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.