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The Global Innovation Index 2011 Accelerating Growth and Development Soumitra Dutta, INSEAD Editor

Global Innovation Index 2011

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  • 1.The Global Innovation Index 2011Accelerating Growth and DevelopmentSoumitra Dutta, INSEADEditor

2. The Global Innovation Index 2011Accelerating Growth and DevelopmentSoumitra Dutta, INSEADEditor 3. The Global Innovation Index 2011: Accelerating Growth andKNOWLEDGE PARTNERSDevelopment is the result of a collaboration among INSEADAlcatel-Lucentand Knowledge Partners.Revital MAROM, Head of Market and Consumer Insight Simon POULTER, Head of Media RelationsEDITOR Kurt STEINERT, Director of Corporate CommunicationsSoumitra DUTTA, Roland Berger Professor of Business andLouis WITTERS, Director, Market and Consumer InsightTechnology, INSEAD, and Academic Director, eLab, INSEAD Booz and Company Karim M. SABBAGH, Senior Vice PresidentACKNOWLEDGEMENTSThe Global Innovation Index, like any innovation project, is a Richard SHEDIAC, Senior Vice Presidentcollaborative effort. The valuable contributions of the individualsBarry JARUZELSKI, Vice Presidentlisted below are gratefully acknowledged. We look forward to Hatem A. SAMMAN, Director, The Ideation Centerthe continued input of the broader community of innovation Lisa MITCHELL, Principalprofessionals and experts to further improve the GII and toChadi N. MOUJAES, Principalmake it more useful for policy making and decision makers in Joanne ALAM, Senior Associatethe public/private sectors. Confederation of Indian IndustryINSEAD Anjan DAS, Executive Director, TechnologyBruno LANVIN, Executive Director of eLab Seema GUPTA, DirectorDaniela BENAVENTE, Senior Research Fellow, eLabJibak DASGUPTA, Deputy DirectorShellie KARABELL, Director Media Relations & Knowledge World Intellectual Property Organization (WIPO)Sophie BADRE, Associate Director Media Relations Carsten FINK, Chief EconomistShilpa DODDA, Research Programmer, eLabSacha WUNSCH-VINCENT, Senior EconomistVirginie BONGEOT-MINET, Centre Coordinator, eLab The indexs methodology and the rankings do not necessarily present the views of WIPO or its Member States. Any remaining errors are the responsibility of the authors and not WIPO.OTHER DIRECT COLLABORATORSMichaela SAISANA, Senior Researcher, Institute for the We are also grateful to the following persons for their help withProtection and Security of the Citizen, Joint Research Centrespecific data requests:of the European Commission Susan Teltscher, Head, and Esperanza Magpantay, Statistician,Hope STEELE, Editor, Steele Editorial Services Market Information and Statistics Division, TelecommunicationNeil WEINBERG, Principal, Neil Weinberg Design Development Bureau, International Telecommunication Union (ITU) Karen Treanton, Head of Energy Balances, Prices and Emissions Section, Energy Statistics Division, International Energy Agency Cornelius Bubenzer, Financial Markets Executive, and Ifigenia Poulka, Data and Applications Specialist, Thomson ReutersThe terms country and nation as used in this report do not in all cases refer to a territorial entity that is a state as understood by internationallaw and practice. The terms cover well-defined, geographically self-contained economic areas that may not be states but for which statisticaldata are maintained on a separate and independent basis. INSEAD 2011. All rights reserved. No part of this publication can be reproduced, stored in a retrieval system, or transmitted, in any form or byany means, electronic, mechanical, photocopying, or otherwise without the prior permission of INSEAD.ISBN: 978-2-9522210-1-6Printed and bound in France by INSEAD, Fontainebleau. 4. Table of ContentsForeword: The World Needs Open Innovation vChapter 2: Innovation in Latin America: 65By Ben Verwaayen, Chief Executive Officer, Alcatel-Lucent Recent InsightsBy Lourdes Casanova, INSEAD Strategy Department; Jeff Dayton-Johnson,Foreword: Innovation: Increasingly Global, vii Organisation for Economic Co-operation and Development; Nils OlayaIncreasingly VitalFonstad, INSEAD; and Anna Pietikinen, Organisation for EconomicBy Shumeet Banerji, Chief Executive Officer, Booz & Company Co-operation and DevelopmentForeword: Innovation, Developing Markets,ixChapter 3: Innovation in India: 77and the Role of the Global Innovation Index Affordable InnovationsBy Chandrajit Banerjee, Director General, Confederation ofBy Manisha G. Singh, Council of Scientific and Industrial Research; AnurajIndian Industry Gambhir, Xpert Media; and Jibak Dasgupta, Confederation of IndianIndustryForeword: Why Innovation Is ImportantxiBy Francis Gurry, Director General, World IntellectualChapter 4: Making Cities Smart and Sustainable87Property Organization By Kurt W. Steinert, Revital Marom, Philippe Richard,Baspar Veiga, and Louis Witters, Alcatel-LucentPreface: The Global Innovation Index Is a xiiiCollaborative EffortChapter 5: The Global Footprint of Innovation 97Soumitra Dutta, INSEADBy Barry Jaruzelski, Chadi Moujaes, and HatemSamman, Booz & CompanyAdvisory Board to the Global Innovation Index xvChapter 6: Accounting for Creativity in 107Innovation: What We Should Be Measuringand Related Difficulties RankingsBy Sacha Wunsch-Vincent, World Intellectual PropertyOrganizationGlobal Innovation Index 2011 Rankings xviii Appendices ChaptersAppendix I: Country/Economy Profiles 117Chapter 1: Measuring Innovation Potential 3and Results: The Best Performing EconomiesAppendix II: Data Tables 247By Soumitra Dutta and Daniela Benavente, INSEADAppendix III: Sources and Definitions333 Appendix: Statistical tests on the 57 Global Innovation IndexAppendix IV: Technical Notes 347 By Michaela Saisana, European Commission Joint Research CentreAppendix V: About the Authors353 5. FOREWORDvThe World Needs Open Innovation ForewordsInnovation has always been an important element in the There are initiatives underway that are applying thisrelative success of societieseconomically, intellectually, model of open innovation to specific global challenges.and socially. And as we move from a world of indepen- One example I like to highlight is the GreenTouchdent, lightly linked societies to one of inclusion with a Consortium, a group that is drawing on the expertise oflarger, more deeply interconnected global community,companies and organizations from all sectors of the infor-innovation is more critical than ever.mation and communication technologies (ICT) industry What is the role of innovation in transforming a and academia to dramatically reduce energy consump-society? How does this transformation happen? It is one tion in ICT networks, a significant contributor to globalthing to have a great ideait is another to bring it to life. climate change. Together, these varied and often compet-For innovation to thrive you need an ecosystem that can ing organizations are working together to pioneer thetransform an idea into something truly meaningful.new technologies on which energy efficient networks of This important work that you have in your hands, the future will depend. These are not merely incremen-the Global Innovation Index, explores the transformativetal improvements, but disruptive technologies that willpower of innovation. Significantly, it identifies the con-change the nature of networks forever.ditions and qualities that allow innovation to thrive, and I am convinced that this same model, where com-highlights the role innovation can play in a nations eco-mercial concerns and self-interest are set aside for thenomic and social development. greater good, can and must be applied to the great chal- But there is another, even deeper question we need lenges of our time, from the management of rapid urban-to ask ourselves:What is the role of innovation in address- ization (which we address in this report) to connectinging the great challenges that confront humanity?the underserved populations of the world and to the We are at a very exciting time in history, a pivot-establishment of a more sustainable way of life across theal time, and the global community faces some daunt- board.ing challenges. The planet is getting hotter. Cities are The Global Innovation Index is laying the foundationexpanding at an astounding rate, creating a difficult envi- for a global conversation of the role of innovation inronment for the delivery of basic services such as health addressing these challenges. By bringing together diversecare, public safety, and education. At the same time, while parties to explore how innovation is being applied aroundthe world becomes more connectedthere are more cellthe world, and what conditions make for successful inno-phones today than there are peoplelarge segments ofvation, it is making an essential contribution to the pro-the global community remain completely cut off from motion of open innovation as a basic operating principalthe world of commerce, communication, and informa-for the global community.tion that has become so critical to the establishment ofhealthy economies and prosperous people.Ben VerwaayenChief Executive Officer As importantly, these changes cannot be incremen- THE GLOBAL INNOVATION INDEX 2011 Alcatel-Lucenttalthe solutions to our most daunting challenges willrequire bold, creative leaps. These challenges require newthinking, new technology, and new ways of collaborat-ingan open innovation approach to solving problemsthat is based on partnerships among industries, compa-nies, national and regional governments, and researchorganizations and academia. 6. FOREWORDviiInnovation: Increasingly Global, Increasingly Vital ForewordsBooz & Company is honoured to contribute to The by developing their talent base, introducing or enforc-Global Innovation Index 2011 and to continue to sup-ing laws that protect intellectual property, and improvingport businesses and governments throughout the worldcorporate governance.in their pursuit of innovation. In the six years that ourAt Booz & Company, we believe in the transfor-firm has published the annual Global Innovation 1000mative nature of innovation. We believe that new ideasstudy, which tracks the companies that spend the most can be a catalyst for change at all levels of society. Andon research and development worldwide, we have gained we believe that institutionspublic and privatehave asignificant insight into the nature of innovation in termsmandate to create environments in which innovation willof the relationship between innovation and performance, flourish. In doing so, they are incubating the next stage ofthe effect of the recession on innovation spending, and the worlds economic advancement.ways that innovative companies are consistently able tooutperform their peers. Shumeet BanerjiChief Executive Officer We have also seen that innovation will be one of the Booz & Companymost crucial elements in the continuing advancement ofbusinesses and governments worldwide. The world hasreached an inflection point in the evolution of innova-tion: Whereas economic advantage during the IndustrialRevolution relied largely on natural resources, nationaldevelopment in the Digital Age depends on smart, ambi-tious individualswho can be found anywhere. No sin-gle person, society, company, or nation has a monopolyon innovation, information, and knowledge. That fact is reflected in the increasingly global natureof innovation. Multinational corporations are makinglarge investments in research and development (R&D)outside of their headquarter countries, setting up R&Dsites in low-cost emerging countries such as China andIndia to access global talent and take advantage of theirproximity to target markets. As a result, developing coun-tries are benefiting from new products and services thatbetter fit their needs, more job opportunities, new man-agement practices, and access to technology. Governments and companies alike must continueto push forward in building their capabilities in innova-tion if they are to capture and sustain competitive advan- THE GLOBAL INNOVATION INDEX 2011 tage in the coming years. Developed economiesmanystill reeling from the impact of the worlds financial crisisthat began in 2008must push forward with innova-tion strategies in order to stay ahead in critical indus-tries. At the same time, developing economiesmanyof which managed to weather the storm of the financialcrisismust actively develop an innovation environment 7. FOREWORD ixInnovation, Developing Markets, Forewordsand the Role of the Global Innovation IndexIt gives me great pleasure to see the flourishing part-good efforts have been made to capture these evolvingnership between the Confederation of Indian Industry economic conditions by various studies at a global level.