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A glance of the global ranking

The GII 2017 notes a continued gap in innovative capacity between developed and developing nations and lackluster growth rates for research and development (R&D) activities, both at the government and corporate levels.

High-income economies take 24 of the top 25 spots (Figure 1), with China the exception at 22. The overall GII ranking of all 127 countries/economies is presented in the following Figure extracted from the GII 2017.

Figure 1 Global Innovation Index 2017 rankings (Top 25)

Key findings

A total of six messages emerge in the GII 2017. Many of these messages are concerned with innovation as a driver of growth generally. The six findings are:

Finding 1: Crafting the foundations for innovation-driven growth while the global economy is at an important turning point

Growth is reaching a novel and more sustained momentum. However, investment and productivity growth are still at historic lows. China aside, investment growth in middle-income countries has now fallen to levels similar to that of rich countries (Figure 2).

Figure 2 Global investment and business R&D falling short

The total R&D expenditures growth is still lower today than it was in 2011–13, and much lower than in 2005–08 (Figure 2). In addition to flattening public R&D, business research expenditures seem to be losing momentum.

Finding 2: Smart, digital agricultural innovation and a better uptake of innovation in developing countries can help overcome serious food challenges

First, lagging agricultural productivity growth in low and middle-income economies and lagging agricultural R&D spending across all economies both need to be reversed. Second, innovations need to disperse more effectively throughout the agricultural and food sector, especially in developing countries.

Helping to meet this need for innovation in agricultural systems, a wave of new agricultural technologies and innovations is taking place that could help overcome lagging productivity, such as genetics and nano and biotechnologies.

Finding 3: More innovation convergence is needed globally, with developing countries perfecting their innovation systems

Yet rich countries take up most of the top 25 spots, with middle-income countries growing more distant to the top 25 this year, rather than closing the gap. The exception is still China. A number of countries that perform significantly better on innovation than their current level of development would predict; it is hoped that this will trigger a virtuous cycle of development in the years to come. A total of 17 economies (Figure 3) compose the cluster of ‘innovation achievers’ this year. This group has grown this year relative to 2016.

Figure 3 Innovation achievers: Income group and years as an innovation achiever

Finding 4: Opportunities have emerged to leverage the rise of new East Asia Innovation Tigers, fostering deeper regional innovation networks and benefitting from the rise of India

In terms of innovation and economic development more broadly, Asia is definitely a more and more important engine of innovation in the 21stcentury. The different elements of a potentially strong networked innovation powerhouse are coming together in Asia. The economic spurt of such countries as Hong Kong (China), Singapore, the Republic of Korea and Japan was temporarily stopped short by the Asian financial crisis, but has since continued unabated. In addition, thanks to its steadily persevering innovation agenda, China also vigorously entered the picture while making strides in terms of innovation activities and results.

New Asian Tigers—such as Indonesia, the Philippines, and Viet Nam—are emerging too, and they increasingly join not only Asian high-tech value chains but also other activities such as ICT offshoring. These and other countries in Asia are also active in improving their innovation performance.

Finding 5: Preserving the innovation momentum in Sub-Saharan Africa and tapping the innovation potential in Latin America are priorities

A recurrent finding of the last editions of the GII has been that the innovation momentum in Sub-Saharan Africa must be preserved, while countries in Latin America and the Caribbean are working to meet their innovation potential.

Finding 6: The largest sub-national clusters of inventive activity, as measured by patenting, include Tokyo–Yokohama, Shenzhen–Hong Kong (China), and San Jose–San Francisco, CA

This year the GII makes a first attempt at assessing sub-national innovation clusters. The importance of innovation hubs at the sub-national and international levels has been at the forefront of GII discussions for the last 10 years.

However, measuring the territorial dimension of innovation remains challenging. Only a few GII indicators are readily available at the regional or city level for a large set of countries. Besides, clusters often do not stop at national borders. By definition, the search for official and timely innovation data is challenging. In an effort to contribute preliminary solutions, a novel approach is presented in the GII 2017 that identifies the largest inventive clusters as measured by Patent Cooperation Treaty (PCT) patenting. Drawing on advanced mapping techniques and WIPO patenting data, Figure 4 shows some of the leading innovation clusters that result from this analysis. Tokyo–Yokohama, Shenzhen–Hong Kong (China), and San Jose–San Francisco (the Silicon Valley area in California) lead in terms of being the largest inventive clusters, based on this methodology.

Figure 4 Top cluster of countries or cross-border regions, within the top 25

Ranking of China and Hong Kong (China)

China and Hong Kong (China) both gain spots in top 25 in GII 2017, which means both economies have outstanding performance in some pillars. Anyhow, gaps with other advanced economies still exist. Disturbingly, this gap is getting wider instead of being filled. The analysis below will display the ranking of both economies in all seven GII pillars and some noticeable indicators they record.

China

Figure 5 displays China’s scores achieved in each of all 81 indicators and corresponding ranking in the global. It moves up by 3 spots in this edition with a score of 52.5, becoming the 22nd most innovative economy in the world after having entered the top 25 in 2016 as the first middle-income economy.

Figure 5 Ranking of China

Regarding the Innovation Output and Input Sub-Indices, China scores 50.9 and 54.2, ranking 11th and 31st. It achieves an Innovation Efficiency Ratio of 0.9, which is the ratio of the Output Sub-Index score over the Input Sub-Index score.

