On 2nd September 2020, the World Intellectual Property Organisation (‘WIPO’) released the Global Innovation Index (hereinafter ‘GII’), 2020. The GII is an annual ranking of 131 nations that ranks every nation’s economy on the basis of its successes in promoting and showcasing innovation. Countries are evaluated with the use of 80 indicators including education, infrastructure, political stability, etc. The 2020 report is jointly released by the WIPO with Cornell University and the Institut Européen d’Administration des Affaires (INSEAD) Business School.
The Report starts off by addressing the current pandemic enveloping the world and understanding that while the world is still coping, innovation serves to be the best hope to overcome the situation. It, thus, gives importance to the growth of innovation in the field of healthcare.
The theme of the report, however, is ‘Who Will Finance Innovation?’. While this question always existed prior to the onset of the pandemic as innovation requires funding, this question has become even more pertinent currently. A central challenge for innovators, the report says, has always been the accessibility of stable financing methods.
In collaboration with the Confederation of Indian Industry (CII); Dassault Systèmes, The 3DEXPERIENCE Company; and the National Confederation of Industry Brazil (CNI), the report has identified 6 key findings. These findings are hopeful of the current economic slowdown if governments act proactively in boosting innovation.
The Six Key Findings of the GII, 2020
Firstly, it is stated that the COVID-19 pandemic will definitely impact innovation, and to tackle this impact, leaders would have to move from containment to recovery. This means involving government support as well as inculcating a collaborative model of support with the private sector for investment in innovation. It states that as governments bring the pandemic under control, they should strive to boost innovation across sectors by making expenditure boosts, even in the face of higher debt.
Secondly, the report compares the current situation to that which the world faced in 2009 and states that the financial system is comparatively sounder. It does note that the pandemic has strengthened the already declining deals in venture capital (VC) and that recovering them will take longer than R&D spending.
However, on a positive note, it states that these VC deals will bounce back soon, especially in VC hot spots such as Singapore, Israel, USA, India, the UK, China, Hong Kong, and Luxembourg. Further, it notes that VC deals seem to have altered their direction more towards the sectors of health, e-commerce, e-education, big data, and robotics.
Third, it is noted that the global innovation landscape is shifting eastwards and this is evidenced by the growth in innovation by countries such as China, India, Vietnam, and the Philippines. These countries have displayed the most significant progress in their rankings over the years. Their placement in the top 50 nations further substantiates their growth (their rankings, in order, being: China – 14th, Vietnam – 42nd, India – 48th, Philippines – 50th).
This year, there are two Southeast Asian nations on the top 10 list, with Singapore at the 8th place and South Korea on the 10th. While the top-performing nations in the GII list are from high-income countries, China stands to be the only exception, being the only middle-income economy among the top 30 nations.
Fourth, the GII 2020 notes that developing nations have showcased an impressive innovation performance. While the top spots in several fields of innovation are held by high-income countries, some areas are topped by middle-income nations. For example, Thailand holds the top spot for business in R&D in South East Asia while Malaysia tops the list for global net exports in High-tech in the region. Similarly, in Sub-Saharan Africa, Botswana tops the list for expenditure on education while in the same region, Mozambique takes the first place for global investment.
Further, there are some pillars of innovation in which economies ranked lower on the overall scale, rank much higher in these specific pillars. For example, India ranks much higher on the pillars of knowledge and technology outputs than when compared to its other GII rankings.
Fifth, the report notes the existence of regional divides. Northern America and Europe lead the GII rankings with South East Asia, East Asia, and Oceania following. The region of Latin America and the Caribbean is faced with low investments, incipient use of IP systems, and a disconnect between private and public sectors. The region of Africa is also characterized by low levels of scientific and technological growth and a higher reliance on foreign donors as a source of R&D. Yet, at the same time, the report acknowledges that specific economies in all these regions have shown growth in specific pillars of innovation.
Finally, the report notes that innovation in the fields of science and technology clusters are situated in the high-income economies as well as China. Of the top 100 clusters, the US hosts the largest number of clusters (25), followed by China (17) and Germany (10). The top 100 clusters of science and technology are located in just 26 countries, with only 6 of them being middle-income countries.
Analyzing India’s Rankings
India has had its best performance in the GII so far. By coming in the top 50, it has portrayed a significant drive for innovation and growth even amid the coronavirus pandemic. It is up to four places from last year when it was 52nd in the Index. What is more, India has retained the top position in the Central and Southern Asian regions. It is also the third-highest economy in innovation among the lower-middle-income group.
Looking at specific pillars of innovation, India has ranked 64th for the pillar of creative outputs, 61st for institutions, 55th in Business sophistication, and 47th in ease of resolving insolvency. India has also upped the ranks in the indicator of cultural and creative goods exports (21st). Further regional achievements of India include the 10th rank in knowledge diffusion, 9th in government online services, 3rd in domestic market scale, and 1st in ICT services exports.
India has also shown progress in graduates in science and technology and ease of protecting minority investors. The Report has also referenced India’s top educational institutes in enhancing the number of top scientific publications, these universities being the Indian Institute of Technology in Bombay and Delhi and the Indian Institute of Science in Bengaluru.
The former Dean and Professor of Management at Cornell University, Soumitra Dutta added that India has shown that the persistent pursuit of innovation pays off over time. According to the report, “India is the lower-middle-income economy with the highest innovation quality,”. Government initiatives such as the NIDHI-PRAYAS for start-ups and innovators has proved hugely successful, the Report noted.
However, the Report has noted that India’s expenditure on R&D has decreased over time and is even lower than the R&D spending of other BRIC nations. While India has noticed a significant rise in the number of investments by Indian corporations into start-ups, it states that the government should actively foster and finance such collaborations so that the ecosystem stays positive even after the pandemic recedes.