(CII) and INSEAD on the Global Innovation Index(GII). This is the third consecutive year of the report, andthe inclusion of three other partnersAlcatel-Lucent,The GII and its importanceBooz & Company, and the World Intellectual PropertyOrganization (WIPO)has strengthened and diversi-The Global Innovation Index (GII) is one such study,fied the team. I welcome all the partners to this initiative conducted by experts from INSEAD and its Knowledgeand hope that together we will be able to enhance ourPartners to put into perspective the new trends andcontributions to the GII.practices in innovation across the world. The indexing of countries on innovation parameters will not only showcase the excellence of lead countries but also helpInnovation and developing marketsin finding the gaps for the laggards.The outreach of this study, which attempts to includePeople have always attempted to fathom the unknown developing regions such as Indiaa country that is fastand discover new paths to knowledge. This perpetualtransforming itself into an innovation-driven economyjourney has recently gained unprecedented momentum.has made it comprehensive. Because CII is the premierIn the last two or three decades the world has seen rapidindustry body of India, it is associated with various inno-changes in operational efficiency, thanks to the advent of vation activities within industry and society at large; itsthe computer, the Internet, and mobile devices. To use knowledge of this region complements the GII well. Thea clich, the world has become a global village whereGII provides insight into the innovation gaps that needdistances have ceased to affect human interaction andbe filled, which makes it a readily available guide forinformation exchange.national policy makers.From big metropolitan areas to remote ones, peopleOn behalf of CII, I express my satisfaction at beingare well connected to the global market. This rapid con- associated with the GII, congratulate its wonderful team,nectivity and information flow has had a great influence and wish it all success.on developing regions, where it is reshaping the mindsetof people in remote villages and towns. People are not Chandrajit Banerjee Director Generalonly more educated today than they were a short time Confederation of Indian Industryago, but also more informed and increasingly connect-ed to the mainstream market. This phenomenon createshuge challenges and as well as opportunities for exist-ing businesses if they are to survive this massive change.It is here that the importance of innovation becomesevident, and it is why innovation is becoming more and THE GLOBAL INNOVATION INDEX 2011 more widely discussed as a way to counter this rapidchange in the global order.As we look around and observe the whole worldembracing innovation in a time of economic downturns,shrinking markets, and shortening product lifecycles, wesee a clear shift towards the developing regions, which arethe new hotbeds of innovation and future markets. Some 8. FOREWORD xiWhy Innovation Is Important Forewords Dhillon PhotographicsInnovation is a central driver of economic growth, devel- To enable countries to benchmark their policies, theopment, and better jobs. It is the key that enables firms Global Innovation Index (GII) provides an integratedto successfully compete in the global marketplace, andmetric based on carefully selected and weighted variables.the process by which solutions are found to social andIt is the result of several years of improvement, a willing-economic challenges, from climate change to the fight ness to use official data where possible, and a desire toagainst deadly diseases. It is the source of improvements weight sub-variables in order not to penalize smaller orto the quality of our everyday life.lower-income economies. The innovation landscape has evolved significantly This undertaking is not without challenges.in recent years. First, shifts are occurring in the geog- Developing an innovation index is constrained by dataraphy of innovation. Trends in economic growth andlimitations, and there is no clear understanding of whichpatterns of investment in education and research andfactors interact in specific country settings and how todevelopment foster a multi-polar innovation landscape.influence innovation. Many factorssay, the number ofFirms in lower-income countries are no longer only pas- science PhDsmay not operate in an identical mannersive adopters of technologies, as enterprises from middle-across different countries.income economies have emerged on the internationalNonetheless, I believe that having the GII makes aninnovation scene. The technological gap between middle- important difference in several ways: It seeks to sharpenand high-income countries has narrowed. the eye of policy makers about the importance of inno- Second, there has been increased recognition of thevation and related policies and puts a spotlight on a topiccomplexity of the journey from idea to commercial real- that is otherwise hard to grasp. It helps to create an envi-ity, leading to a broadening of our understanding of inno-ronment where innovation factors are under constantvation. Non-technological innovationssuch as new re-evaluation, thus becoming a tool to assess relative posi-organizational forms, new marketing approaches, suc-tions and to refine national innovation policies. And thecessful design, and other innovationsare now acknowl-demands created by the GII are meant to foster the avail-edged as vital. Innovation capability is also the ability toability of statistical data.exploit new and incremental technological combinations. WIPO, through developing a balanced and effectiveThird, the innovation process today is more open, collab- international intellectual property system, contributesorative, and internationalized than ever. to stimulating innovation and economic development. Importantly, in this setting, innovation-driven growth Better understanding the innovation process is thusis no longer the prerogative of high-income countries closely linked to our mission. We are therefore glad toalone. Opportunities to innovate can be tapped by all.have supported the development of the 2011 GII and Ithank INSEAD, GIIs Knowledge Partners, and its emi-nent Advisory Board Members for a fruitful partnership.Why an innovation index?I hope readers find the present publication enlight-ening. Measuring innovation, identifying its main drivers,Innovation is still a blurry concept, despite the policyand fostering adequate policies is a multi-year journey. THE GLOBAL INNOVATION INDEX 2011 interest it now garners. It evades clear measurement by We at WIPO look forward to taking part in this journey.national statistical offices, especially as our understandinghas broadened and as a wider spectrum of actorsthe Francis GurryDirector Generalservice sector, public entities, and philanthropiesis rec- World Intellectual Property Organization (WIPO)ognized. Even less is known about how new productsand processes come about in developing countries, howinnovation diffuses, and what its impacts are. 9. PREFACExiiiThe Global Innovation Index Is a Collaborative Effort PrefaceSoumitra Dutta, INSEADAs this fourth edition of The Global Innovation Index (GII) a thorough robustness and sensitivity analysis of the GII.2011 goes to the press in the second quarter of 2011, The JRC has researched extensively on the complexitythe global economic recovery is strengthening in most of composite indicators ranking countries performancesparts of the world. With the global economy forecastedalong policy lines. The recommendations from the JRCto grow at a rate of more than 4% in 2011, innovation isauditing report are presented in the Report and werecoming into its own as an essential element of resilience taken into account in the computation of the rankings.as economies aim to sustain their growth while creatingLast but certainly not least, an Advisory Board wasnew jobs for their citizens.set up, comprising a select group of international practi- Since 2007, INSEAD eLab has been producing the tioners and experts in the realm of innovation (details onGII, recognizing the key role of innovation as a driver the following page). We are grateful for the time and sup-of economic growth and prosperity and acknowledging port provided by the Advisory Board members.the need for a broad horizontal vision of innovation thatThe GII, like any innovation project, is a collab-is applicable to both developed and emerging econo- orative effort. There are many others who have mademies. A key goal of the GII has been to find metrics andvaluable contributions to the success of the project thisapproaches to better capture the richness of innovation inyearin particular, the support of Sacha Wunsch-Vincentsociety and go beyond the traditional measures of inno- of WIPO; Bruno Lanvin of INSEAD eLab; Anjan Das,vation such as the number of PhDs, research articles pro- Jibak Dasgupta, and Seema Gupta of CII; Chadi Moujaesduced, research centers created, patents issued, and R&Dand Hatem Samman of Booz and Company; and Revitalexpenditures. Marom and Kurt Steinert of Alcatel-Lucent is gratefully In 2011, the GII Report underwent major devel- acknowledged. The excellent research and overall projectopments. It gathered key players around the project and management of Daniela Benavente for this fourth edi-strengthened the GII as a valuable benchmarking tool to tion of the GII is also gratefully acknowledged. We lookfacilitate public-private dialogue, whereby policy mak- forward to the continued input of the broader commu-ers, business leaders, and other