultures have also embraced qualitative success fac- is establishing an innovation-promotion entity that willtors—they have developed coherent linkages between create and develop the necessary linkages, coordinatetheir strategies and capabilities, and they nurture an policy, convene stakeholders, and drive the nationalenvironment that supports innovation. agenda. Our 2011 study The Global Innovation 1000: Why At Booz & Company, we believe that coherenceCulture Is Key shows that spending more on R&D is around key capabilities drives essential advantage.not enough to create robust and sustainable innovative Coherent companies and, indeed, countries, wield aenterprises. Instead, numerous elements comprise a truly clear set of capabilities aligned with their strategyinnovative company: a focused innovation strategy, a throughout their portfolio. Furthermore, both publicwinning overall business vision, profound customer and private sectors have an important role to play ininsight, great talent, and the right set of capabilities—the increasing global welfare by developing coherent strate-combination of processes, tools, knowledge, skills, and gies and linkages for innovation at both the firm andorganization—are needed to succeed. Importantly, cor- country-wide levels.porate culture ties all those elements together, makingthe ’secret sauce’ that makes innovative companies dif- Cesare R. Mainardi Chief Executive Officerferent from their peers. The right culture of innovation Booz & Companyguarantees a high degree of coherence between strate- THE GLOBAL INNOVATION INDEX 2012 gies and capabilities or between a company’s aspirationsand its implementation. A coherent capabilities-driven strategy is the keyto unlocking value creation on a reliable and sustainedbasis. Three interlocking elements comprise this strat-egy: pursuing a clear strategic direction, building asystem of differentiating capabilities consistent with that
foreword xiWhy Innovation Linkages? ForewordPerspectives from anEmerging EconomyToo often these days, any discussion on innovation and critical area and on inclusive growth. At the same time,its linkages to growth and development is reduced to the government has prioritized a doubling of investmentthe difficulties faced by economies in certain parts of in R&D over the next five years. The Indian Nationalthe world over the last few years and the implications for Innovation Council (NIC) was established by the gov-the global economy. There is an urgent need to broaden ernment in 2010 to discuss, analyse, and help implementthis discussion and to explore how innovation can be not strategies for inclusive innovation in India and prepareonly fostered and harnessed for growth but also how it a Roadmap for Innovation 2010–2020. Recently, forcan solve everyday problems, reduce poverty, and help example, the NIC has taken up the challenge of forg-us attain a faster-sustainable-inclusive-growth-driven ing global collaborations through its Global Innovationfuture. Roundtable Conference. There is also a need to widen the perspective on the The government’s partnership with stakeholdersactors that are crucial in promoting innovation. Today’s provides the key to the success of its initiatives. Theinnovation environment is broad and involves bilateral Confederation of Indian Industry (CII) has been