World’s top innovative nations

January 16, 2009

1. United States

The United States still rules the world when it comes to innovation. This is no surprise, as the US with a legacy of over 100 years in innovation, has been consistent in taking the leader’s slot. The US knows it must continue to innovate to stay ahead. It tops in three areas: human capacity, business markets and competitiveness. The five input pillars that are included in the GII are: Institutions and Policies, Human Capacity, General and ICT Infrastructure, Markets Sophistication and Business Sophistication. The input pillars define aspects of the conducive environment required to stimulate innovation within an economy. There are three output pillars which provide evidence of the results of innovation within the economy: Knowledge Creation, Competitiveness and Wealth Creation. The US scored high on both input (ranked 2nd) and output (ranked 1st) pillars.

2. Germany

Germany follows in second position, maintaining its position from last year. Germany scores relatively low on the input pillars (10th) and very high on the output pillars (2nd), leading to an overall second rank. It is important to note that that eight out of the top 10 countries in the list are from Europe. As global competition intensifies and innovation becomes more important, the business sector has been internationalizing knowledge-intensive corporate functions, including research and development, the study points out.

3. Sweden

Sweden rises to 3rd rank in 2008 year from 12th position in 2007. It’s important to provide a safety net to innovators, says the study. There must be a conducive environment for innovative companies. A ‘succeed or perish’ environment often kills innovative ideas in the nascent stages as people will be too intimidated to take creative risks that could fail.

4. United Kingdom

The United Kingdom fell from 3rd to 4th position in 2008. The study reflects that innovation is correlated with income levels in a country. For example, the innovation levels in the OECD (Organization for Economic Cooperation and Development) countries are much more than non-OECD countries. The high income countries do significantly better by topping innovation rankings. The average innovation index falls with the income levels of the country.

5. Singapore

Singapore rose to 5th rank in 2008 from 7th. Singapore is also 2nd from the Asian region. Innovation is not just about generating new ideas, says the study. It is about translating these ideas into value-added products and services. This requires flexibility of attitude and a willingness to adapt and welcome unprecedented levels of change on the part of all stakeholders involved, says the study.

6. South Korea

South Korea made a giant leap by grabbing the 6th rank, up from 19th position in 2007. Over the last two decades, the Republic of Korea has undergone a great change, with Information and Communication Technologies (ICT) and innovation becoming the power engine for its high economic growth. After facing a big financial crisis in 1997, Korea emerged into a powerhouse of knowledge through the consolidation of knowledge industries with the ICT industry itself contributing to more than 30 per cent of its total exports, the study states.

7. Switzerland

One of the world most beautiful places has also made it to the top innovative nations’ list. Switzerland is ranked 7th in the global innovative index. Innovation is the key driver of any economy. It works best when like-minded individuals come together in small collectives, irrespective of political and cultural differences and work on projects that yield value for all parties involved.

8. Denmark

While Denmark features among the top nations with an overall score of 5.73 along the different input pillars, it ranks relatively low at position 21st along the output pillars. This pulls the overall GII rank of Denmark down to 8th and raises questions as to why despite creating a highly conducive environment for innovation, it is not able to capitalize on it. The remarkable leadership and phenomenal development of the three Nordic countries of Finland, Denmark and Sweden have consistently done well in the development of institutions and policies that nurture innovation. Denmark tops the ICT and infrastructure pillar. Denmark also comes at top position in the 2008 Networked Readiness Rankings of the World Economic Forum.

9. Japan

The world’s industrial powerhouse Japan moved down to 9th position in 2008. It was ranked fourth in 2007. Ranked relatively lower along the input pillars (16th), Japan comes in at an impressive 3rd position along the output pillars. Clearly, Germany and Japan are able to leverage their less favorable innovation environments into more effective innovation results. The Japanese society is currently undergoing deep structural changes. Japan enjoys a competitive edge in business sophistication, innovation and R&D (research and development) spending. But its macroeconomic weaknesses have led to one of the highest debt levels in the world. People are also questioning the values of the political, economic and social institutions, and alternatives are being explored. This includes the fields of education, research and innovation as well. The government and the private sector give high priority to R&D spending.

10. Netherlands

The Netherlands with a prosperous economy is ranked 10th in the list. It is also the 16th largest economy in the world. A country’s readiness is linked to its ability to garner the best from leading-edge technologies, expanded human capacities, better organizational and operational capabilities and improved institutional performance, according to the study.