stakeholders can evaluatenity of innovation professionals and experts to furtherprogress on a continual basis.improve the GII and to make it more useful for policy As part of this evolution, Alcatel-Lucent, Booz &making and decision makers in the public and privateCompany, the Confederation of Indian Industry (CII),sectors.and the World Intellectual Property Organization(WIPO, a specialized agency of the United Nations)joined INSEAD as Knowledge Partners in the elabora-tion of the GII. These Knowledge Partners share a com-mon belief in the growing importance of innovationfor enabling economic growth in both developed and THE GLOBAL INNOVATION INDEX 2011 emerging nations. They have provided valuable input tothe research underlying the GII, contributed analyticalchapters to the GII Report, and will participate activelyin the dissemination of results. In addition, for the 2011 edition, the Joint ResearchCentre (JRC) of the European Commission performed 10. ADVISORY BOARD xvAdvisory Board to the Global Innovation Index Advisory BoardIn 2011, an Advisory Board was set up to advise on the ADVISORY BOARD MEMBERSresearch underlying the Global Innovation Index (GII), Khalid S. Al-Sultangenerate synergies at its development stages, and assistRector of King Fahad University for Petroleum & Minerals ofwith the dissemination of its messages and results. Saudi Arabia The Advisory Board is a select group of lead- Daniele Archibugiing international practitioners and experts with uniqueTechnology Director at the Italian National Research Councilknowledge and skills in the realm of innovation. Its(CNR) and Professor of Innovation at the University of Londonmembers, while coming from diverse geographical and Irina Bokovainstitutional backgrounds (international organizations,Director General of the United Nations Educational, Scientificthe public sector, non-governmental organizations, busi-and Cultural Organization (UNESCO)ness, and academia), participate in their personal capacity. We are grateful for the time and support provided byLeonid Gokhbergthe Advisory Board members. First Vice-Rector of the Higher School of Economics ofRussia and Director of the Institute for Statistical Studies andEconomics of Knowledge Rolf-Dieter HeuerDirector General of the European Organization for NuclearResearch (CERN) Rolf LehmingDirector, Science & Engineering Indicators, US National ScienceFoundation R. A. MashelkarCSIR Bhatnagar Fellow & President, Global Research Alliance,National Chemical Laboratory Lynn St AmourPresident and CEO of the Internet Society Hamadoun TourSecretary General of the United Nations InternationalTelecommunication Union (ITU)THE GLOBAL INNOVATION INDEX 2011 11. Rankings 12. xviii Global Innovation Index rankingsRankings GII PAST YEARS Country/EconomyScore (0100)RankIncomeRankRegionRank20102009Switzerland 63.82 1 HI1ECS 147Sweden 62.12 2 HI2ECS2 2 3Singapore 59.64 3 HI3 EAS 175Hong Kong (SAR), China 58.80 4 HI4 EAS 2 312Finland 57.50 5 HI5ECS3 613Denmark 56.96 6 HI6ECS4 5 8United States of America 56.57 7 HI7 NAC 111 1Canada 56.33 8 HI8 NAC 21211Netherlands 56.31 9 HI9ECS5 810United Kingdom 55.96 10 HI 10ECS614 4Iceland 55.10 11 HI 11ECS7 120Germany 54.89 12 HI 12ECS816 2Ireland 54.10 13 HI 13ECS91921Israel 54.03 14 HI 14 MEA 12323New Zealand 53.79 15 HI 15 EAS 3 927Korea, Rep. 53.68 16 HI 16 EAS 420 6Luxembourg 52.65 17 HI 17ECS 101517Norway 52.60 18 HI 18ECS 111014Austria 50.75 19 HI 19ECS 122115Japan 50.32 20 HI 20 EAS 513 9Australia 49.85 21 HI 21 EAS 61822France 49.25 22 HI 22ECS 132219Estonia 49.18 23 HI 23ECS 142929Belgium 49.05 24 HI 24ECS 151718Hungary 48.12 25 HI 25ECS 163647Qatar 47.74 26 HI 26 MEA 23524Czech Republic 47.30 27 HI 27ECS 172733Cyprus 46.45 28 HI 28ECS 183245China 46.43 29 LM 1 EAS 74337Slovenia 45.07 30 HI 29ECS 192636Malaysia 44.05 31 UM 1 EAS 82825Spain 43.81 32 HI 30ECS 203028Portugal 42.40 33 HI 31ECS 213440United Arab Emirates 41.99 34 HI 32 MEA 32426Italy 40.69 35 HI 33ECS 223831Latvia 39.80 36 HI 34ECS 234460Slovak Republic 39.05 37 HI 35ECS 243735Chile 38.84 38 UM 2 LCN 14239Moldova, Rep. 38.66 39 LM 2ECS 25 n/a 116Lithuania 38.49 40 UM 3ECS 263942Jordan 38.43 41 LM 3 MEA 45855Bulgaria 38.42 42 UM 4ECS 274974Poland 38.02 43 HI 36ECS 284756Croatia 37.98 44 HI 37ECS 294562Costa Rica 37.91 45 UM 5 LCN 24148Bahrain 37.80 46 HI 38 MEA 54034Brazil 37.75 47 UM 6 LCN 36850Thailand 37.63 48 LM 4 EAS 96044Lebanon 37.11 49 UM 7 MEA 6 n/a n/aRomania 36.83 50 UM 8ECS 305269Viet Nam 36.71 51 LM 5 EAS107164Kuwait 36.64 52 HI 39 MEA 73330THE GLOBAL INNOVATION INDEX 2011 Mauritius 36.47 53 UM 9SSF17366Saudi Arabia 36.44 54 HI 40 MEA 85432Serbia 36.31 55 UM10ECS 31 10192Russian Federation 35.85 56 UM11ECS 326468Oman 35.51 57 HI 41 MEA 96552Argentina 35.36 58 UM12 LCN 47584South Africa 35.22 59 UM13SSF25143Ukraine 35.01 60 LM 6ECS 336179Guyana 34.83 61 LM 7 LCN 5 113 103India 34.52 62 LM 8 SAS 15641Greece 34.18 63 HI 42ECS 3446540.0 8.75 17.50 26.25 35.0 43.75 52.50 61.25 70.0 13. xixGlobal Innovation Index rankings (continued)Rankings GII PAST YEARS Country/EconomyScore (0100)RankIncomeRankRegionRank20102009 Uruguay 34.18 64 UM 14 LCN 65380 Turkey 34.11 65 UM 15ECS 356751 Tunisia 33.89 66 LM9 MEA106246 Macedonia 33.47 67 UM 16ECS 367789 Mongolia 33.40 68 LM 10 EAS1187 105 Armenia 33.00 69 LM 11ECS 3782 104 Ghana 32.48 70 LI 1SSF3105 n/a Colombia 32.32 71 UM 17 LCN 79075 Trinidad and Tobago 32.17 72 HI43 LCN 85565 Georgia 31.87 73 LM 12ECS 388498 Paraguay 31.17 74 LM 13 LCN 9 127 118 Brunei Darussalam 30.93 75 HI44 EAS1248 n/a Bosnia & Herzegovina 30.84 76 UM 18ECS 39 116 n/a Panama 30.77 77 UM 19 LCN106667 Namibia 30.74 78 UM 20SSF49295 Botswana 30.51 79 UM 21SSF58677 Albania 30.45 80 UM 22ECS 4081 121 Mexico 30.45 81 UM 23 LCN116961 Sri Lanka 30.36 82 LM 14 SAS 27958 Peru 30.34 83 UM 24 LCN128885 Kazakhstan 30.32 84 UM 25ECS 416372 Kyrgyzstan 29.79 85 LI 2ECS 42 104 122 Guatemala 29.33 86 LM 15 LCN139581 Egypt 29.21 87 LM 16 MEA117476 Azerbaijan 29.17 88 UM 26ECS 435757 Kenya 29.15 89 LI 3SSF68378 El Salvador 29.14 90 LM 17 LCN149188 Philippines 28.98 91 LM 18 EAS137663 Jamaica 28.88 92 UM 27 LCN157073 Ecuador 28.75 93 LM 19 LCN16 126 109 Morocco 28.73 94 LM 20 MEA129482 Iran 28.41 95 UM 28 MEA13 n/a n/a Nigeria 28.15 96 LM 21SSF79670 Bangladesh 28.05 97 LI 4 SAS 3 120 111 Honduras 27.81 98 LM 22 LCN17 11283 Indonesia 27.78 99 LM 23 EAS147249 Senegal 27.56 100 LM 24SSF8 10690 Swaziland 27.52 101 LM 25SSF9 n/a n/a Venezuela 27.41 102 UM 29 LCN18 124 101 Cameroon 26.95 103 LM 26SSF 10 119 106 Tanzania 26.88 104 LI 5SSF 119886 Pakistan 26.75 105 LM 27 SAS 4 10393 Uganda 26.37 106 LI 6SSF 12 108 100 Mali 26.35 107 LI 7SSF 13 10797 Malawi 25.96 108 LI 8SSF 1497 n/a Rwanda 25.86 109 LI 9SSF 15 n/a n/a Nicaragua 25.78 110 LM 28 LCN19 117 114 Cambodia 25.46 111 LI10 EAS15 102 117 Bolivia 25.44 112 LM 29 LCN20 129 123 Madagascar 25.41 113 LI11SSF 16 125 113 Zambia 25.27 114 LI12SSF 17 11196 Syrian Arab Republic 24.82 115 LM 30 MEA14 13294THE GLOBAL INNOVATION INDEX 2011 Tajikistan 24.50 116 LI13ECS 44 115 112 Cte dIvoire 24.08 117 LM 31SSF 1889 n/a Benin 23.81 118 LI14SSF 19 11899 Zimbabwe 23.54 119 LI15SSF 20 131 126 Burkina Faso 23.14 120 LI16SSF 21 122 115 Ethiopia 22.88 121 LI17SSF 22 123 120 Niger 21.41 122 LI18SSF 23 n/a n/a Yemen 20.72 123 LM 32 MEA15 n/a n/a Sudan 20.36 124 LM 33SSF 24 n/a n/a Algeria 19.79 125 UM 30 MEA16 121 108Note: World Bank Income Group Classification (January 2011): LI = low income; LM = lower-middle income; UM = upper-middle income; and HI = high income; World Bank Regional Classification (January 2011): ECS = Europe & Central Asia; MEA = Middle East & North Africa; SSF = Sub-Saharan Africa; EAS = East Asia & Pacific; SAS = South Asia; NAC = North America; and LCN = Latin America & Caribbean. 0.0 8.75 17.50 26.25 35.0 43.75 52.50 61.25 70.0 14. Chapters 15. Chapter 13Measuring Innovation Potential and Results: The Best Performing Economies 1: Measuring Innovation Potential and ResultsSoumitra Dutta and Daniela Benavente, INSEADThe Global Innovation Index (GII)for innovation over the last severalin size, population, and stage of eco-project was launched by INSEAD years. The GII builds on these priornomic development.in 2007 with the simple goal ofapproaches and attempts to incor-As a sign of the increasingdetermining how to find metricsporate new perspectives on both validation and importance of theand approaches to better capture traditional and emerging views of GII project, four key Knowledgethe richness of innovation in soci-innovation. Many aspects of inno- Partners have contributed toety and go beyond such traditional vation, such as those in the informal the project this year: Alcatel-measures of innovation as the num- economy, remain hard to identifyLucent, Booz & Company, theber of PhDs, the number of researchand harder to measure with objec- Confederation of Indian Industryarticles produced, the research cen- tive metrics. The GII innovation(CII),2 and the World Intellectualtres created, the patents issued, andmodel, described in further detailProperty Organization (WIPO, aresearch and development (R&D) in this chapter, takes several impor- specialized agency of the Unitedexpenditures.tant steps in this direction, but feed- Nations). Each of these partners There were several motiva-back from experts and practitioners shares a common vision of thetions for setting this goal. First,allows the model to continue to importance of a broader notion ofinnovation is important for driv-evolve. innovation in our world today. Theing economic progress and com-An ambition of the GII has GII project has benefited from thepetitivenessboth for developedbeen to maximize the number ofknowledge and input of these part-and developing economies. Many economies evaluated in the study. ners, and contributions from othergovernments are putting innova-This continues to be a challengepublic- and private-sector leaderstion at the centre of their growth because obtaining timely and rel- who are interested in understandingstrategies. Second, there is aware-evant metrics on a global basis and improving innovation in theirness that the definition of innova-is often not possible. All avail- economies will continue to providetion has broadenedit is no longer able off icial data from interna- valuable input.restricted to R&D laboratories tional organizations such as the This chapter presents selectedand to published scientific papers.World Bank, the United Nationsfindings from a review of innova-Innovation could be and is moreEducational, Scientific and Culturaltion literature that has allowed usgeneral and horizontal in nature,Organization (UNESCO), and theto refine the theoretical underpin-and includes social innovations andInternational Telecommunicationsnings of the GII model and guidebusiness model innovations as well.Union (ITU) were considered,the revision of pillars and sub-pillarsLast but not least, recognizing andalthough many critical measures and the selection of indicators. Thecelebrating innovation in emerg- of innovation are not covered inchapter also includes details on theing markets is seen as critical forthe efforts of these organizations. innovation rankings emerging fromTHE GLOBAL INNOVATION INDEX 2011 inspiring peopleespecially theFinally, combining various metricsthe GII project in 2011.next generation of entrepreneurs into a simple measure of innova-and innovators.tion for an economy is fraught with However, reaching this goal statistical and other complexities,1has not been simple. A serious bodyespecially when considering econo-of literature (see the next section) mies that are often vastly differenthas attempted to outline metrics 16. 