Asian economies – notably China, India, the Philippines and Viet Nam – have advanced considerably in the innovation ranking over the years
The COVID-19 pandemic is severely pressuring a long-building rise in worldwide innovation, likely hindering some innovative activities while catalyzing ingenuity elsewhere, notably in the health sector, according to the Global Innovation Index (GII) 2020.
The GII 2020’s theme asks Who Will Finance Innovation? A key question is how the economic fallout from the COVID-19 crisis will impact start-ups, venture capital, and other traditional sources of innovation financing. Many governments are setting up emergency relief packages to cushion the impact of the lockdown and face the looming recession. But the GII 2020 advises that further rounds of support must prioritize and then broaden support for innovation, particularly for smaller enterprises and start-ups that are facing hurdles in accessing rescue packages.
“The rapid, worldwide spread of the coronavirus requires fresh thinking to ensure a shared victory over this quintessential global challenge,” says WIPO Director General Francis Gurry. “Even as we all grapple with the immediate human and economic effects of the COVID-19 pandemic, governments need to ensure that rescue packages are future-oriented and support the individuals, research institutes, companies, and others with innovative and collaborative new ideas for the post-COVID era. Innovations equal solutions.”
In its associated annual ranking of the world’s economies on innovation capacity and output, the GII shows year-on-year stability at the top, but a gradual eastward shift in the locus of innovation as a group of Asian economies – notably China, India, the Philippines and Viet Nam – have advanced considerably in the innovation ranking over the years.
Switzerland, Sweden, U.S., U.K and Netherlands lead the innovation ranking, with a second Asian economy - the Republic of Korea - joining the top 10 for the first time (Singapore is number 8). The top 10 is dominated by high-income countries.
- Switzerland (Number 1 in 2019)
- Sweden (2)
- United States of America (3)
- United Kingdom (5)
- Netherlands (4)
- Denmark (7)
- Finland (6)
- Singapore (8)
- Germany (9)
- Republic of Korea (11)
- Hong Kong (China) (13)
- France (16)
- Israel (10)
- China (14)
- Ireland (12)
- Japan (15)
- Canada (17)
- Luxembourg (18)
- Austria (21)
- Norway (19)
A Shifting Innovation Landscape
The geography of innovation continues to shift, the GII 2020 shows. Over the years, India, China, the Philippines, and Viet Nam are the economies with the most significant progress in their GII innovation ranking over time. All four are now in the top 50.
The top-performing economies in the GII are still almost exclusively from the high-income group, with China (14th) remaining the only middle-income economy in the GII top 30. Malaysia (33rd) follows.
India (48th) and the Philippines (50th) make it to the top 50 for the first time. The Philippines achieves its best rank ever—in 2014, it ranked 100th. Heading the lower-middle-income group, Viet Nam ranks 42nd for the second consecutive year— from 71st in 2014. Indonesia (85th) joins the top 10 of this group. Tanzania tops the low-income group (88th).
“As shown by China, India and Viet Nam, the persistent pursuit of innovation pays off over time," says Former Dean and Professor of Management at Cornell University Soumitra Dutta. “The GII has been used by governments of those countries and others around the world to improve their innovation performance.”
New Findings for the GII 2020
- The COVID-19 crisis hit the innovation landscape at a time when innovation was flourishing (see chart below). In 2018, research and development (R&D) spending grew by 5.2%, i.e., significantly faster than global gross domestic product (GDP) growth, after rebounding strongly from the financial crisis of 2008-2009. Venture capital (VC) and the use of the intellectual property (IP) were at an all-time high.
- In the context of the GII 2020 theme Who Will Finance Innovation?, one of the GII findings is that the money to fund innovative ventures is drying up. VC deals are in sharp decline across North America, Asia, and Europe. The impact of this shortage in innovation finance will be uneven, with the negative effects felt more heavily by early-stage VCs, by R&D-intensive start-ups, and in countries that are not typically VC hotspots.
- While the impacts of the pandemic on the science and innovation systems will take time to unfold, there are positive signs of increased international collaboration in science. At the same time, there are concerns of major research projects being disrupted and international closure in the pursuit of innovation.
- The COVID-19 crisis has already catalyzed innovation in many new and traditional sectors, such as health, education, tourism, and retail.
“There are now genuine risks to international openness and collaboration on innovation. Faced with unprecedented challenges, whether sanitary, environmental, economic or social, the world needs to combine efforts and resources to ensure the continuous financing of innovation,” says INSEAD Executive Director for Global Indices Bruno Lanvin.