work-and multilateral collaborations in scientific and tech- ing with the industry, institutions, government andnological research and development (R&D), cultural global organizations to strengthen innovation ecosystemexchanges, sharing of best practices, open innovation in India. Many innovative initiatives based on public-challenges, and other forms of linkages. private-partnership (PPP) mode have been launched Such linkages must, however, energize and be ener- to implement and support innovations on the ground.gized by the innovative and creative spirits inherent in One key initiative is formation of a not-for-profit PPPevery society and culture. In this context, India stands company named Global Innovation & Technologyas an example. With a large population and limited Alliance to support industrial R&D that converts globalresources, Indians must innovate to thrive, and this is high cost/high quality innovative technologies into costexpressed in every strand of society: by those on the effective products those are affordable by and accessiblestreet; by grassroots innovators; by entrepreneurs; and to people.by small, medium, and large companies. The theme of this year’s Global Innovation Index, A specific instance is found in one of India’s big- which emphasizes innovation linkages in high- andgest recent success stories: the mobile and ICT revolu- lower-income countries alike, is well suited for address-tion. This revolution has enabled innovation in other ing the contemporary challenges of innovation. I takespheres by connecting people throughout the country, this opportunity to thank INSEAD and the Worldproviding the means for optimization of ideas and their Intellectual Property Organization for bringing outrealization. The government, for example, is connect- this excellent work and to express my pleasure at CII’sing Indian panchayats (village administrations) through participation over the last four years as a Knowledgefibre optic cables with the goal of transforming service Partner in this important initiative. I also congratulate THE GLOBAL INNOVATION INDEX 2012 delivery in areas such as health, education, agriculture. the other Knowledge Partners for their continued sup-This has truly provided an important means by which port and contribution to the report.this Indian innovative spirit can be harnessed. The government is keen to provide an enabling Chandrajit Banerjee Director Generalpolicy and institutional framework to promote innova- Confederation of Indian Industrytion. The President of India has declared 2010–2020the ‘Decade of Innovation’ to focus attention on this
contributors xiiiContributors to the Report ContributorsThis report was developed under the general direction of Soumitra DUTTA DIRECT COLLABORATORS(Editor) and Francis GURRY (Director General, World Intellectual Property Michaela SAISANA, Senior Researcher, Institute for the Protection andOrganization). It was prepared and coordinated by a core team comprising: Security of the Citizen, Joint Research Centre of the European Commission Hope STEELE, Editor, Steele Editorial Servicescore team Neil WEINBERG, Principal, Neil Weinberg DesignSoumitra DUTTA, Roland Berger Professor of Business and Technology,INSEAD, and Academic Director of eLab, INSEAD data COLLABORATORSBruno LANVIN, Executive Director of eLab, INSEAD Alex