Trade and Development Symposium At the Ninth WTO Ministerial Conference Bali, Indonesia, 3-5 December 2013 The Global Innovation Index 2013: Measuring innovation in the Post 2015 Development Agenda Daniela Benavente Lead Researcher and Project Manager, The Global Innovation Index 2011-13 1
The Global Innovation Index 2013 1. Rationale and methodology 2. Findings 1. While an innovation divide persists 2. innovation is a global game 3. GII in practise: A tool for action 4. GII sub-theme in 2013: The local dynamics of innovation 2
Rationale of the Global Innovation Index The GII recognizes the key role of innovation as a driver of economic growth and prosperity A global measurement and benchmarking tool was required to facilitate public-private dialogue Need to move beyond simplistic and traditional metrics (R&D, patents) towards a modern, holistic, and inclusive vision applicable to developed and emerging economies Measuring innovation is a journey and not an endgame 3
The GII is a multi-stakeholder effort Co-published by Cornell University, INSEAD and WIPO Four Knowledge Partners: Booz & Company, the Confederation of Indian Industry, du, and Huawei Independent statistical audit by the Joint Research Centre of the European Commission International Advisory Board 4
A tool for action for 142 countries, around 84 metrics 60 hard data, 19 indices, 5 survey questions 5
GII 2013 rankings Top 10 Input Sub-Index Output Sub-Index Efficiency Ratio GII 1. Singapore 2. Hong Kong (China) 3. United States of America 4. United Kingdom 5. Sweden 6. Finland 7. Switzerland 8. Denmark 9. Canada 10. Netherlands 1. Switzerland 2. Netherlands 3. Sweden 4. United Kingdom 5. Malta 6. Luxembourg 7. Iceland 8. Finland 9. Israel 10. Germany 1. Mali 2. Moldova, Rep. 3. Guinea 4. Malta 5. Swaziland 6. Indonesia 7. Nigeria 8. Kuwait 9. Costa Rica 10. Venezuela, Bolivarian Rep. 1. Switzerland 2. Sweden 3. United Kingdom 4. Netherlands 5. United States of America 6. Finland 7. Hong Kong (China) 8. Singapore 9. Denmark 10. Ireland GII top 10 countries: Singapore and the US would have kept their 3 rd and 10 th positions of 2012 had we not fine-tuned the GII framework (Annex 2, 20 indicators). Efficiency ratios evolve around 1 and are neutral to stages in development: high ratios often 6 reflect blatant deficiencies in the input side; still show doing more from less.
The innovation gap Stability at the top Rankings remain correlated with income levels. Switzerland comes 1 st and Sweden 2 nd since 2011. The top 10 or top 25 might swap rankings, but not a single country moved in or out in 2013. 7
Spiky regional dispersion of innovation 8
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Regional gaps can be bridged For example, in Business sophistication South East Asia and Oceania comes before Europe; LAC comes before Northern Africa and Western Asia; Sub- Saharan Africa comes before Central and Southern Asia. 10
Fast movers: Scores are often remarkably close; small changes can impact rankings significantly Uganda and Costa Rica are now, incidentally, in the category of innovation learners. Cambodia, Mexico, Uruguay, Indonesia, Ecuador jumped by 15 or more positions in 2013. There are only 2.7 (over 100) points between positions 51 and 75; 4.5 between 76 and 100. 11
Learners are 18 economies out-performing their peers relative to GDP per capita: Moldova, China, India, Uganda, Armenia, Viet Nam, Malaysia, Jordan, Mongolia, Mali, Kenya, Senegal, Hungary, Georgia, Montenegro, Costa Rica, Tajikistan, and Latvia. 12
Côte d Ivoire and Benin could get inspiration from Sub-Sahara African learners with similar per capita level of income: Uganda, Senegal and Kenya. 13
Mapping the GII rankings is not the whole story The GII helps identify targeted policies, good practices, and other levers to foster innovation. An online interactive platform will list strengths and weaknesses; compare data for two countries, chart data for up to 5 countries. The GII rankings attract media attention, but they are not the main part of the GII. 14