41: Measuring Innovation Potential and Results and covered only products and Box 1: Low-tech innovations processes. The breakthrough made after 1997 was to expand the sec- Although innovations with low technolog-sector in the European Union at 15 coun-toral coverage from manufactur- ical content have always existed, the facttries (19792003) and the United States ofing industries to services. The 2005 that innovations do not necessarily entailAmerica, respectively (19792004).edition incorporated three crucial a technological component emerges as an Innovation in low-tech industries has developments. First, the techno- important theme in the recent literatureparticular characteristics: logical qualifier was eliminated on innovation, in sharp contrast with the 1. It is more market pulled than technol- (see Box 1). Second, innovations past (OECD/EC, 2005, p. 17).ogy pushed; demand factors, nichein methods were added to the list. According to the OECD classificationmarkets, product differentiation, and Third, for the first time, innova- of innovativeness based on R&D intensity, mature brands are crucial to innovation tion in the public sector was men- low-tech industries are those that have anin low-tech industries. tioned as an area deserving further R&D intensity that ranges between 0 and 2. Product innovations are not intensive attention.5 In 2010, the Ministerial 0.9% (this intensity is greater than 5% for in research and development (R&D),Report on the Organisation for high-tech industries). Since this classifica- although process innovations have Econom ic Co-operation and tion applies exclusively to manufacturesmore technological content (cf. invest- Development (OECD) Innovation ment in equipment and machinery). (textiles, wood, pulp, etc.), a different tax-Strategy added that consideration onomy was proposed by Pavitt in 1984, 3. New technologies often spill over [was] being given to extending the which included four groups: (1) supplier- (through acquisition) from other indus- methodology to public sector inno- tries, so that low-tech firms provide a dominated firms, (2) scale-intensive firms, vation and social innovation so as to demand pull for high-tech firms. (3) specialized suppliers, and (4) science- correspond to the reality of innova- based firms. Low-tech sectors mainly fall 4. For this absorption of innovation to be tion today.6 effective, a skilled workforce and learn- into the first group.An innovation can be new to ing capabilities are required. This distinction is crucial, as high-tech the world, or new to a sector or industries represent a small proportion ofmarket, or new to an agent. It can Source total manufacturing industries, including also be a disruptive innovation, Based on Joint Research Centre of the in developed economies. High-tech indus-European Commission, 2009.where the focus is on impact, rather tries have represented around 6% and 10%than on novelty.7 Most studies agree of the value-added of the manufacturing that the commercial introduction of innovations developed elsewhere constitutes an innovation: Innovation also occurs when a firmprocess, a new marketing method, introduces a product or process toPrior research in innovation: Selectedor a new organizational method ina country for the first time. It occursperspectivesbusiness practices, workplace orga-when other firms imitate this pio-nization, or external relations.3neering firm. Moreover, it occursDifferent definitions of innovation when the initial or follower firmshave been proposed in the literature. make minor improvements andIn this report, we embrace a broad The modern evolution ofdefinition that has the advantage ofthe concept of innovation can be adaptations to improve a product THE GLOBAL INNOVATION INDEX 2011 being both short and well suited to sketched by referring to the dif-or production process, leading tocapture global innovation:ferent versions of the Oslo Manual,productivity improvements. In short,which guides statisticians in theirinnovation occurs through creativerecent attempts to measure inno- imitation.8An innovation is the implementation vation.4 In its first editions in 1992of a new or significantly improvedand 1997, the Manual focused exclu-product (good or service), a newsively on technological innovations 17. 5 1: Measuring Innovation Potential and Results Innovations are not restricted Box 2: Innovation in emerging marketsto the firm, they originate in allagents of society: at the level ofthe firm, or of an industry; in gov- Terms such as reverse innovation, 1In a recent publication, the Worldernmental services or in the publicGandhian innovation,2 frugal innovation, Bank notes the technological divide insector; in academia; and in societyinclusive innovation, 3 constraint-baseddeveloping countries: Slow diffusion with-in general.9 Innovation activities innovation, or even poor peoples knowl- in countries reflects a nonlinear process. . .by these agents are usually com- edge4 have all been recently coined to.The surprisingly low level of overall tech-plementary: Prototypes might bedescribe the type of innovation by which nological achievement in countries suchdeveloped in a university research technological products are customized at as China and India contrasts with popularlab and the final product introduced low prices and high volumes in and for perceptions, which are based on the rela-in the market by a firm, for instance. emerging markets. Examples abound: tive technological sophistication of some A distinction made by Gibbons Tatas Nano car, solar-powered cellularof the two countries major cities and trad-et al. (1994) has been highly inf lu-phones, micro-spinning in the textiles ing centers. . . . [t]he same kind of techno-ential in the literature on innova-industry, and the hand-held electrocardio- logical diversity observed across countriestion. These authors label traditionalgram Mac 400 are just a few. is visible within countries as well.519th and early 20th century researchChapter 3, Innovation in India:How to account fairly for theseas mode 1: Characterized by aAffordable Innovations analyses this andislands of progress is a real conundrum.cleavage between academia andother phenomena in India today. Big mul- The same report gives one clue: The rise insociety, this type of research is aca- tinational corporations such as Microsoft, Chinas index of diffusion of new technolo-demic, autonomous, self-sustained, PepsiCo, IBM, Cisco, Nokia, GE, and Xeroxgies is almost double that of India, in parti nve st ig ator -i n it i ated , peer - as well as Indian major players such asbecause the more technologically back-reviewed, and discipline-based inTata, Godrej, and Mahindras are shifting ward regions in China have made progressnature. By contrast, mode 2 refers their focus towards the rapidly expand-in closing the gap with the more techno-to more recent forms of knowledgeing middle-income group of customers bylogically advanced regions on the coast.6production, which is centred mostlycoming up with frugal innovations, keep-around the firm where research ising in mind the price sensitivity of IndianNotesincreasingly context-driven, prob- consumers. A trend of reverse innovation 1http://www.vijaygovindarajan.com/2009/10/what_is_reverse_innovation.htm.lem-focused, application-oriented, has set in, where an innovation is devel-2 Mashelkar and Prahalad, 2010.and interdisciplinarytask-force oped and/or adopted first in the develop-3 Mashelkar and Prahalad, 2010.teams and tailored processes are cre-ing world and then deployed in mature4 Finger, 2004.ated to work on specific projects.10 markets. 5 World Bank, 2008, p. 90.Other theorists, such as those of the 6 World Bank, 2008, p. 91.Triple Helix of Innovation, havestressed the historical continuitiesand linkages in the relationshipamong academia, industry, andgovernment.11 The different legal, institution-With technological catch-upcan inf luence the innovative per-al, organizational, and governance and market and business sophistica- formance of regions.12regimes surrounding innovative tion, innovation acquires a strong International market linkagesactivities are of special relevanceregional or sectoral component. foster the development of tech-to their success. These include theSub-national systems of innovationnological capabilities in develop-THE GLOBAL INNOVATION INDEX 2011 political environment, openness to might develop, for example, arounding and least-developed countriescredit, the treatment of investmentlocal public research institutions, because they integrate global valueand trade, the presence of competi-large dynamic firms, or industrychains through exports, the importtion laws, the protection of intellec- clusters. In addition, good infra-of machinery and equipment, trans-tual property rights, tax laws, andstructure, venture capital, and a fers of technology, the spill-overthe transportation and telecommu-strong entrepreneurial environmenteffects of foreign direct investmentnications infrastructure.(FDI), and licensing. A recent study 18. 