Global Innovation Index 2016: how to lead in innovation?

As recently released the 9th edition of the Global Innovation Index (GII) co-published by Cornell University, INSEAD, and the World Intellectual Property Organization ranks Switzerland first (six consecutive years) which is followed by Sweden, UK, US, Finland and Singapore among 128 countries. In the former Soviet space, the Baltic countries – Estonia, Latvia and Lithuania are frontrunners (#24, #34 and #36 respectively) while Azerbaijan is just ranked as 85th (last year 93th among 141 countries) being outperformed by Russia (#43), Armenia (#60), Georgia (#64), and Kazakhstan (#75). The lower scores from that geography belong to Tajikistan (#86) and Kyrgyz Republic (#103).

The index is measured by comparing 84 indicators of innovation capacity and performance of 128 countries worldwide. These 84 indicators are divided into two subgroups, innovation input and innovation output, namely. Azerbaijan, for example, is #81 in Innovation Input Sub-Index rankings, and #94 in Innovation Output Sub-Index rankings.

Intellectual Property Watch says, the lead group of countries continued to be mainly composed of most economically advanced nations, while innovation is lagging in many developing countries, but China and India made notable leaps up the list this year. Impressive performance of the Alpine country is explained by five major reasons. As widely known, Switzerland enjoys (a) well-performing industry-research collaboration; (b) the highest number of patent applications (873) per million people; (c) huge R&D investments by multinational corporations, (d) massive attention to green industries, and finally (e) high-skilled labor force.

According to Business Times, experts particularly highlight China’s achievement (#25) by improving quality education, strengthening protection of Intellectual Property Rights, and investing in smart technologies.

Azerbaijan, however, cannot climb the ranking due to many reasons as it is clearly seen in the report. Ease of starting a business is the only indicator where Azerbaijan is in the TOP10. Microfinance gross loans as a percentage of GDP (#11), FDI inflow per GDP (#23) and FDI outflow per GDP (#23) are other highly-ranked indicators. Unfortunately, the share of creative goods export in total trade is almost 0 which makes the country #113 in the list. Citable documents (#109), share of education expenditures on GDP (#109), scientific and technical articles (#112), intensity of local competition (#111) and logistics performance (#113) are the worst indicators of the Land of Fire which aims to transfer “black gold” assets into human capital by 2020.

As authors of the report call, to guarantee a successful innovation system one cannot simply rely on R&D expenditures, or number of domestic researchers or the number of science and engineering graduates. Here, government and its role also should not be grabbed into the bull’s eye as an exclusive flagman of innovation. Authors stress the right balance between the role of government and the functions of entrepreneurship and innovation. Governments may provide better and right stimulus for competitive entrepreneurship while arranging enough freedom to operate relatively freely.

Hopefully, Azerbaijan will be able to score higher in regulatory environment indicators since the Law on Science had been recently adopted by her parliament Milli Majlis, and to increase investments in R&D projects after the new reforms in investment promotion. Otherwise, with 0.2% R&D spending, 2.5% education expenditures, and weaker local competition and fragile research-industry collaboration it seems reasonably challenging process for Azerbaijan to achieve a spot in the TOP50 most innovative nations. Moreover, if Azerbaijan aims to diversify its economy by subbing carbon-hydrate assets with human capital, innovative entrepreneurship, STEM education, and science commercialization give the very promising impression as it is true for all success stories.

Photo © Global Innovation Index


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