Who leads the world in innovation? Most would instinctively say America. Others might point to China’s rapid rise. However, according to the Global Innovation Index, published by the World Intellectual Property Organisation (WIPO), the answer lies elsewhere. Switzerland, a nation renowned for its precision engineering and quality craftsmanship, has emerged as the global champion of innovation, securing the top spot on the index.
The index adopts a comprehensive approach to defining innovation, encompassing both “outputs,” such as patents, scientific publications, and high-tech exports, as well as “inputs,” such as R&D spending, the number of engineering graduates, and venture capital deals. The index also considers a country’s adoption and utilization of technology, beyond just its production. Countries that import significant amounts of high-tech products and invest heavily in intellectual property from abroad score higher on the index.
Some of the metrics employed are unconventional, such as the number of feature films a country produces and the frequency of changes made to collaborative software projects on platforms like GitHub.
While the US and China, with their vast resources and research capabilities, might be expected to dominate, their rankings on the index are surprisingly low, with the US coming in third and China in 11th place. The index, however, takes into account a nation’s population and GDP, allowing smaller countries to compete on an equal footing. Switzerland, despite filing fewer international patent applications than the US, ranks higher due to its smaller economy.
While Switzerland’s absolute contribution to global innovation may be smaller than America’s, it boasts a higher per capita innovation rate.
The index reveals a strong correlation between a country’s GDP per person and its innovation ranking, with wealthier countries tending to perform better. Yet, some countries outperform expectations based on their level of development. India, despite its low GDP per capita, ranks 39th, exceeding expectations.
Over the past five years, several nations have witnessed remarkable progress in the innovation rankings, including Indonesia, Mauritius, Saudi Arabia, Qatar, Brazil, and Pakistan.
However, the world is witnessing a slowdown in the global innovation surge that marked the period between 2020 and 2022. Key indicators are showing signs of decline. The number of scientific publications fell by 5% in 2023, while international patent filings declined for the first time since 2009. R&D investment by major corporations saw a slowdown in growth, while venture capital deals and their value experienced a significant drop in 2023.
Even China, despite its rise in the rankings, faces challenges in its venture capital industry. Earlier this year, Xi Jinping, China’s leader, expressed concerns about the declining number of new unicorns, prompting the government to explore unconventional solutions.
The Chinese government’s proposed foray into venture capital through state-owned banks, a move that contradicts traditional risk-averse approaches, remains to be seen as a viable strategy to revitalize innovation in the country. It will be interesting to observe whether these unorthodox measures will succeed in reigniting the spirit of innovation within China’s financial landscape.