61: Measuring Innovation Potential and Results overhaul. Some aspects, however, Box 3: Innovation surveys needed to be strengthened.A key inspiration behind the The Organisation for Economic Co-regarding their innovation characteristics.GII comes from the literature on operation and Development (OECD) and Firms are also being asked about fac-total quality management (TQM), the European Commission have beentors that hamper their ability to innovate.which has a long history in bench- guiding the collection and interpretationFinally, these surveys aim to assess the marking and data analysis. The first of data on innovation since the first editioneffect of innovation on sales, productivity, TQM award, the Deming Award, of the Oslo Manual in 1992, which is now inemployment, and other factors. was given in Japan in 1951this its third edition (2005). These innovation surveys are a rich award initially focused on product Innovation surveys started with thedata source for analytical work on innova- and process quality. Subsequent ver- European Community Innovation Survey tion. However, a number of problems exist: sions have evolved into a broader in the early 1990s and are now being con-(1) the questionnaires are given only to notion of business excellence that ducted in about 5060 countries world- firms, so that innovation outside the busi-looks at the whole business, includ- wide (mostly the European countries butness sector is not captured; (2) the quality ing enablers and results. also a number of Latin American, Asian,of responses varies greatly, as one cannotThe focus in TQM expanded African, and other countries). control who is replying to the question- from a narrow technical on to a Firm-level innovation surveys seek naire and as respondents have a tendency much broader concept. Innovation to identify the characteristics of innova- to overrate their innovative activity; (3) today is expanding its focus in a tive enterprise activities. After asking firms the country coverage is still very limited,similar way. The same distinction to answer certain basic questions (indus-because most developing countriesbutbetween enablers and results has try affiliation, turnover, R&D spending),also some large developed countriesdo been incorporated into the GII, firms are asked to identify whether they not conduct these surveys; and (4) sur-providing the theoretical under- are an innovator and, if yes, they are vey results across studies are not alwayspinnings of the conceptual frame- asked to respond to a number of questionscomparable.work. The GII also draws on other composite indicators in its design, although it differs in many respects from a host of other indices on innovation. Some key pieces fromon the readiness, by 2020, of a traditional sectors of innovation andprior research are mentioned below.set of countries to apply recentlyenabling environments.developed technologies in bio- andnano-technology, materials, infor- The Boston Consulting Group/Nationalmation, and so on shows that a lim- Composite indicators for innovationAssociation of Manufacturers Indexited technological adaptive capacity The BCG/NAM Internationalmay reduce the diffusion of futureThe previous section surveyedInnovation Index was built in 2009technologies.13 important developments in the con- to establish a ranking among US The type of innovation takingceptualization of innovation and a states and among countries. Theplace in emerging markets presentsseries of recent issues and trends inBCG/NAM Index is built on aits own peculiarities, which are dif- the realm of innovation. The lit-model comprising two major blocks:ficult to capture with traditionalerature review allowed us to refineInnovation Inputs and Innovationmetrics (see Box2). The challengethe theoretical underpinnings of the Performance. Innovation Inputs arefor the research team behind theGII and guided the revision of pil-measured by three aspects: fiscal THE GLOBAL INNOVATION INDEX 2011 Global Innovation Index was to find lars, sub-pillars, and indicators. One policies, other policies, and inno-statistics that would gauge the devel-general preliminary conclusion invation environment. Innovationopments and trends of innovation in light of this survey was that the GIIPerformance is measured by R&Dlow-tech industries, in emergingconceptual framework developed results, business performance, andmarkets, and in business models,in previous versions was well suited public impact of innovation. Thewhile at the same time covering the to uncover innovation as it occurs focus of the BCG/NAM Index is ontodayit did not require a major business performance specifically in 19. 7 1: Measuring Innovation Potential and Resultsthe manufacturing sector, and most measured by a single indicator: and they still do not provide aof the data used were generatedthe sum of patents granted by the good count on innovation outputsthrough surveys and interviews.European, Japanese, and US Patent per country. Moreover, they targetOnly one edition (2009) of the Offices (EPO, JPO, and USPTO, only innovations at the firm levelBCG/NAM Innovation Index has respectively).16broader public-sector and socialbeen published thus far.14 innovations are not included.Science and technology indi- The Global Competitiveness Index (GCI) of cators are not all available interna-The European Innovation Scoreboard/the World Economic Forumtionally, so they provide, at best,Innovation Union ScoreboardThe Global Competitiveness Indexinformation on innovation inputs /The European Innovation Score- (GCI) of the World Economic throughputs (such as R&D expen-board, renamed the InnovationForum (WEF), while dealing with ditures and the number of scientistsUnion Scoreboard in 2010, has been the theme of competitiveness, in a country), intermediate inno-in existence for nearly a decade.includes 12 pillars that overlap on vation outputs (such as numbers ofUntil 2007, it lacked an underlyingsome enabling factors for inno- scientific publications or patents),model of innovation and focusedvation in the GII. Innovation isor certain forms of technology-primarily on the technological sec-a separate pillar within the GCIrelated commercial activity (such astor. Since 2008, it has been modi- that includes metrics traditionally data on high-technology exports).fied to include an underlying modelattributed to innovation related to Rarely do they provide data on thecomprising three blocks: EnablersR&D, intellectual property protec-aforementioned innovation itself,(human resources, research systems,tion, and patenting.17and they are often specific to tech-and finance/support); Firm Activi- nological and product innovationsties (firm investments, linkages/of research organizations and firms.entrepreneurship, and intellectual Statistics on innovation A trade-off between precisionassets); and Outputs (innovators and and country coverage was ofteneconomic effects) and has included a All efforts at capturing innova-made in selecting the indicatorsbroader set of 25 indicators to mea- tion confront the same challenge: to be included in the GII model.sure the above blocks. The focus ofDirect official measures that would The balance was struck in favourthe Innovation Union Scoreboardquantify innovation outputs are of selecting a combination of threeis on the European Union (EU)frequently not available across manyto six indicators that would capturemember states with selective com-countries. This is particularly truethe latent dimension within eachparisons to a few international refer- if one considers our broadening sub-pillar in the best possible way,ence countries such as the Unitednotion of innovation, which encap-with an overall coherence withinStates of America (US), China, and sulates non-technological, softer orpillars. The Joint Research Centre,India.15 local types of innovation (includingwhich assisted in the assessment of those in developing countries). Mostthe conceptual and statistical coher- existing measures also struggle toence of the overall structure of theThe Global Innovation Index of the appropriately capture innovationGII, confirmed the soundness ofEconomist Intelligence Unitoutputs of a wider spectrum ofthis approach (details in the appen-The Economist Intelligence Unitinnovation actors, as mentioned dix to this chapter).index ranks 41 countries along a above (e.g., the services sector, pub- A development particularly rel-model consisting of Innovation lic entities, etc.).evant to the fine-tuning of thisInputs and Innovation Outputs.In recent years, the generationyears GII was the release of theTHE GLOBAL INNOVATION INDEX 2011 Innovation Inputs are measured of data from firm-level innovationOECD Innovation Strategy Reportby direct innovation inputs (six surveys (see Box3) has improved thein 2010 along with its accompanyingmeasures, such as education of the data situation somewhat. However, compendium of close to 100 indica-workforce) and innovation envi-there are several unresolved issues tors on innovation (see Box4).ronment (nine indicators, such aswith these data. They are gener- T he OECD I n novat ionforeign trade and exchange con-ally not available and comparable Strategy metrics conf irmed thetrols). Innovation Outputs are for more than about 50 countries, continued relevance of traditional 20. 81: Measuring Innovation Potential and Results in detail the particular challenges Box 4: OECD Innovation Strategy (2010) involved in the measurement of creative industries and copyright- The Organisation for Economic Co-gaps and propose ways to advance the related industries. operation and Development (OECD) issuedmeasurement agenda. Although these its Innovation Strategy report in 2010. This metrics represent state-of-the-art innova- report includes the findings of a three-year tion statistics, most are developed on a The Global Innovation Index multi-disciplinary effort aimed at propos- prospective basis and/or are provided for ing new perspectives and prospective only a handful of countries.2 For example, The GII is an evolving project, metrics on innovation, broadly defined asthe data on investment in fixed and intan- which builds upon previous editions the introduction of a new or significantlygible assets as a share of GDP is availableof the Index while incorporating improved product, process or method.1 only for 16 countries for 2006.3 the latest research on the measure-The report is accompanied by ment of innovation. This section a measurement compendium, entitled Source looks at the GII 2011 framework Measuring Innovation: A New Perspective, OECD, 2010a. and considers the indicators that which is comprised of 100 innovationcomprise each pillar and sub-pillar. indicators grouped by six different topics.Notes Indicators traditionally used to monitor 1 OECD, 2010a, p. 9.2 Online measurement guide available at innovation are complemented by indica- http://www.oecd.org/document/22/0,3746, Conceptual framework tors from other domains that describe en_41462537_41454856_44979734_1_1_1 The Global Innovation Index _1,00.html. the broader context in which innovation (GII) relies on two sub-indices, the3 Includes Machinery and equipment, occurs. It includes some experimental indi- Software and databases, R&D and other Innovation Input Sub-Index and intellectual property products, and Brand cators that provide insight into new areasequity, firm-specific human capital, andthe Innovation Output Sub-Index, of policy interest. An important objectiveorganizational capital. each built around pillars. Five input of the report is to highlight measurement pillars capture elements of the national economy that enable inno- vative activities: (1) Institutions, (2) Human capital and research, (3) Infrastructure, (4) Market sophisti-variables included in earlier editions strategic alliance deals, total tax cation, and (5) Business sophistica-of the GII. Examples are in the areasrate, software spending, R&D per- tion. Two output pillars captureof education and R&D, patents, sci-formed and financed by business,actual evidence of innovation out-entific and technical journal pub- and the share of renewables in ener-puts: (6) Scientific outputs and (7)lications, and labour productivity.gy use, to name a few.Creative outputs. Each pillar is The OECD compendium wasIn an effort to capture a broad- divided into sub-pillars and eachalso an inspiration for the inclusioner vision of innovation that goes sub-pillar is composed of individualof new variables. The statistics thatbeyond science and technology indicators.were incorporated only this year indicators to accommodate, when- Sub-pillar scores are calculatedto the GII and that were inspired, ever possible, the type of innova-as the weighted average of individ-to a large extent, by the OECD tion found in emerging markets, ual indicators; pillar scores are cal-measurement exercise and other and in view of its holistic approachculated as the simple average of theexpert publications include: gradu-to innovation, the GII also includessub-pillar scores (refer to Appendixate inbound and outbound mobil-statistics on the enabling environ- IV Technical Notes). Four measures THE GLOBAL INNOVATION INDEX 2011 ity and gross enrolment ratios, thement for innovation (pillars 1, 3,are then calculated (see Figure1):OECD PISA scores on performanceand 4 on institutions, infrastructure,in reading, mathematics and scienceand market conditions for credit, 1.The Innovation Input Sub-Indexin elementary education, school life investment, and trade); knowledgeis the simple average of the firstexpectancy, percentages of gradu-absorption and technological catch-five pillar scores.ates in science and engineering, up (sub-pillar 5.3); and creative out-venture capital, joint venture and puts (pillar 7). Chapter 6 describes 21. 