CHISHOLM, Director, Statistical Analysis; and Hillary CHAN, ResearchDaniela BENAVENTE, GII Lead Researcher and Project Manager, Analysis Associate Manager at the Graduate Management AdmissioneLab, INSEAD Council (GMAC)Sacha WUNSCH-VINCENT, Senior Economist, Economics and Janis KARKLINS, Assistant Director-General for UNESCO’s CommunicationStatistics Division, WIPO and Information Sector, Martin SCHAAPER, Programme Specialist, Lydia DELOUMEAUX, Assistant Programme Specialist, Luciana MARINS,KNOWLEDGE PARTNERS Assistant Programme Specialist, UNESCO Institute for StatisticsAlcatel-Lucent Alex KOZAK, Policy Analyst, GoogleRevital MAROM, Head of Market and Consumer Insight Sean MAC CURTAIN, Head, Conformity Assessment, InternationalLouis WITTERS, Director, Market and Consumer Insight Organization for Standardization (ISO) Adelina MENDOZA, Senior Statistical Officer, Economic Research andKurt STEINERT, Director of Corporate Communications Statistical Division, World Trade Organization (WTO)Simon POULTER, Head of Media Relations Ifigenia POULKA, Data and Applications Specialist, Thomson ReutersBooz and Company Programme for International Student Assessment (PISA), Directorate forBarry JARUZELSKI, Senior Vice President Education, Indicators and Analysis Division, Organisation for EconomicKarim M. SABBAGH, Senior Vice President Co-operation and Development (OECD) Taylor REYNOLDS, Head; Piotr STRYSZOWSKI, Economist; and FredericRichard SHEDIAC, Senior Vice President BOURASSA, Statistician, Information, Computer and CommunicationChadi N. MOUJAES, Vice-President Policy Division, Directorate for Science, Technology and Industry, OECDRasheed ELTAYEB, Principal Susan TELTSCHER, Head; and Esperanza MAGPANTAY, StatisticianHadi RAAD, Principal at the Market Information and Statistics Division, TelecommunicationHatem A. SAMMAN, Director, The Ideation Center Development Bureau, International Telecommunication Union (ITU) Karen TREANTON, Head of Energy Balances, Prices and Emissions Section,Confederation of Indian Industry Energy Statistics Division, International Energy AgencyAnjan DAS, Executive Director, Technology Erik ZACHTE, Data Analyst, Wikimedia FoundationSeema GUPTA, Director Matthew ZOOK, Associate Professor at the University of KentuckyJibak DASGUPTA, Deputy DirectorINSEADShellie KARABELL, Director Media Relations & KnowledgeSophie BADRE, Associate Director Media RelationsShilpa DODDA, Research Programmer, eLab THE GLOBAL INNOVATION INDEX 2012 Virginie BONGEOT-MINET, Centre Coordinator, eLabWIPOCarsten FINK, Chief EconomistRyan LAMB, Statistical Analyst, Economics and Statistics DivisionLiudmila KASHCHEEVA, Intern, Economics and Statistics DivisionWIPO Communications DivisionWIPO Printing & Publication Production Section
advisory board xvAdvisory Board to the Global Innovation Index Advisory BoardIn 2011, an Advisory Board was set up to provide advice ADVISORY BOARD MEMBERS Khalid S. Al-Sultanon the research underlying the Global Innovation Index Rector, King Fahad University for Petroleum & Minerals, Saudi Arabia(GII), generate synergies at its stages of development, and Daniele Archibugiassist with the dissemination of its messages and results. Research Director, Italian National Research Council (CNR), affiliated withThe Advisory Board is a select group of leading interna- the Institute on Population