Example: Strengths and Weaknesses of Indonesia (percent rank cutoffs at 66.6% for S and 10.1% for W) Strengths 2.2.2 Graduates in science and engineering (66.6) 2.3.3 QS university ranking average score of top 3 universities (75.8) 3.2.4 Gross capital formation (92.8) 4.2.1 Ease of protecting investors (66.6) 4.2.3 Total value of stocks traded (71.2) 5.2.1 University/industry research collaboration (72.5) 5.2.2 State of cluster development (77.0) 5.3.1 Royalties and license fees payments (% of service imports) (81.6) 6.2.1 Growth rate of GDP per person engaged (91.4) 6.2.5 High-tech and medium-high-tech output (66.6) 7.1 Intangible assets (89.1) 7.2.5 Creative goods exports (75.6) Weaknesses 1 Institutions (2.8) 1.2 Regulatory environment (2.1) 1.2.3 Cost of redundancy dismissal (0.0) 1.3.2 Ease of resolving insolvency (9.2) 2.1.4 Assessment in reading, mathematics, and science (10.1) 2.2.3 Tertiary inbound mobility (7.3) 2.2.4 Gross tertiary outbound enrolment (7.1) 2.3.2 Gross expenditure on R&D (GERD) (9.3) 4.1.1 Ease of getting credit (9.9) 5.1 Knowledge workers (0.7) 5.1.1 Employment in knowledge-intensive services (8.6) 5.1.2 Firms offering formal training (0.0) 5.1.3 GERD performed by business enterprise (% of GDP) (6.0) 5.2.5 Patent families filed in at least three offices (0.0) 6.1.4 Scientific and technical publications (2.1) Note: Cutoffs are calculated for each country on the basis of the 10 th highest (strengths) and 10 th lowest (weaknesses) percent ranks for that country, at the indicator level. Cutoffs are also applied to pillars, sub-pillars and indices (in bold pink). 66.6% of countries have a lower percentage of graduates in science and engineering than Indonesia. Switzerland (GII #1) has cutoffs at 98.2% and 59.2%; Yemen (GII #142) at 39.8% and 0.8%. 15
Quality matters Not all innovation inputs and outputs are of equal quality and impact. BRICs are the best performers among middle-income countries on 3 key indicators included this year top 3 universities, patent family applications publications citations Top 18 positions taken by high-income economies. Among middle-income countries, patent filing in more than three offices is not prevalent, except in China (lower level than average for HI economies). Elite universities in all BRIC countries. Four Latin American countries in the list; the region saw an average increase in rankings by 5 positions this year.
Trade-related indicators in the Global Innovation Index 3 Infrastructure 3.2.3 Logistics performance* 3.3.3 ISO 14001 environmental certificates/bn PPP$ GDP 4 Market sophistication 4.2.1 Ease of protecting investors* 4.3.1 Applied tariff rate, weighted mean, % 4.3.2 Non-agricultural mkt access weighted tariff, % 4.3.3 Intensity of local competition** 5 Business sophistication 5.2.5 Patent families 3+ offices/bn PPP$ GDP 5.3.1 Royalty & license fees payments, % service imports 5.3.2 High-tech imports less re-imports, % 5.3.3 Comm., computer & info. services imports, % 5.3.4 FDI net inflows, % GDP 6 Knowledge & technology outputs 6.1.1 Domestic resident patent ap/bn PPP$ GDP 6.1.2 PCT resident patent ap/bn PPP$ GDP 6.1.3 Domestic res utility model ap/bn PPP$ GDP 6.2.4 ISO 9001 quality certificates/bn PPP$ GDP 6.3.1 Royalty & license fees receipts, % service exports 6.3.2 High-tech exports less re-exports, % 6.3.3 Comm., computer & info. services exports, % 6.3.4 FDI net outflows, % GDP 7 Creative outputs 7.1.1 Domestic res trademark reg/bn PPP$ GDP 7.1.2 Madrid trademark registrations/bn PPP$ GDP 7.2.1 Audio-visual & related services exports, % 7.2.5 Creative goods exports, % 7.3.1 Generic top-level domains (TLDs)/th pop. 15 69 7.3.2 Country-code TLDs/th pop. 15 69 Trade statistics are among the most reliable, with good country-coverage and granularity at the product/service/sector level. Current developments in trade in value-added with the Made in the World Initiative led by the World Trade Organization and the OECD might change completely the picture in the future. 17
Missing data is an issue 90% confidence interval Range #of positions/142 Indicator coverage Country GII rank Belize 102 [37, 102] 65 65.5% Lesotho 124 [81, 124] 43 64.3% Namibia 109 [84, 123] 39 82.1% Togo 139 [101, 139] 38 69.0% Panama 86 [72, 110] 38 90.5% Mali 106 [103, 140] 37 81.0% Indonesia 85 [82, 116] 34 94.0% Guinea 126 [93, 126] 33 69.0% Nicaragua 115 [96, 129] 33 75.0% Fiji 97 [77, 109] 32 69.0% Uganda 89 [90, 122] 32 85.7% Niger 131 [103, 133] 30 72.6% China 35 [33, 63] 30 95.2% 90% confidence intervals based on audit: 13 countries with ranges of 30+, 19 with 20-29, 55 with 10-19, 55 with 9 or less. Missing data a real problem for rankings robustness. The audit is an incentive for countries to improve the collection of 18 statistics. Indicator coverage is 100% for Bulgaria, Hungary, Poland, and Romania.