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Best nations to do business

October 7, 2008

1. Singapore – Singapore kept its top ranking for the third year in a row as the easiest place in the world to do business. The Asian city-state edged out New Zealand and the United States in the ‘Doing Business 2009’ ranking. Along with Hong Kong, South Korea and Taiwan, Singapore is one of the Four Asian Tigers. Singapore’s economy depends heavily on exports refining imported goods, especially in manufacturing. Thousands of foreign expatriates work here in multi-national corporations. The city-state employs thousands of blue-collared workers across the globe.

2. New Zealand- New Zealand has a developed economy with an estimated nominal GDP of $128.1 billion as on 2008. The country has a very high standard of living. New Zealand’s service sector is the largest sector in the economy, followed by manufacturing and construction and the farming/raw materials extraction. New Zealand is heavily dependent on free trade, particularly in agricultural products.

3. USA- The American economy is under terrible stress at the moment.  A series of events in United States, including the collapse of Lehman Brothers and Bank of America agreeing to buy Merrill Lynch for $44 billion, has shaken up the global financial markets. There could be several more developments over the next few months that might make things more difficult. Thousands will lose their jobs in the global financial sector as many companies have witnessed the fastest drop in business levels, profitability and confidence in almost two decades.  Initial estimates say that the unprecedented crisis in the global financial services industry will lead to more than 250,000 jobs being lost globally. And economists say that this figure is ‘very conservative.’ The eventual number of jobs that will actually be lost could be much higher, they say. The fiscal hurricane that originated in the United States has soon spread panic and gloom across the world markets. European companies have already announced layoffs, while some Asian companies too have done the same. However, some relief came with the US Congress approving a revised $700 billion package to bail out the beleaguered financial sector of the country.

4. Hong Kong- Hong Kong is one of the world’s leading financial centers.  It is one of the four Asian tigers known for its high growth rate and rapid industrialization. The Hong Kong Stock Exchange is the sixth largest in the world, with a market capitalization of $2.97 trillion as on October 2007. It is an important centre for international finance and trade, with the greatest concentration of corporate headquarters in the Asia-Pacific region.

5. Denmark- Denmark has a GDP per capita higher than that of most European countries, and 15-20% higher than that of the United States. Denmark is one of the most competitive economies in the world according to World Economic Forum 2008 report, IMD, and The Economist. Denmark’s market economy features efficient markets, above average European living standards, and high amount of free trade. Denmark is home to many multinational companies. Among them: A P Moller-Maersk Group, Lego, Bang & Olufsen, Carlsberg, Vestas, Novozymes and the pharmaceutical companies Lundbeck and Novo Nordisk deserve special mention

6. Britain- The British economy is made up (in descending order of size) of the economies of England, Scotland, Wales and Northern Ireland. In the 1980s, during Prime Minister Margaret Thatcher’s tenure, most state-owned enterprises were privatized. The British government now owns very few industries or businesses — Royal Mail is one of the very few examples. In the post World War II period, the British economy recorded chronic weak growth. However, in recent years Britain has seen the longest period of economic growth. It has grown in every quarter since 1992.  It is one of the strongest EU economies in terms of inflation, interest rates and unemployment, all of which remain relatively low. The country’s GDP as of 2007, stands at $2.772 trillion.

7. Ireland- The economy of the Republic of Ireland is modern and trade-dependent with growth averaging a 7% per annum in 1995-2007. Agriculture, once the most important sector, is now dwarfed by industry, which accounts for 46% of GDP, about 80% of exports, and employs 29% of the labour force. Ireland has the second highest per capita income of any country in the EU next to Luxembourg, and fourth highest in the world based on measurements of gross domestic product per capita

8. Canada- Canada is one of the world’s wealthiest nations, and a member of the Organization for Economic Co-operation and Development and Group of Eight. As with other developed nations, the Canadian economy is dominated by the service industry, which employs about three quarters of Canadians. The country’s GDP as of 2007 stands at $1.274 trillion. Canada has a sizable manufacturing sector, centered in Central Canada, the automobile industry being especially important.