and Social Policy (IRPPS); and Professor oftional practitioners and experts with unique knowledge Innovation, Governance and Public Policy, Department of Management,and skills in the realm of innovation. Its members, while Birkbeck College, University of Londoncoming from diverse geographical and institutional Irina Bokovabackgrounds (international organizations, the public Director General of the United Nations Educational, Scientific and Culturalsector, non-governmental organizations, business, and Organization (UNESCO)academia), participate in their personal capacity. We Leonid Gokhberg First Vice-Rector, Higher School of Economics (HSE), and Director, HSEare grateful for the time and support provided by the Institute for Statistical Studies and Economics of Knowledge, RussianAdvisory Board members. Federation In 2012, we welcomed two new members to the Rolf-Dieter HeuerAdvisory Board: Sibusiso Sibisi and Rob Steele. Director General, European Organization for Nuclear Research (CERN) Rolf Lehming Director, Science and Engineering Indicators Program, National Science Foundation (NSF), United States of America Raghunath Anant Mashelkar Bhatnagar Fellow, National Chemical Laboratory, Council of Scientific and Industrial Research (CSIR); Chairperson, National Innovation Foundation; and President, Global Research Alliance, India Sibusiso Sibisi President and Chief Executive Officer, Council for Scientific and Industrial Research (CSIR), South Africa Lynn St. Amour President and Chief Executive Officer, Internet Society Rob Steele Secretary-General, International Organization for Standardization (ISO) Hamadoun Touré Secretary-General, International Telecommunication Union (ITU) THE GLOBAL INNOVATION INDEX 2012
xviii Global Innovation Index rankingsRankings Country/Economy Score (0–100) Rank Income Rank Region Rank Switzerland 68.2 1 HI 1 EUR 1 Sweden 64.8 2 HI 2 EUR 2 Singapore 63.5 3 HI 3 SEAO 1 Finland 61.8 4 HI 4 EUR 3 United Kingdom 61.2 5 HI 5 EUR 4 Netherlands 60.5 6 HI 6 EUR 5 Denmark 59.9 7 HI 7 EUR 6 Hong Kong (China) 58.7 8 HI 8 SEAO 2 Ireland 58.7 9 HI 9 EUR 7 United States of America 57.7 10 HI 10 NAC 1 Luxembourg 57.7 11 HI 11 EUR 8 Canada 56.9 12 HI 12 NAC 2 New Zealand 56.6 13 HI 13 SEAO 3 Norway 56.4 14 HI 14 EUR 9 Germany 56.2 15 HI 15 EUR 10 Malta 56.1 16 HI 16 EUR 11 Israel 56.0 17 HI 17 NAWA 1 Iceland 55.7 18 HI 18 EUR 12 Estonia 55.3 19 HI 19 EUR 13 Belgium 54.3 20 HI 20 EUR 14 Korea, Rep. 53.9 21 HI 21 SEAO 4 Austria 53.1 22 HI 22 EUR 15 Australia 51.9 23 HI 23 SEAO 5 France 51.8 24 HI 24 EUR 16 Japan 51.7 25 HI 25 SEAO 6 Slovenia 49.9 26 HI 26 EUR 17 Czech Republic 49.7 27 HI 27 EUR 18 Cyprus 47.9 28 HI 28 NAWA 2 Spain 47.2 29 HI 29 EUR 19 Latvia 47.0 30 UM 1 EUR 20 Hungary 46.5 31 HI 30 EUR 21 Malaysia 45.9 32 UM 2 SEAO 7 Qatar 45.5 33 HI 31 NAWA 3 China 45.4 34 UM 3 SEAO 8 Portugal 45.3 35 HI 32 EUR 22 Italy 44.5 36 HI 33 EUR 23 United Arab Emirates 44.4 37 HI 34 NAWA 4 Lithuania 44.0 38 UM 4 EUR 24 Chile 42.7 39 UM 5 LCN 1 Slovakia 41.4 40 HI 35 EUR 25 Bahrain 41.1 41 HI 36 NAWA 5 Croatia 40.7 42 HI 37 EUR 26 Bulgaria 40.7 43 UM 6 EUR 27 Poland 40.4 44 HI 38 EUR 28 Montenegro 40.1 45 UM 7 EUR 29 Serbia 40.0 46 UM 8 EUR 30 Oman 39.5 47 HI 39 NAWA 6 Saudi Arabia 39.3 48 HI 40 NAWA 7 Mauritius 39.2 49 UM 9 SSF 1 Moldova, Rep. 39.2 50 LM 1 EUR 31 Russian Federation 37.9 