Independent statistical audit Performed by the Joint Research Centre of the European Commission. Globally, missing data are problematic, particularly for the output sub-index. Example: in the Middle East and Northern Africa region, missing data are: 1. Institutions 0.0% 2. Human capital and research 36.2% 3. Infrastructure 1.7% 4. Market sophistication 10.3% 5. Business sophistication 34.1% 6. Knowledge and technology outputs 36.6% 7. Creative outputs 27.6% Published rankings No imputation of missing data Audit (Annex 3) Imputation of missing data Arithmetic averages Geometric averages Fixed weights One calculation One ranking for GII, Input and Output Sub-indices Random weights 4,000 Monte Carlo simulations 90% confidence intervals for each ranking 19
Maybe I can beat you at my own game! Country-specific strategies and the efficient frontier Knowledge Institutions Human capital and research Infrastructure Market sophistication Business sophistication and technology outputs Creative outputs GII weights 0.10 0.10 0.10 0.10 0.10 0.25 0.25 Country-specific weights and efficient frontier (min 0.05 and max 0.20) Efficient frontier rank GII rank Diff. Switzerland 0.06 0.18 0.11 0.08 0.19 0.19 0.19 1 1 - Hong Kong (China) 0.20 0.05 0.20 0.20 0.19 0.05 0.12 1 7 6 Singapore 0.12 0.19 0.19 0.10 0.20 0.14 0.05 1 8 7 Sweden 0.20 0.20 0.20 0.17 0.05 0.13 0.05 2 2 - United States of America 0.12 0.20 0.05 0.20 0.18 0.20 0.05 2 5 3 United Kingdom 0.20 0.20 0.20 0.20 0.05 0.06 0.09 3 3 - Finland 0.20 0.20 0.20 0.05 0.11 0.19 0.05 4 6 2 Netherlands 0.20 0.12 0.20 0.05 0.20 0.05 0.18 7 4 (3) Ireland 0.20 0.20 0.05 0.20 0.12 0.18 0.05 7 10 3 Denmark 0.20 0.20 0.20 0.20 0.05 0.06 0.09 8 9 1 Canada 0.20 0.20 0.19 0.20 0.05 0.05 0.10 9 11 2 Norway 0.20 0.20 0.20 0.05 0.10 0.05 0.20 9 16 7 Luxembourg 0.20 0.20 0.11 0.05 0.19 0.05 0.20 10 12 2 Israel 0.05 0.20 0.08 0.20 0.20 0.20 0.07 10 14 4 Country-specific efficient weights might depart from the innovation model imposed by the GII: efficient frontiers and ranks for each economy defined by Data Envelopment Analysis (Annex 3). Three countries at the efficient frontier, ranked 1; Switzerland only country with strengths in all 7 pillars. Among the top ten, the US and 20 Israel only countries with strength in Knowledge and technolofgy outputs.
The local dynamics of innovation o o o o o Despite the economic crisis, innovation is alive and well. Research and development spending levels are surpassing 2008 levels in most countries. The theme of the GII 2013 is on the local dynamics of innovation. Seven analytical chapters shed light on the factors leading to the excellence of innovation hubs, the role of local champions, the interaction of clusters with local, inter-regional, and global networks and value chains, with examples from India, Uruguay, the Middle East and Northern Africa, and Europe, among others. Local dynamics are bustling in established hubs such as Baden-Württemberg in Germany, the Capital Region of the Republic of Korea, Guangdong Province in China, Stredni Cechy in the Czech Republic, the Mumbai region in India, Tel Aviv in Israel, São Paulo in Brazil, etc. The report signals a shift from the tendency to duplicate successful initiatives. Original innovation ecosystem are thriving around the world. In New York City, Cornell University and the Technion Israel Institute of Technology were invited to set up the NYC Tech Campus on Roosevelt Island, aimed at attracting a new talent pool, lead to innovation, and impact the economy of the surrounding region. 21
Thank you for your attention www.globalinnovationindex.org danielabenavente@gmail.com 22