While China is quickly entering the list of economies that are among the greatest innovators, the European economies continue to dominate the ranks of the world’s most innovative countries. This was revealed after a study conducted jointly by the World Intellectual Property Organization (WIPO), Cornell University and Insead.

Among the economies that were studied, the most innovative economy was identified as Switzerland which held on to its No.1 ranking. Sweden and the United Kingdom followed Switzerland in being innovative. The innovativeness of the economies was judged according to the annual Global Innovation Index.

While Finland and Singapore were fifth and sixth respectively, the fourth position in the list of innovative in economies was accorded to the U.S. The Global Innovation Index has been historically dominated by developed economies.

This year, the first middle-income economy to join the top 25 of the Global Innovation Index was China.

Economic infrastructure, the market and business sophistication, creative output and scope for research were among the factors that were studied and used to come to a conclusion about the innovativeness of economies in the study.

The report noted that due to the sluggish global growth and productivity, it should be a priority for economies to find new drivers and in that context one of the key concerns for economies was the keeping up the pace of innovation.

“Investing in innovation is critical to raising long-term economic growth,” said Francis Gurry, director general at the WIPO.

“In this current economic climate, uncovering new sources of growth and leveraging the opportunities raised by global innovation are priorities for all stakeholders,” he added.

The enhanced flow of knowledge and talent across economies and countries was the primary reason that there has been a rise in global innovation, this year’s study found.

“The relative contraction of international trade and investment flows does give even more strategic importance to the two sides of global innovation: on one hand, more emerging countries are becoming successful innovators, and on the other hand, an increasing share of innovation benefits stem from cross-border cooperation,” said Bruno Lavin, executive director for global indices at Insead.

The report however clearly noted that there was a very distinct and persistent “innovation divide” between developed and developing countries.

The report further said that there was an annual growth of about 7 percent in the expenditure for research and development (R&D) before 2009. However for reasons such tightening of spending in R&D by governments in higher-income economies and emerging economies – especially China, slowing their investments in such activities resulted in the slowing in the growth in spending to just 4 percent by the end of 2014, the report also said.

The GII report is also truly global in nature as 97.9 percent of global gross domestic product (GDP) and 92.8 percent of the global population were covered in the study that went into the details of the economies of 128 countries across the globe.

(Adapted from CNBC)

Categories: Economy & Finance