Every year, the United Nations puts out the WIPO Global Innovation Index, which captures the innovation ecosystem performance of 132 economies and tracks the most recent global innovation trends. The goal of the report is to pinpoint the factors within an economy that promotes innovation, which isn’t easy. Innovation is inherently challenging to quantify.
Since 2000, global investment in research and development (R&D) has tripled to $2.4 trillion. (nsf.gov)
In 2022 the top science and technology (S&T) clusters were concentrated in two countries: China and the United States. (WIPO Global Innovation Index 2022)
U.S. based companies spend more than those in any other country for R&D, putting out more than $700 billion in 2020. (nsf.gov)
Based on how its universe of countries scored in seven categories (business sophistication, market sophistication, infrastructure, human capital & research, institutions, creative outputs, knowledge and technology outputs), which cover things such as R&D spend, general market strength, patent systems and output, and local labor capital, the Global Innovation Index report ranks countries from most innovative to least. The framework aims to identify indicators that foster an innovative environment and breakthrough technologies. The idea isn’t just to count new developments, but how well they are integrated into general use and impact a country's standard of living.
It’s worth noting that each country’s overall innovation score is a mix of categories, and countries with similar scores can be strong in different areas.
Switzerland ranks at the top for the 12th year in a row—above the United States, South Korea and Israel, and well above China. For many, this may come as a surprise. However, the country’s intellectual property rules are considered world-class, and they are complemented by strong collaboration between universities and industry, as well as a strong, stable economy. In addition, the country attracts top talent thanks to its high quality of living.
The United States came in second based on its $700 billion per year R&D spending. Globally, four of the five top R&D spending companies are in America: Amazon ($42.7 billion), Alphabet ($27.6 billion), Microsoft ($19.3 billion), and Apple ($18.8 billion).
Switzerland’s top ranking in 2022 is no fluke. The country has held that spot since the beginning of the report. In addition to Switzerland, seven other countries have been in the top 10 in each year, including Sweden, Singapore, and the United States. The United States barely held onto its top 10 spot in 2012 when it was listed 10th, but it has steadily improved its ranking in the past 10 years.
Others, such as Canada in 2012 and Ireland in 2018, have dropped out of the top 10. But that let up-and-comers like South Korea and Germany move ahead. In total, 14 countries have ranked in the top 10 most-innovative countries in the world since 2011.
Despite having more science and technology hubs than nearly any other country, China isn’t considered one of the top 10 innovators. Its low scores in political and regulatory environments, as well as infrastructure and human capital, offset high scores in research areas, resulting in a ranking of 11 for 2022.
When this report was issued, the world was coming out of the Covid shut down. Funding and innovation had held up surprisingly well during the pandemic years, but it was obviously slowing. In analyzing the data it gathered, the report presents the views of both optimists and pessimists regarding the future of innovation.
The innovation pessimists argue that low productivity growth is here to stay. According to them, innovations that make a truly transformative impact on productivity—like some of the key inventions of previous centuries, such as electricity—are just too difficult to find these days. On the other hand, the innovation optimists predict a new economic and social era; one where a massive innovation spurt fosters a productivity uplift.
Taking the view of the optimists, the authors of the report put their hopes in two novel innovation waves:
An upcoming Digital Age innovation wave built on supercomputing, artificial intelligence and automation that is on the verge of making ample productivity impacts across all sectors – including services – and helping to achieve scientific breakthroughs in basic sciences of all fields; and
A Deep Science innovation wave built on breakthroughs in biotechnologies, nanotechnologies, new materials and other sciences that is revolutionizing innovations in four fields of key importance to society: health, food, environment, and mobility.
That said, the positive effects of these two novel waves will take a long time to materialize. Many obstacles, particularly in the area of technology adoption and diffusion, have to be overcome first.
So, who will be proven right? The pessimists, who predict a future of plodding incremental change and innovation? Or the optimists, who believe we are still capable of truly transformative innovation?
Chart courtesy of Visual Capitalist.