9Figure 1: Framework of the Global Innovation Index 2011 1: Measuring Innovation Potential and ResultsGlobal Innovation Index (average) Innovation Efficiency Index (ratio)Innovation Input Innovation Output Sub-Index Sub-IndexHuman capital Market Business ScientificCreativeInstitutions and researchInfrastructuresophisticationsophisticationoutputsoutputsPolitical KnowledgeKnowledgeCreativeenvironmentEducationICT Creditworkerscreation intangiblesRegulatory Tertiary Innovation KnowledgeCreative goodsenvironmenteducationEnergyInvestmentlinkages impact and servicesBusiness Research & General Trade & KnowledgeKnowledgeenvironmentdevelopmentinfrastructurecompetition absorption diffusion2.The Innovation Output Sub- innovation within an economy. the whole sample of 125 economies Index is the simple average of the What follows is a description ofretained in the final computation. last two pillar scores.each pillar (refer to Appendix III,Sources and Definitions, for further3.The overall GII is the simpledetails). Institutions average of the Input and Output A table is included for each pil-Nurturing an institutional frame- Sub-Indices. lar that provides a list of its indica- work that attracts business andtors; their type (composite indicatorsfosters growth by providing good4.The Innovation Efficiency Indexare identified with an asterisk *,governance and the correct levels of is the ratio of the Output Sub-survey questions with a dagger , protection and incentives is essential Index over the Input Sub-Index.and the remaining indicators areto innovation. The Institutions pil-hard data); their weight (indicatorslar captures the institutional frame-with half weight are identified withwork of a country through threeInnovation Input Sub-Indexthe letter a); and the direction of sub-pillars (Table1a).THE GLOBAL INNOVATION INDEX 2011 their effect (indicators for whichThe political environment sub-The GII has five enabler pillars: higher values imply worse outcomespillar includes three indices thatInstitutions, Human capital and are identified with the letter b).ref lect perceptions of the likelihoodresearch, Infrastructure, MarketThe table then provides for eachthat a government might be destabi-sophistication, and Business sophisti-indicator the average values (in theirlized; the quality of public and civilcation. Enabler pillars define aspectsrespective units) per income groupservices, policy formulation, andof the environment conducive to (World Bank classification) and for 22. 10Table 1a: Institutions pillar1: Measuring Innovation Potential and Results tax, social contributions and labour Average value by income group taxes paid by the employer, prop-High Upper-middleLower-middle Low erty taxes, etc.).19Indicator incomeincome income income Mean1Institutions1.1Political environment1.1.1Political stability*.......................................................................72.0..................42.3..................25.8..................29.5..................46.5Human capital and research1.1.2Government effectiveness*...............................................84.0..................53.9..................36.8..................30.1..................56.5 The level and standard of education1.1.3Press freedom*b.........................................................................13.7..................29.2..................44.9..................31.5..................28.2 and research activity in a country1.2Regulatory environment are the prime determinants of the1.2.1Regulatory quality*..................................................................84.6..................54.1..................39.7..................34.6..................58.21.2.2Rule of law*..................................................................................83.0..................46.6..................32.7..................29.5..................53.3 innovation capacity of a nation.1.2.3Rigidity of employment*b...................................................23.6..................28.8..................31.7..................30.8..................28.0This pillar tries to gauge the human1.3Business environment capital of countries through three1.3.1Time to start a business, daysb.........................................15.9..................30.1..................26.9..................26.4..................23.71.3.2Cost to start a business, % income/capb.......................5.2..................12.8..................37.2..................63.4..................23.9 sub-pillars (Table1b).1.3.3Tota l tax rate, % profitsb.......................................................37.3..................42.2..................43.4..................42.0..................40.8The first sub-pillar includes aNote: (*) index, () survey question, (a) half weight, (b) higher values indicate worse outcomes. mix of indicators aimed at captur- ing achievements at the elementa- ry and secondary education levels. Education expenditure and schoolTable 1b: Human capital and research pillar life expectancy are good proxies Average value by income group for coverage. Public expenditureHigh Upper-middleLower-middle LowIndicator incomeincome income income Mean per pupil gives a sense of the level of priority given to education by2Human capital & research2.1Education the state. The quality of education2.1.1 Education expenditure, % GNIa..........................................4.8.....................4.2.....................3.7.....................3.6.....................4.2is measured through the results2.1.2 Public expenditure/pupil, % GDP/capa.......................21.6..................16.5..................19.9..................19.3..................19.7 to the OECD Programme for2.1.3 School life expectancy, years.............................................15.6..................13.5..................11.1.....................9.4..................13.02.1.4 PISA scales in reading, maths, & sciencea...............496.5...............415.4...............435.6............... 324.9............... 465.3 International Student Assessment2.1.5 Pupil-teacher ratio, secondaryb........................................11.4..................15.0..................19.4..................25.5..................16.5 (PISA), which examines 15-year-2.2Tertiary education old students performances in read-2.2.1Tertiary enrolment, % gross................................................57.6..................41.7..................24.8.....................7.9..................37.8ing, mathematics, and science, and2.2.2Graduates in science, %...........................................................9.5.....................7.2.....................8.1.....................8.9.....................8.62.2.3Graduates in engineering, %.............................................12.3..................12.6..................11.0.....................8.4..................11.7 the pupil-teacher ratio.2.2.4Tertiary inbound mobility, %a..............................................9.4.....................3.2.....................1.9.....................3.5.....................6.0Higher education is crucial for2.2.5Tertiary outbound mobility, %a........................................14.8.....................8.0.....................5.7.....................9.2..................10.0 economies to move up the value2.2.6Gross tertiary outbound enrolment, %a........................4.0.....................2.0.....................1.0.....................0.4.....................2.1 chain beyond simple production2.3Research & development (R&D)2.3.1Researchers headcount/million pop.....................4,754.0........... 1,071.5...............667.9..................99.8........... 2,192.6processes and products. The sub-2.3.2Gross expenditure on R&D, % GDP...................................1.7.....................0.5.....................0.3.....................0.1.....................0.9pillar on tertiary education aims at2.3.3Quality research institutions...............................................4.8.....................3.6.....................3.2.....................3.2.....................3.9 capturing coverage (tertiary enrol-Note: (*) index, () survey question, (a) half weight, (b) higher values indicate worse outcomes.ment); the priority given to the sectors traditionally associated withimplementation; and perceptions onenforcement, property rights, theinnovation (science and engineer-violations to press freedom.18police, and the courts); and ating); and the inbound and out- The regulatory environment measuring the level of rigidity of bound mobility of tertiary students,sub-pillar draws on three World employment regulations.which plays a crucial role in theBank indices aimed at captur-The business environment sub- exchange of ideas and skills neces- THE GLOBAL INNOVATION INDEX 2011 ing perceptions on the ability of pillar expands on three aspects that sary to innovation.the government to formulate and directly affect private entrepreneur- The last sub-pillar, on R&D,implement cohesive policies thatial endeavours: time and cost con- measures the level and quality ofpromote the development of thestraints to starting a business and theR&D activities, with indicatorsprivate sector; at evaluating the total amount of taxes and manda- on expenditure, researchers (head-extent to which the rule of law tory contributions borne by busi-counts), and perceptions of theprevails (in aspects such as contract nesses (profit or corporate income 23. 11Table 1c: Infrastructure pillar 1: Measuring Innovation Potential and Resultsquality of scientific and researchinstitutions (a survey question). Average value by income groupHigh Upper-middleLower-middle LowIndicator incomeincome income income Mean3InfrastructureInfrastructure3.1 Info & comm. technologies (ICT)Information and communication 3.1.1 ICT access*.......................................................................................7.1.....................4.1.....................2.9.....................1.6.....................4.5technologies (ICT), energy supply,3.1.2 ICT use*..............................................................................................4.2.....................1.4.....................0.6.....................0.2.....................2.0and infrastructure are respectively 3.1.3 Governments Online Service*a..........................................0.5.....................0.4.....................0.3.....................0.2.....................0.43.1.4E-Participation*a...........................................................................0.4.....................0.2.....................0.2.....................0.1.....................0.3the nervous system, the circulatory3.2Energysystem, and the backbone of any 3.2.1 Electricity output, kWh/capa.......................................9,995.2........... 