9. Austria- The economy of the Republic of Austria may be characterized as a social market economy similar in structure with that of Germany. In 2004 Austria was the fourth richest country within the European Union, having a GDP per capita of approximately Euro27’666, with Luxembourg, Ireland, and Netherlands leading the list. In the post World War II era, Austria has achieved sustained economic growth. In the crisis-ridden 1950s, the rebuilding efforts for Austria lead to an average annual growth rate of more than 5 per cent in real terms and averaged about four point five per cent through most of the 1960s.

10. Norway- The economy of Norway has shown robust growth since the start of the industrial era. Shipping has long been a support of Norway’s export sector, but much of Norway’s economic growth has been fueled by an abundance of natural resources, including petroleum exploration and production, hydroelectric power, and fisheries. Norway is among the most expensive countries in the world, as reflected in the Big Mac Index. Historically, transportation costs and barriers to free trade had caused the disparity, but in recent years, Norwegian policy with respect to labor relations, taxation, etc, have contributed significantly.


Nations with highest per capita income

July 25, 2008

Liechtenstein

Strange, as it might seem, the World Bank ranks nations, sometimes without giving their actual per capita income. No explanation is given by the World Bank, other than a footnote that says: �2007 data not available; ranking is approximate.’ However, information gleaned from other sources bears out the World Bank ranking. So the nation with the highest per capita income in the world is Liechtenstein, a small country bordering Switzerland and Austria. Liechtenstein’s per capita income is about $80,000 per annum. The principality has an industrialized economy, with banking and financial services being the mainstay. Tourism too is a major revenue earner for the nation. The personal income tax rates in Liechtenstein too are exceedingly low: basic income tax rate is 1.2 per cent on income up to 200,000 Swiss Francs, and maximum is 5 per cent on income over 2 million Swiss Francs a year.

Bermuda

Bermuda is tourist’s delight, located in the North Atlantic Ocean. Bermuda’s per capita income is almost 50 per cent more than that of the United States. The tiny island nation’s per capita income stands at just above $78,000. It has the second highest PCI in the world. Bermuda is a major financial centre and is particularly attractive because of its low taxation rates. Financial services are the nation’s largest industry, followed by tourism.

Norway

Norway’s per capita income stands at $76,450, which is the third highest in the world. Norway has a mixed economy consisting of state-owned businesses and a robust free market. It’s a high developed and industrialized state. Fishing, petroleum, hydel power, minerals contribute heavily to the nation’s GDP.

Luxembourg

Luxembourg’s per capita income is at $75,880. That makes it the world’s fourth highest PCI. Luxembourg is located in Europe and is bordered by Belgium, France, and Germany. The nation has highly developed industrial and financial sectors.

Qatar

The per capita income of Qataris is $60,000, the fifth highest in the world. Qatar is an Arab emirate located in the Persian Gulf. The nation’s economy mainly depends on its huge oil and natural gas reserves. There is no income tax in Qatar.

Switzerland

The Swiss enjoy a financially comfortable life, with a per capita income of $59,880. Switzerland ranks sixth in the World Bank’s per capita income rankings. Switzerland, a truly capitalist economy, has many giant banks and multinational corporations. It also has highly developed industries in sectors like pharmaceuticals, chemicals, machine parts, electronics, precision instruments, banking, tourism, etc. Dairy farming too is an age old industry in Switzerland. It has very low tax rates.

Denmark

Denmark’s per capita income is at $54,910. According to World Bank rankings, it is the world’s seventh highest PCI. Denmark has a highly industrialized economy, with robust agricultural and corporate sectors. Despite being one of the most competitive nations, the nation has a very weak financial regulatory system. Also, its labor laws are very lax and tilted heavily in favour of the employers.

Iceland

At $54,100, the per capita income of Iceland is the world’s eighth highest. Iceland has a very healthy power sector which helps it be a highly industrialized country. Apart from manufacturing, the nation is also taking big strides in the fields of software generation, biotechnology, tourism, and financial services.

Cayman Islands

The per capita income of Cayman Islands is more than $48,140 and less than $54,100, as per World Bank figures. It has the 11th highest PCI in the world. At number 9 is Channel Islands and in the 10th spot is Andorra. The Cayman Islands are situated in the Caribbean Sea. It is a major financial centre and also one of the world’s best known tax havens. The nation’s economic mainstays are tourism and financial services.

Ireland

The Irish have a per capita income of $48,140, ranking them twelfth in the world. Ireland too has made rapid strides in the field of information technology. Construction, apart from agriculture, too is an important part of the Irish economy.