51 UM 10 EUR 32 Romania 37.8 52 UM 11 EUR 33 Brunei Darussalam 37.7 53 HI 41 SEAO 9 South Africa 37.4 54 UM 12 SSF 2 Kuwait 37.2 55 HI 42 NAWA 8 Jordan 37.1 56 UM 13 NAWA 9 Thailand 36.9 57 UM 14 SEAO 10 Brazil 36.6 58 UM 15 LCN 2 Tunisia 36.5 59 UM 16 NAWA 10THE GLOBAL INNOVATION INDEX 2012 Costa Rica 36.3 60 UM 17 LCN 3 Lebanon 36.2 61 UM 18 NAWA 11 Macedonia, FYR 36.2 62 UM 19 EUR 34 Ukraine 36.1 63 LM 2 EUR 35 India 35.7 64 LM 3 CSA 1 Colombia 35.5 65 UM 20 LCN 4 Greece 35.3 66 HI 43 EUR 36 Uruguay 35.1 67 UM 21 LCN 5 Mongolia 35.0 68 LM 4 SEAO 11 Armenia 34.5 69 LM 5 NAWA 12 Argentina 34.4 70 UM 22 LCN 6 Georgia 34.3 71 LM 6 NAWA 13
xixGlobal Innovation Index rankings (continued) RankingsCountry/Economy Score (0–100) Rank Income Rank Region RankBosnia and Herzegovina 34.2 72 UM 23 EUR 37Namibia 34.1 73 UM 24 SSF 3Turkey 34.1 74 UM 25 NAWA 14Peru 34.1 75 UM 26 LCN 7Viet Nam 33.9 76 LM 7 SEAO 12Guyana 33.7 77 LM 8 LCN 8Belarus 32.9 78 UM 27 EUR 38Mexico 32.9 79 UM 28 LCN 9Belize 32.5 80 LM 9 LCN 10Trinidad and Tobago 32.5 81 HI 44 LCN 11Swaziland 32.0 82 LM 10 SSF 4Kazakhstan 31.9 83 UM 29 CSA 2Paraguay 31.6 84 LM 11 LCN 12Botswana 31.4 85 UM 30 SSF 5Dominican Republic 30.9 86 UM 31 LCN 13Panama 30.9 87 UM 32 LCN 14Morocco 30.7 88 LM 12 NAWA 15Azerbaijan 30.4 89 UM 33 NAWA 16Albania 30.4 90 UM 34 EUR 39Jamaica 30.2 91 UM 35 LCN 15Ghana 29.6 92 LM 13 SSF 6El Salvador 29.5 93 LM 14 LCN 16Sri Lanka 29.1 94 LM 15 CSA 3Philippines 29.0 95 LM 16 SEAO 13Kenya 28.9 96 LI 1 SSF 7Senegal 28.8 97 LM 17 SSF 8Ecuador 28.5 98 UM 36 LCN 17Guatemala 28.4 99 LM 18 LCN 18Indonesia 28.1 100 LM 19 SEAO 14Fiji 27.9 101 LM 20 SEAO 15Rwanda 27.9 102 LI 2 SSF 9Egypt 27.9 103 LM 21 NAWA 17Iran, Islamic Rep. 27.3 104 UM 37 CSA 4Nicaragua 26.7 105 LM 22 LCN 19Gabon 26.5 106 UM 38 SSF 10Zambia 26.4 107 LM 23 SSF 11Tajikistan 26.4 108 LI 3 CSA 5Kyrgyzstan 26.4 109 LI 4 CSA 6Mozambique 26.3 110 LI 5 SSF 12Honduras 26.3 111 LM 24 LCN 20Bangladesh 26.1 112 LI 6 CSA 7Nepal 26.0 113 LI 7 CSA 8Bolivia, Plurinational St. 25.8 114 LM 25 LCN 21Zimbabwe 25.7 115 LI 8 SSF 13Lesotho 25.7 116 LM 26 SSF 14Uganda 25.6 117 LI 9 SSF 15Venezuela, Bolivarian Rep. 25.4 118 UM 39 LCN 22Mali 25.4 119 LI 10 SSF 16Malawi 25.4 120 LI 11 SSF 17Cameroon 25.0 121 LM 27 SSF 18Burkina Faso 24.6 122 LI 12 SSF 19Nigeria 24.6 123 LM 28 SSF 20Algeria 24.4 124 UM 40 NAWA 18Benin 24.4 125 LI 13 SSF 21Madagascar 24.2 126 LI 14 SSF 22Uzbekistan 23.9 127 LM 29 CSA 9Tanzania, United Rep. 23.9 128 LI 15 SSF 23Cambodia 23.4 129 LI 16 SEAO 16Gambia 23.3 130 LI 17 SSF 24 THE GLOBAL INNOVATION INDEX 2012 Ethiopia 23.3 131 LI 18 SSF 25Syrian Arab Rep. 23.1 132 LM 30 NAWA 19Pakistan 23.1 133 LM 31 CSA 10Côte dIvoire 22.6 134 LM 32 SSF 26Angola 22.2 135 LM 33 SSF 27Togo 20.5 136 LI 19 SSF 28Burundi 20.5 137 LI 20 SSF 29Lao PDR 20.2 138 LM 34 SEAO 17Yemen 19.2 139 LM 35 NAWA 20Niger 18.6 140 LI 21 SSF 30Sudan 16.8 141 LM 36 SSF 31Note: World Bank Income Group Classification (April 2012): LI = low income; LM = lower-middle income; UM = upper-middle income; and HI = high income. Regions are based on the United Nations Classification (20 September 2011): EUR = Europe; NAC = Northern America; LCN = Latin America and the Caribbean; CSA = Central and Southern Asia; SEAO = South East Asia and Oceania; NAWA = Northern Africa and Western Asia; and SSF = Sub-Saharan Africa.