3,033.9........... 1,374.9............... 640.5........... 5,021.2economy (Table 1c). They facili- 3.2.2 Electricity consumption, kWh/capitaa..................9,581.7........... 2,736.2...............995.8............... 553.7........... 4,677.43.2.3 GDP/unit of energy use, PPP$/kg oil eq........................6.2.....................6.4.....................5.7.....................4.3.....................6.0tate the production and exchange3.2.4 Share of renewables in energy use, %.........................11.6..................14.8..................36.0..................68.2..................24.4of ideas, services, and goods and 3.3General infrastructurefeed into the innovation system 3.3.1Quality of trade & transport infrastructure*................3.6.....................2.6.....................2.4.....................2.1.....................2.8through increased productivity and3.3.2Gross capital formation, % GDP.......................................21.0..................23.7..................24.4..................22.0..................22.73.3.3Ecological footprint & biocapacity, ha/cap................(2.1).................(0.0)...................0.7................... (0.1)................. (0.5)efficiency, lower transaction costs,and better access to markets. Note: (*) index, () survey question, (a) half weight, (b) higher values indicate worse outcomes.In the past 50 years, ICT hasrevolutionized the way people inter-act, businesses transact, and govern- Table 1d: Market sophistication pillarments serve. The ICT sub-pillar Average value by income groupincludes four indices developed byHigh Upper-middleLower-middle Lowinternational organizations on ICTIndicator incomeincome income income Meanaccess, ICT use, online service by4Market sophisticationgovernments, and online participa-4.1Credittion of citizens (see Box5).20 4.1.1 Strength of legal rights for credit*a..................................6.8.....................5.7.....................4.7.....................6.1.....................5.94.1.2 Depth of credit information*a..............................................4.4.....................4.7.....................3.7.....................1.7.....................3.9The sub-pillar on energ y 4.1.3 Domestic credit to private sector, % GDP..............107.3..................49.7..................43.5..................19.4..................59.8regroups three indicators related to4.1.4 Microfinance gross loans, % GDPa....................................0.0.....................1.0.....................2.0.....................2.0.....................1.5energy supply, efficiency in energy 4.2Investment4.2.1 Strength of investor protection*........................................6.0.....................5.7.....................4.7.....................5.0.....................5.4use, and sustainability.21 Energy4.2.2 Market capitalization, % GDP............................................78.7..................47.4..................34.5..................22.3..................55.3supply is essential to the proper 4.2.3 Total value of stocks traded, % GDP..............................74.1..................13.8..................20.0.....................3.5..................39.6functioning of any economy; how-4.2.4 Venture capital deals/tr GDP PPP$a............................104.7.....................6.1..................22.8..................30.6..................48.8ever, energy policy is an area that 4.3Trade & competition4.3.1Applied tariff rate weighted mean, %b...........................1.8.....................4.9.....................6.4.....................9.2.....................4.8typically goes beyond energy supply 4.3.2Market access trade restrictiveness*, %a,b....................7.2.....................8.5..................13.1..................16.6..................11.1to address a series of elements such4.3.3Imports of goods & services, % GDP............................52.4..................39.8..................45.0..................39.9..................45.6as the risk of supply-and-demand4.3.4Exports of goods & services, % GDP.............................59.6..................36.9..................36.0..................25.8..................43.14.3.5Intensity of local competition............................................5.4.....................4.6.....................4.7.....................4.4.....................4.9mismatch, environmental issues,alternative sources of energy, cost-Note: (*) index, () survey question, (a) half weight, (b) higher values indicate worse outcomes.efficiency, and so on.The sub-pillar on infrastruc-ture includes a composite indicator ditches, drains); plant, machinery, biocapacity and footprint reserve oron the quality of trade- and trans- and equipment purchases; and thedeficit of countries.port-related infrastructure (e.g.,construction of roads, railways, andTHE GLOBAL INNOVATION INDEX 2011 ports, railroads, roads, and infor- the like, including schools, offices,mation technology).22 The secondhospitals, private residential dwell- Market sophisticationvariable of this sub-pillar, gross cap- ings, and commercial and industrial The recent global financial crisis hasital formation, consists of outlays onbuildings. Ecological concerns areunderscored how crucial the avail-additions to the fixed assets and net also addressed through the inclu- ability of credit, investment funds,inventories of the economy, includ- sion of a measure on the ecological and access to international marketsing land improvements (fences,are for businesses to prosper. This 24. 121: Measuring Innovation Potential and Results pillar has three sub-pillars struc-Box 5: Composition of sub-pillar 3.1 on information and communication tured around market conditionstechnologies (ICT) and the total level of transactions (Table1d).ICT access indicator 3.1.1The credit sub-pillar includesIndicator 3.1.1 is a composite indicator Development Index together with two indi- two indices aimed at measuringdeveloped by the International Telecom-ces on telecommunication infrastructure the degree to which collateral andmunication Union (ITU). The ICT accessand human capital.bankruptcy laws facilitate lendingsub-index, is one component in ITUs ICT It is constructed on the basis ofby protecting the rights of borrow-Development Index (IDI), together with the the United Nations (UN) e-Governmenters and lenders, as well as the rulesICT use sub-index and the ICT skills sub- Survey (United Nations E-Government and practices affecting the cover-index (Measuring the Information Society, Survey 2010 Leveraging e-Government atage, scope, and accessibility of creditITU, 2010). It is composed of five ICT indica- a Time of Financial and Economic Crisis,information. Transactions are giventors (20% each): UN Department of Economic and Socialby the total value of domestic cred-1. fixed telephone lines per 100 inhabitants, Affairs, 2010). The survey covers four stages it and, in an attempt to make the2. mobile cellular telephone subscriptionsof governments online service develop- model more applicable to emerg-per 100 inhabitants, ment with points assigned for emerginging markets, a measure on the level3. international Internet bandwidth (bit/s) information services, enhanced informa- of development of microfinanceper Internet user, tion services, transaction services, and ainstitutions.234. proportion of households with a com- connected approach. In addition, researchThe investment sub-pillarputer, and teams assess each countrys national web- includes an index measuring the5. proportion of households with Internet site as well as the websites of the minis-extent of disclosure and of directoraccess at home tries of education, labour, social services,liability and the ease of shareholder health, and finance for a minimal level ofsuits. To show whether market sizeICT use indicator 3.1.2content accessibility (with a citizen-centric is matched by market dynamism,Indicator 3.1.2 is the second componentapproach).stock market capitalization is com-in ITUs IDI. The ICT use sub-index is com-plemented by the value of sharesposed of three ICT indicators (33% each):E-participation indicator 3.1.4 traded. This year, for the first time,1. Internet users per 100 inhabitants,Indicator 3.1.4 is a composite indicator, hard data on venture capital deals2. fixed broadband Internet subscribers the E-participation index, developed by have been included, taking intoper 100 inhabitants, and UNPAN on the basis of the UN e-Govern-account a total of 7,937 deals in 813. mobile broadband subscriptions per ment Survey. The survey was expandedcountries for this variable.24100 inhabitants. with questions emphasizing quality in theThe last sub-pillar tackles trade connected presence stage of e-govern- and competition. The market con-Governments online servicement. These questions focus on the useditions for trade are given by twoindicator 3.1.3of the Internet to facilitate provision ofindicators: the average tariff rateIndicator 3.1.3 is a composite indicator information by governments to citizensweighted by import shares and adeveloped by the United Nations Public (e-information sharing), the interactionmeasure capturing market accessAdministration Network (UNPAN). Thewith stakeholders (e-consultation), and conditions to foreign markets. TheGovernments online service index is a the engagement in decision-making pro-sub-pillar then includes the totalcomponent in UNPANs E-Governmentcesses (e-decision making). value of exports and imports as a percentage of GDP. The last indica- tor is a survey question that ref lects THE GLOBAL INNOVATION INDEX 2011 on the intensity of competition in the local markets. Efforts made at finding hard data on competition proved unsuccessful. 25. 13 Table 1e: Business sophistication pillar 1: Measuring Innovation Potential and ResultsBusiness sophisticationThe last enabler pillar tries to cap- Average value by income groupture the level of business sophistica- High Upper-middleLower-middle Low Indicator incomeincome income income Meantion to assess how conducive firms 5 Business sophisticationare to innovation activity (Table1e). 