Outstanding performance

Of the seven GII pillars (Figure 11), China remains in top 25 in terms of human capital & research (25th), business sophistication (9th) and knowledge & technology outputs (4th). The score in the pillar of business sophistication is above the average of the rest of the 11–25 group. This year, for the first time, China displays a score higher than the top 10 average in knowledge and technology outputs.

Regarding particular indicators, China ranks 1st in domestic market scale, firms offering formal training, patents by origin, utility models by origin, high-tech exports less re-exports, industrial designs by origin and creative goods exports (Figure 5).

In addition, China this year displays a strong performance in three indicators introduced in the GII 2016: global R&D companies, domestic market scale, and research talent in business enterprise.

domestic expenditure on R&D

About eight years after the 2008–09 crisis, the worst-case scenario of permanently reduced R&D growth has to date been avoided. Thanks to these anticyclical innovation policies, China as a R&D champion has consistently spent large and growing sums on R&D. Figure 6 shows the gross domestic expenditure on R&D (GERD) of China with no fall in GERD during the 2008-09 crisis keeps a fast increase from 2008 to 2015, ranking 1st, and business enterprise expenditure on R&D also ranks 2nd.

Figure 6 Benchmarking R&G expenditures across countries

innovation cluster

Regarding the ranking of the world’s largest clusters of inventive activity on the basis of patent filings, seven cities from China take spots in the top 100 clusters. Shenzhen–Hong Kong (China) ranks 2nd with a total of 41,218 PCT filings during the 2011–15 period, Beijing 7th with 15,185 filings, Shanghai 19th with 6,639, Guangzhou 63rd with 1,670, Hangzhou 85th with 1,213, Nanjing 94th with 1,030 and Suzhou 100th with 956.

PCT fillings of Shenzhen–Hong Kong (China) mainly fall into the field of digital communications, mainly contributed by ZTE Corporation.

innovation quality

When talking about innovation quality, China leads in top 10 middle-income economies. China moves up one spot to 16th position in innovation quality, retaining for the fifth consecutive year its position as the top middle-income economy and getting closer to high-income economies. This movement can be attributed to higher scores in university rankings (4th) and citable documents (14th). The third component of the quality index is patent families filed at least 2 offices.

Figure 7 Metrics for quality of innovation: Top 10 high- and top 10 middle-income economies

Space to improve

In comparison with GII 2016, China falls two spots in the pillar of business sophistication, ranking 9th this year; and falls four spots in market sophistication (28th). It still keeps low ranking in institution (78th).

What China needs is balanced development, which means it should not only keep its strength but also fill the gap in environment protection, energy consumption and others, said Sacha WUNSCH-VINCENT, Senior Economist, Economics and Statistics Division, WIPO, also a key contributor of the CII 2017.

When talking about R&D investment in agriculture, Sheng Yu, researcher of modernized agriculture in Peking University and deputy director of the Center for Chinese Agricultural Policy, said that the investment structure and the proportion of public and private funding need more adjustment. Private enterprises should play a greater role in R&D investment, he said.

Hong Kong (China)

Hong Kong (China) gets a score of 53.9, ranking 16th in GII 2017 and falling in the 11–25 range of high-income economies. It performs above the top 10 average in various pillars, i.e., institutions, infrastructure, and market sophistication (Figure 8).

Hong Kong (China) scores 40.81 in the Innovation Output Sub-Index (ranking 25th) and 66.95 in the Innovation Input Sub-Index (ranking 8th), thus achieving an Innovation Efficiency Ratio of 0.6 (ranking 73rd).

Figure 8 Ranking of Hong Kong

Outstanding performance

Hong Kong (China) retains its good positions in institutions (3rd) and market sophistication (2nd). Regarding indexes of political stability and absence of violence/terrorism, Hong Kong (China) outperforms China. The former ranks 13th while the latter ranks 90th. In 9 of the 15 input sub-pillars, Hong Kong (China) ranks in the top 10, holding top spots in regulatory environment (2nd), business environment (2nd), ecological sustainability (1st), credit (3rd), and knowledge absorption (3rd).

Hong Kong (China) preserves its top spot in JV-strategic alliance deals, high- tech imports, and FDI net inflows and improves its rank in PISA results, patents by origin, and utility models by origin.

Space to improve

Hong Kong (China) drops from 2nd to 8th in the Innovation Input Sub-Index this year and ranks 16th overall, down from 14th in 2016. But it falls in three out of five input pillars, with the largest drop in human capital and research (28th). Hong Kong (China), however, drops significantly in education (73rd), which is a weak sub-pillar this year, and R&D (33rd). This is partly the result of a new missing value (school life expectancy) and a drop in global R&D companies (43rd). Other weak indicators include GERD financed by abroad, IP payments, and ICT services imports and exports.

Index itself

Published annually since 2007, GII is now a leading benchmarking tool for business executives, policy makers and others seeking insight into the state of innovation around the world on a continual basis.

Four measures are calculated: the overall GII, the input and output sub-indices, and the innovation efficiency ratio. The overall GII score is the simple average of the input and output sub-index scores. The innovation input sub-index gauges elements of the national economy which embody innovative activities grouped in five pillars: (1) institutions, (2) human capital and research, (3) infrastructure, (4) market sophistication, and (5) business sophistication. The innovation output sub-index captures actual evidence of innovation results, divided into two pillars: (6) knowledge and technology outputs and (7) creative outputs. The general framework of the GII 2017 is displayed by Figure 9.

Figure 9 Framework of the Global Innovation Index 2017