chapter 1 3The Global Innovation Index 2012: Stronger Innovation Linkages for Global 1: The Global Innovation Index 2012GrowthDaniela Benavente and S oumitra Dutta, INSEAD eLabSacha Wunsch-Vincent, WIPOThe global economic recovery is this downturn on innovation is com- Unmistakably, reductions or afragile and uneven across different plex and ambiguous, with large vari- streamlining of R&D expendituresregions. ations across f irms, sectors, coun- in times of crisis does not have to Most current economic forecasts tries, and regions. On the one hand, affect research output or innovationsby leading international economic crisis might stimulate new entrepre- if eff iciency is improved and lessinstitutions predict a slowdown neurial ventures and growth areas. promising projects are discontinued.of gross domestic product (GDP) Past crises in the 1990s are said to Still, firms—in particular small andgrowth throughout 2012 and an have generated new strings of inno- medium-sized enterprises (SMEs)—uncertain recovery in 2013.1 Despite vative companies and may have put face greater diff iculties in tappingsome setbacks, growth remains rel- entire nations—such as Finland and external sources of funding to sup-atively strong in most emerging- the Republic of Korea—on a new port their innovation investmentsmarket economies. The situation in growth path.3 Countries that con- and to f inance new business ven-high-income economies, however, tinue to invest in innovation despite tures. The access to venture capital isis more precarious. Unemployment economically worsening conditions still severely depressed. The numberis high and growing in many of these are reaping the benef its of their of firm creations is down in coun-countries. Full crisis recovery will efforts at some point. tries for which data are available.take its time, and there are risks of On the other hand, true risks Importantly, research anda renewed degradation of the eco- exist in terms of a negative effect on development (R&D) and innova-nomic climate resulting in a pro- innovation expenditures and out- tion expenditures cannot often belonged state of uncertainty. puts. Total and/or business R&D stopped and subsequently picked In this context, the economic investments have declined as of 2008 up again simply when the economypolicy debate is placing renewed or 2009 in a significant number of recovers. Initial investments areemphasis on achieving an appro- countries for which data are avail- sunk. Researchers deskill and PhDpriate policy framework that fosters able (for example, in Canada, Israel, students without funding go intogrowth and employment while pro- Lithuania, Netherlands, Spain, other fields. Innovation that is post-moting sustainable public finances. Sweden, and the United Kingdom, poned now will also not take placeAs outlined in the Preface to this or UK).4 Moreover, the world’s later; there are hysteresis effects inreport, policies that promote inno- top R&D investors decreased their innovation.vation and structural policies foster- R&D spending by 1.9% in 2009.5 Knowing the exact effects of theing long-term output growth should The crisis is expected to have slowed economic crisis on business innova-feature prominently in these discus- the introduction of new products tion will take time. The questionssions. Although innovation cannot or processes, primarily because of involved are too complex to becure the most immediate financial decreased demand and increased reduced to a blanket assessment of THE GLOBAL INNOVATION INDEX 2012 diff iculties, it is a crucial element business uncertainty, including the effect of the economic slowdownof sustainable growth. Forward- uncertainty about the size of the on the level and geography of inno-looking measures are needed to lay future market. Large multinational vation. Moreover, such an assess-the foundations for future prosperity. firms responsible for a large share of ment is premature and data to fully The economic crisis is affecting business R&D have recently accu- assess the impacts are only emerging.not only investments but also the cli- mulated large cash stocks that are not Also, as part of their stimulusmate for innovation.2 The effect of being reinvested. packages, in 2009 and onwards most
4 governments have pledged to avoid In the policy debate and the liter- so by introducing and discussing rel-1: The Global Innovation Index 2012 cutbacks in science and R&D or even ature, emphasis is put on the increas- evant metrics that are complemented increase spending.6 Ideally, spending ingly collaborative nature of inno- by substantive chapters that analyse measures decided by governments vative processes. Such collaboration this theme in the context of partic- need to marry short-term demand has been facilitated as innovation ular country settings (Chapter 3 on stimulus with longer-lasting growth processes have become more frag- Saudi Arabia, Chapter 5 on the Golf objectives. Most governments have mented and ‘open’.7 As studied in Cooperation Council, Chapter 6 on also identified financial or structural several chapters of this publication, the Russian Federation, and Chapter policies to foster new employment the role of the Internet more gener- 7 on India) and with a focus on sci- and growth in areas such as research, ally has been crucial in introducing ence-industry linkages (Chapters 4 the health sector, transport, and the changes to the innovation process and 8), public-private partnerships environment. There is now a need to and to related outputs.8 Markets for (Chapter 2), and the role of informa- monitor and assess how and whether technologies that allow for