5.1 Knowledge workersThe Human capital and research 5.1.1 Knowledge-intensive employment, %.......................36.4..................23.5..................16.8.....................7.0..................26.1pillar (pillar 2) made the case that 5.1.2 Firms offering formal training, % firms........................42.6..................39.3..................34.4..................31.7..................36.8the accumulation of human capital5.1.3 R&D performed by business, %a......................................55.7..................30.8..................26.9..................15.5..................41.1 5.1.4 R&D financed by business, %a..........................................49.3..................31.1..................24.9..................15.4..................38.5through education, and particularly 5.2 Innovation linkageshigher education and the prioritiza- 5.2.1 University/industry collaboration....................................4.5.....................3.5.....................3.2.....................3.2.....................3.8tion of R&D activities, is an indis- 5.2.2 State of cluster development............................................4.1.....................3.3.....................3.3.....................3.1.....................3.6 5.2.3 R&D financed by abroad, %a.................................................8.2.....................8.1.....................9.3..................19.9.....................9.4pensable condition for innovation to 5.2.4 JV/strategic alliance deals/tr GDP PPP$a....................26.8.....................6.2.....................6.8.....................9.9..................14.1take place. That logic is taken one5.2.5 PCT patent filings with foreign inventor, %..............37.6..................22.0..................13.2..................19.0..................25.2step further here with the assertion 5.3 Knowledge absorptionthat businesses foster their produc- 5.3.1 Royalty & license fees payments, % GDP......................1.0.....................0.2.....................0.4.....................0.0.....................0.5 5.3.2 High-tech imports less re-imports, %..........................13.2..................11.0.....................8.9.....................7.6..................10.9tivity, competitiveness, and innova- 5.3.3 Computer & comm. service imports, %......................39.3..................32.5..................25.4..................21.4..................31.4tion potential with the employment 5.3.4 FDI net inflows, % GDP..........................................................12.0.....................3.9.....................3.6.....................3.3.....................6.5of highly qualified professionals andNote: (*) index, () survey question, (a) half weight, (b) higher values indicate worse outcomes.technicians. The first sub-pillar includesfour quantitative indicators on Table 1f: Scientific outputs pillarknowledge workers: employment inknowledge-intensive services; the Average value by income groupavailability of formal training at the High Upper-middleLower-middle Low Indicator incomeincome income income Meanlevel of the firm; and the percentage 6 Scientific outputsof total gross expenditure of R&D 6.1 Knowledge creationthat is either financed or performed 6.1.1 Domestic resident patent ap/bn GDP PPP$...............9.8.....................2.9.....................4.3.....................1.6.....................5.9by business enterprise.6.1.2 PCT resident patent ap/bn GDP PPP$............................3.6.....................0.3.....................0.2.....................0.0.....................1.5 Innovation linkages and pub-6.1.3 Domestic res utility model ap/bn GDP PPP$a......... 2.5.....................1.1..................10.6.....................2.5.....................4.0 6.1.4 Scientific & technical articles/bn GDP PPP$.............15.3.....................4.4.....................3.3.....................3.7.....................7.8l ic/pr ivate/academ ic par tner- 6.2 Knowledge impactships are essential to innovation. 6.2.1 Growth rate of GDP PPP$/worker, %...............................0.6.....................2.1.....................3.1.....................3.5.....................2.0In emerging markets, pockets of6.2.2 New businesses/1,000 pop. 1564 yrs...........................5.5.....................2.5.....................0.7.....................0.5.....................3.0 6.2.3 Computer software spending, % GDPa.........................0.6.....................0.2.....................0.2.....................0.1.....................0.4wealth have developed around 6.3 Knowledge diffusionindustrial or technological clusters 6.3.1 Royalty & license fees receipts, % GDP...........................0.3.....................0.0.....................0.3.....................0.0.....................0.2and networks in sharp contrast with6.3.2 High-tech exports less re-exports, %...........................10.7.....................4.9.....................3.3.....................0.9.....................6.2the poverty that may prevail in the6.3.3 Computer & comm service exports, %.......................38.3..................26.5..................30.2..................22.9..................31.1 6.3.4 FDI net outflows, % GDP......................................................13.5.....................0.8.....................0.3.....................0.1.....................5.1rest of the territory. The sub-pillardraws on both qualitative and quan-Note: (*) index, () survey question, (a) half weight, (b) higher values indicate worse outcomes.titative data regarding business/university collaboration on R&D,the prevalence of well-developedand deep clusters, collaboration ininventive activities, and the level of in 2010, with firms headquarteredIn broad terms, pillar 4 on mar-THE GLOBAL INNOVATION INDEX 2011 gross R&D expenditure financed in 95 participating economies.25 In ket sophistication makes the caseby abroad. For the first time this addition, the share of published pat- that well-functioning markets con-year, a measure on the number of ent applications filed by residents tribute to the innovation environ-deals on joint ventures and strate-through the Patent Cooperationment through competitive pressure,gic alliances is included. It covers Treaty with at least one foreignefficiency gains, and economies ofa total of 920 joint ventures andinventor is included to proxy for transaction and by allowing supply327 strategic alliances announcedinternational linkages. to meet demand. Open markets to 26. 14Table 1g: Creative outputs pillar1: Measuring Innovation Potential and Results and macroeconomic level: increas- Average value by income group es in labour productivity, the entryHigh Upper-middleLower-middle Low density of new firms, and spendingIndicator incomeincome income income Mean on software.7 Creative outputsThe third sub-pillar, on knowl-7.1 Creative intangibles7.1.1 Domestic res trademark ap/bn GDP PPP$................31.5..................47.3..................63.2..................15.7..................40.6 edge diffusion, is the mirror image7.1.2 Madrid resident trademark ap/bn GDP PPP$a.......13.9.....................6.3.....................4.2.....................0.1.....................9.2of the Knowledge absorption sub-7.1.3 ICT & business models............................................................5.1.....................4.4.....................4.3.....................4.1.....................4.6 pillar under pillar 5. It includes7.1.4 ICT & organizational models...............................................4.7.....................4.1.....................3.9.....................3.5.....................4.2 four statistics all linked to sec-7.2 Creative goods & services7.2.1 Recreation & culture consumption, %a..........................7.8.....................4.1.....................2.4.....................2.0.....................5.7 tors with high-tech content or that7.2.2 National feature films/mn pop.a.........................................4.0.....................0.6.....................0.9.....................1.4.....................2.3 are key to innovation: royalty and7.2.3 Daily newspapers/1,000 literate pop.a......................304.3..................89.1..................79.1.....................6.8............... 164.6 license fees receipts as a percentage7.2.4 Creative goods exports, %.....................................................2.1.....................1.5.....................1.8.....................0.9.....................1.77.2.5 Creative services exports, %..................................................6.2.....................4.7.....................1.8.....................1.9.....................4.1 of GDP; high-tech exports (net of re-exports) as a percentage of totalNote: (*) index, () survey question, (a) half weight, (b) higher values indicate worse outcomes. exports (net of re-exports); exports of computer, communications, andforeign trade and investment havepillars, it is averaged with the Inputother services as a percentage ofthe additional effect of exposingSub-Index in the overall GII. Thiscommercial service exports; anddomestic firms to best practices asymmetry, which is only apparent,net outf lows of FDI as a percent-around the globe, which is criti-serves two purposes: to give inno-age of GDP.cal to innovation through knowl- vation results the same weight asedge absorption and diffusion. The innovation enablers, and to redressrationale behind sub-pillars 5.3 onan unbalance at the level of availableCreative outputsknowledge absorption (an enabler)statistics. The last pillar, on creative outputs,and 6.3 on knowledge diffusionThere are two output pillars:has only two sub-pillars (Table1g).(a result), two sub-pillars designed Scientif ic outputs and CreativeThis is essentially the result of theto be mirror images of each other, outputs.lack of reliable indicators acrossis precisely that together they will many countries on all copyrighted-reveal how good countries are at related industries and creativity inabsorbing and diffusing knowledge. Scientific outputsgeneral (see Chapter 6, Accounting Sub-pillar 5.3 includes four sta- This pillar covers all those variablesfor Creativity in Innovation). Astistics all linked to sectors with that are traditionally thought to benew and better statistics becomehigh-tech content or that are keythe fruits of innovation (Table1f ). available in the coming years, thisto innovation: royalty and license The first sub-pillar refers to thepillar will be strengthened.fees payments as a percentage of creation of knowledge. It includes The first sub-pillar on creativeGDP; high-tech imports (net of four indicators that are the result intangibles includes statistics onre-imports) as a percentage of total of inventive and innovation activi- trademark registrations by residentsimports; imports of computer, com- ties: patent applications filed byat the national office and under themunications, and other services as a residents both at the national patent Madrid System, as well as two sur-percentage of commercial service office and at the international level vey questions regarding the use ofimports; and net inf lows of FDI asthrough the Patent CooperationICT in business and organizationala percentage of GDP. Treaty (see Box 6); utility modelmodels, new areas that are increas- applications filed by residents atingly linked to innovation in the THE GLOBAL INNOVATION INDEX 2011 the national office; and scientific literature.Innovation Output Sub-Indexand technical published articles inThe last sub-pillar, on