Global investment in innovation remained buoyant throughout 2020, despite the setbacks ushered in by the pandemic. High-tech industries in particular maintained their commitment to research and development (R&D) spending, according to the World Intellectual Property Organization’s (WIPO) Global Innovation Index (GII).
The top three countries for R&D investment, as ranked in the GII, are Switzerland, Sweden and the US. Switzerland has held the number one spot in the Index since 2011.
This year, South Korea has been placed in the top five for the first time.
More than half the top 20 are European countries, but five Asian economies are in the upper rankings – South Korea (5th), Singapore (8th), China (12th), Japan (13th) and Hong Kong (14th). China is the only middle-income economy in the top 30, WIPO says.
China scores highly in the GII for its number of patents, trademarks and industrial designs. However, it lags behind other economies in areas like human capital, enrollment in tertiary education, plus market sophistication and business sophistication.
There are a number of countries that are performing above expectations relative to their economic development. These include India, Kenya, the Republic of Moldova and Viet Nam.
To create the rankings, WIPO assesses economies’ against a number of criteria that influence and facilitate innovation, as well as those that are created as a result of innovation. These indicators include things like the volume of venture capital deals, the number of scientific papers published, labour and productivity growth, and high-tech exports.
R&D spending: Pre- and post-pandemic
Despite the pandemic, WIPO says many countries stuck to their commitments around supporting innovation. While that is a positive thing, WIPO says there is still much to be done.
“The global innovation landscape is changing too slowly,” it warns. It points out that while high-income, developed economies continue to perform well where innovation investment is concerned, other countries are getting left behind.
“There is an urgent need for this to change, particularly in the context of the COVID-19 crisis,” the GII report continues. “Confronted with an unprecedented crisis, it is important to fully leverage the power of innovation to collectively build a cohesive, dynamic and sustainable recovery.”
WIPO points to a failure on the part of some national governments to regard R&D as a priority in their post-COVID economic stimulus packages. Rather than cut-back, governments should boost R&D spending at times of economic slow-down, the GII report argues, as a way of filling any spending gaps left by the private sector.
Successful innovation takes place within ecosystems that make it possible for an idea to come to fruition and be commercially viable. Such ecosystems require a business environment that rewards risk-taking, regulations that provide a working economic and legal framework, and knowledge-generation (universities, research centres and laboratories), according to the World Economic Forum’s Global Competitiveness Report 2020.
Investments in innovation reached an all-time high before the pandemic, according to the GII – R&D spending was growing at 8.5% in 2019. In 2020, the top global corporate R&D spenders increased expenditures by around 10%, while the number of venture-capital-backed deals grew by 5.8%.
The World Economic Forum’s Global Competitiveness Report says that not enough of that pre-pandemic investment was directed at making “societies more inclusive, sustainable and resilient.”
This article was originally published in the World Economic Forum.