knowl- tion and communication technolo- these stimulus measures have been edge diffusion have added a further gies and the Internet (Chapters 8, 9, implemented and to determine the boost to collaboration.9 and 10). impacts on short-term demand and Accordingly, in the last decades longer-term economic foundations in high- and middle-income coun- and the society more broadly. This tries alike, various national strate- The rationale for the Global Innovation applies to programmes decided in gies have aimed to improve the link- Index 2009 and to those that are in the ages between the various innovation The GII project was launched by offing. actors, most notably the science sys- INSEAD in 2007 with the simple To support these debates, to tem and higher education, the gov- goal of determining how to f ind guide polices, and to highlight good ernment, the private sector, and metrics and approaches to better practices, metrics are required to increasingly also the not-for-profit capture the richness of innovation assess innovation and related policy sector such as philanthropies and in society and go beyond such tradi- performance. For this purpose the nongovernmental organizations. tional measures of innovation as the GII is timely and relevant. The measurement agenda has number of research articles and the evolved to address the systemic dimen- level of R&D expenditures.13 sion of innovation10—that is, the activ- There were several motivations Stronger innovation linkages for global ities of multiple innovation actors for setting this goal. First, innova- growth and linkages among them.11 The tion is important for driving eco- The theme of this year’s GII report, challenge is to detect and quantify nomic progress and competitive- ‘Stronger innovation linkages for the dynamic and often informal ness—both for developed and devel- global growth’, underlines the nature of linkages and their efficacy. oping economies. Many govern- importance of productive interac- This policy and measurement ments are putting innovation at the tions among innovation actors— ambition is far from being impor- centre of their growth strategies. firms, the public sector, academia, tant only to advanced economies. It Second, there is awareness that the and society—in modern innovation is also critical in most low- and mid- definition of innovation has broad- ecosystems (see also Chapter 4 of this dle-income country contexts, where ened—it is no longer restricted to report). innovation linkages are, on average, R&D laboratories and to published More and more attention is weaker than in high-income coun- scientific papers. Innovation could focused on the interplay of institu- tries. Furthermore, low- and mid- be and is more general and horizontal tions and the interactive processes dle-income countries have been in nature, and includes social inno- in the creation, application, and dif- the source of incremental innova- vations and business model innova- THE GLOBAL INNOVATION INDEX 2012 fusion of knowledge, human capi- tion.12 One challenge is to appro- tions as well. Last but not least, rec- tal, and technology. In particu- priately quantify the extent of this ognizing and celebrating innovation lar, the transfer of scientific results type of innovation and the required in emerging markets is seen as criti- and inventions and their application linkages. cal for inspiring people—especially to societal challenges in high- and Yet again, the GII intends to the next generation of entrepreneurs lower-income countries alike is gar- contribute to the policy and mea- and innovators. nering attention. surement debate on linkages. It does
5 The GII helps to create an envi- An inclusive perspective on innovation Furthermore, the process of 1: The Global Innovation Index 2012ronment in which innovation factors The GII adopts a broad notion of innovation has undergone signif i-are under continual evaluation, and innovation, originally presented in cant change. Investment in innova-it provides a key tool and a rich data- the Oslo Manual developed by the tion-related activity has consistentlybase of detailed metrics for refining European Communities and the intensified at the firm, country, andinnovation policies. OECD:14 global levels, adding new innovation The GII is not meant to be the actors from outside high-income An innovation is the implementation of aultimate and definitive ranking of economies and also nonprofit actors. new or significantly improved product (goodnations with respect to innovation. The structure of knowledge produc- or service), a new process, a new marketingMeasuring innovation outputs and tion activity is more complex and method, or a new organizational method inimpacts remains diff icult; hence geographically dispersed than ever. business practices, workplace organization,great emphasis is placed on mea- A key challenge is to find metrics or external relations.suring the climate and infrastruc- that capture innovation as it happensture for innovation and on assessing This def inition ref lects the in the world today.16 Direct officialrelated outcomes. evolving nature of the way inno- measures that quantify innovation Although the end results take the vation is perceived and understood outputs remain extremely scarce.17form of several rankings, the GII is over the last two decades.15 For example, there are no off icialmore concerned with improving the Previously, economists and pol- statistics on the amount of innova-‘ journey’ to better measuring and icy makers focused on R&D-based tive activity—defined as the num-understanding innovation, and with technological product innovation, ber of new