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Asian Nations Rank High on Global Innovation Index

Singapore and Hong Kong have ranked among the top 10 in the 2014 Global Innovation Index, sponsored by Cornell University, INSEAD and the UN’s World Intellectual Property Organization.

In the ranking of innovative capabilities and progress of 143 economies, Singapore is the seventh highest in the world; Hong Kong places 10th. South Korea (16), Australia (17), New Zealand (18) and Japan (21) all make it within the top 25.

The Global Innovation Index (GII), launched in 2007, is published annually. This year’s edition focuses on what it calls the “Human Factor” in innovation, which pertains mostly to education and how countries can produce, attract and retain talented individuals. Singapore is a leader in this respect, drawing educated individuals from around the world and acting as a hub where critical mass can be reached.

When the sole component of education is looked at as a means by which to cultivate and enhance human capital, South Korea takes the lead among high income countries. China (29) has made great strides toward improving its human resources through education and takes top place among upper-middle income countries, followed by Malaysia (33).

The GII report emphasizes the importance of education, stating “…better educated citizens are more successful in higher-income economies in leveraging the favorable contexts for driving innovation. As countries move up the scale of innovation sophistication, the quality of its talents in science, engineering, but also in business and management for example become even more critical.”

The GII report also highlights the continuation of global innovation gaps. Although the rankings on Top 10 and 25 lists change each year, the economies involved are the same. High income countries enjoy the most progress in innovation and lower income countries struggle to keep up, even when experiencing gains themselves.

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Since innovation growth cannot and should not be solely measured by comparing the gains of all countries uniformly, the GII has multiple methods by which it weighs, measures, or compares economies. The GII spots advancing countries by categorizing them under different income brackets according to their GDP per capita, then comparing them to others within their brackets. Economic entities that perform at least 10 percent higher overall than their peers across several dimensions are referred to as “Innovation Learners”. These dimensions are:

  • Institutional frameworks;
  • Skilled labor force with expanded tertiary education;
  • Better innovation infrastructures;
  • Deeper integration with global credit investment and trade markets; and
  • A sophisticated business community.

2014’s GII lists 17 Innovation Learners across all income brackets. Included among them are – in order of performance – China (29), Mongolia (56), Vietnam (71), India (76), Malaysia (33) and Thailand (48).

China’s gains are the most notable, climbing six places in global rankings this last year. Though categorized as an upper-middle income country at best, its ranking resembles that of most high income economies. India on the other hand, despite being labeled an Innovation Learner, fell 10 places to 76th.

About the Global Innovation Index

The Global Innovation Index is collaborative publication produced by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO). It ranks the innovative capabilities and achievements of 143 countries. The GII asserts that innovation is vital to economic growth, and takes into account common measures of innovation such as research and development, as well as more obscure indicators.

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The GII is calculated by averaging the results of two sub-indexes: innovation input and innovation output. The input sub-index is comprised of economic indicators that naturally lead to innovative activity and growth. These indicators are divided into five categories:

  • Institutions;
  • Human capital and research;
  • Infrastructure;
  • Market sophistication; and
  • Business sophistication.

The innovation output sub-index evaluates conclusive evidence of innovation divided into two categories:

  • Knowledge and technology outputs; and
  • Creative outputs.

When all indicators (81 in total) are summed up and the indexes averaged, the result is an educated means by which we can measure and compare the innovative capacities of countries around the globe.

A list of Asian Countries included in the GII and their rankings:

  • 7. Singapore
  • 10. Hong Kong
  • 16. Korea, Rep.
  • 17. Australia
  • 18. New Zealand
  • 21. Japan
  • 29. China
  • 33. Malaysia
  • 48. Thailand
  • 56. Mongolia
  • 71. Vietnam
  • 76. India
  • 87. Indonesia
  • 100. Philippines
  • 106. Cambodia
  • 140. Myanmar

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email asia@dezshira.com or visit www.dezshira.com.

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