products, processes, oridentifying targeted policies, good largely produced in-house and other innovations—for any givenpractices, and other levers to foster mostly in manufacturing industries. innovation actor, let alone for anyinnovation. The rich metrics can This type of innovation is performed given country. Most measures alsobe used by individual countries— by a highly educated labour force struggle to appropriately capture theeither at the level of the index and in R&D-intensive companies. The innovation outputs of a wider spec-sub-indices or at the level of individ- process leading to such innovation trum of innovation actors, such asual variables, such as ‘the number of was conceptualized as closed, inter- the services sector, public entities,patent applications by resident’—to nal, and localized. Technological and so on.monitor performance over time and breakthroughs were necessarily The GII aims to move beyondto benchmark developments against ‘radical’ and took place at the ‘global the mere measurement of such sim-other countries in the same region or knowledge frontier’. This character- ple innovation metrics. This requiresof the same income group. ization also implied the existence of the integration of new variables, As a result, and drawing on the leading and lagging countries with with a trade-off between the qual-expertise of the GII’s Knowledge low- or middle-income economies ity of the variable on the one handPartners and the prominent only catching up. and achieving good country cover-Advisory Board, the GII model is Today, innovation capability is age on the other hand.continually updated to ref lect the seen more as the ability to exploit The timeliest indicators areimproved availability of statistics and new technological combinations and used for the GII. About 35% of dataour understanding of the meaning embraces the notion of incremental obtained is from 2011, 35% fromand implications of innovation. This innovation and ‘innovation without 2010, 21% from 2009, and the smallyear particular emphasis is placed on research’. Non-R&D-innovative remainder—for certain particularavoiding f lawed year-on-year com- expenditure is an important compo- variables or low-income countries—parisons by estimating the impact nent of reaping the rewards of tech- from earlier years.18 This gives thein the rankings of changes in per- nological innovation. GII good coverage of the years where THE GLOBAL INNOVATION INDEX 2012 formance on particular indicators, There is also an increasing inter- the economic crisis attained its ini-adjustments to the GII framework, est in understanding how innova- tial peak, when innovation expen-and/or the inclusion of additional tion takes place in low- and middle- ditures were most severely affected,economies in the rankings. income countries and an awareness and when stimulus programmes that incremental forms of innovation were decided and meant to be put can impact development. into action.
6 Figure 1: Framework of the Global Innovation Index 20121: The Global Innovation Index 2012 Global Innovation Index (average) Innovation Efficiency Index (ratio) Innovation Input Innovation Output Sub-Index Sub-Index Human Knowledge and capital and Market Business technology Creative Institutions research Infrastructure sophistication sophistication outputs outputs Political Knowledge Knowledge Creative environment Education ICT Credit workers creation intangibles Regulatory Tertiary General Innovation Knowledge Creative goods environment education infrastructure Investment linkages impact and services Business Research & Ecological Trade & Knowledge Knowledge Online environment development sustainability competition absorption diffusion creativity That said, the time coverage the latest research on the measure- the simple average of the first does not allow us to capture more ment of innovation. This year the five pillar scores. medium-term effects of the crisis or GII model includes 141 economies, 2. Innovation Output Sub-Index: the stimulus programmes on inno- which represent 94.9% of the world’s Innovation outputs are the vation, some impacts of which might population and 99.4% of the world’s results of innovative activities be very long-term (e.g., expen- GDP (in current US dollars). within the economy. There are ditures on education and public The GII relies on two sub- two output pillars: (6) Knowl- R&D). Moreover, the renewed set- indices: the Innovation Input Sub- edge and technology outputs19 back of the global economy in the Index and the Innovation Output and (7) Creative outputs. The second half of 2011 and the current Sub-Index, each built around pil- Innovation Output Sub-Index is set-backs to the world economy, as lars. Four measures are calculated the simple average of the last two well as possible new spending mea- (Figure 1): pillar scores. Although the Out- sures are not accounted for. These 1. Innovation Input Sub-Index: put Sub-Index includes only two effects will naturally be at the heart Five input pillars capture ele- pillars, it has the same weight in of future GIIs. THE GLOBAL INNOVATION INDEX 2012 ments of the national economy calculating the overall GII scores that enable innovative activities: as the Input Sub-Index. The GII conceptual framework (1) Institutions, (2) Human capital The GII is an evolving project that 3. The overall GII score is the and research, (3) Infrastructure, builds upon previous editions of the simple average of the Input and (4) Market sophistication, and index while incorporating newly Output Sub-Indices. (5) Business sophistication. The available data and that is inspired by Innovation Input Sub-Index is