By Anand Kulkarni
Innovation has become increasingly important for nations to be competitive and prosper. The 2018 Global Innovation Index, prepared annually by Cornell University, INSEAD and the World Intellectual Property Organisation, examines the performance of 126 countries against approximately 80 indicators, and comprises innovation input measures (institutions, human capital and research, market sophistication, business sophistication), and output measures (knowledge and technology outputs and creative outputs). Input and outputs are combined into an overall index.
It is clear that it is difficult to break into the top ranks. The last two years have shown that there is stability at the top with Switzerland, Netherlands, Sweden, the UK, Singapore, the US, Finland, Denmark, Germany and Ireland occupying the top ten positions (with changes of order). Remarkably, for the last six years, Switzerland has been ranked number one in the world.
The key to being a strong innovation player is all-around capabilities, both in input and output terms, rather than having narrow pockets of excellence. This means apt political and regulatory environments; investments in research, education and training; the ability to translate inputs into outputs through skilled employment; patents; exports; and value-added production. What also matters is being open to the ideas, knowledge, technology and insights that others bring through imports of technology-intensive goods, foreign direct investment and inward student mobility. It also means strong linkages between academia and industry, and effective industry clusters to capitalise on synergies in knowledge and complementary capabilities.
Achieving this is no small feat, and higher levels of economic development are associated with stronger innovation performance. It is important to note that the top ten performers comprise a number of smaller economies, which could perhaps mean focused effort on building core capabilities.
However, changes are afoot. The rise of China in the rankings is becoming more apparent, while to a lesser extent India is seen to be performing better than its level of economic development would indicate.
China is now ranked 17th in the world and has steadily improved its ranking from 29th in 2015. India is ranked 57th and progressively improved from 81st in 2015, noting that it is harder to move up the rankings the closer to the top.
Large-scale, long-term investments in capability building, with clear goals and objectives, are reaping rewards for China. In particular, building foundations, with a strong focus on human capital in all its dimensions has been key. Human capital is seen as a major driver of competitiveness and growth.
China is ranked at 23rd in human capital and research, with core strengths in school assessments in mathematics and science, and expenditure in research and development. In tertiary education, China ranks 5th in the world, which is a measure of the average score of top 3 universities in the QS rankings, although overall enrolments are weaker. The importance of a strong base of skills and research is also reflected in the translation of knowledge to outputs. China is ranked 12th in the world on high and medium outputs, equal first on patents and equal first on high technology exports (despite China shifting towards a more domestic-led consumption model of development in recent years). Firm-level training is also exemplary building on the capabilities that are fostered in higher education institutions. These factors reflect the nexus between China as a manufacturing powerhouse and an emerging knowledge superpower. China has also positioned itself as being open to the flow of ideas and knowledge from abroad, even though there has been criticism in the way it has acquired knowledge from abroad. It is ranked 12th on the knowledge absorption criterion, with particular strengths in imports of high technology products and research talent in business enterprise.
How India performs
At 57th place, India is performing reasonably. Unlike the top ten economies, and China to varying degrees, it has a fragmented innovation base. There are pockets of excellence; for example, it is number one in the world on ICT services exports, reflecting its niche capabilities in this field, and is well placed in its university rankings performance (21st). However, the latter is a little misleading in that beyond a few elite institutions, there is a “soft underbelly” when it comes to the bulk of institutions in higher education in India, with major questions around quality, employability, accountability and governance. While India is ranked 6th on science and engineering graduates, unfortunately, this does not necessarily capture quality metrics. There have been many studies that have questioned the employability of Indian graduates. However, it should be noted that there appears to be a semblance of an innovation ecosystem taking hold, with industry/university research collaboration at 25th place (and interestingly ahead of China at 27th place). India performs only moderately in the knowledge translation type indicators such as high technology exports, patents, and knowledge and technology output, and a sharp contrast can be found with China in these areas.
Despite its ranking on science and engineering graduates, India ranks only 84th in tertiary enrolments. This suggests that there are issues around lack of access to tertiary education for the large population, and possibly lack of diversity in course offerings. Moreover, there is a weak “pipeline” in education when viewed more broadly, with India ranked 112th on education overall, with this metric capturing expenditure on secondary school, expenditure per secondary student, school performance in mathematics and science and pupil-teacher ratios.
Beyond this, there are still many challenges confronting India, including improving female access to employment opportunities (93rd), employment in knowledge-intensive services (91st), and number of researchers relative to population (74th). India still remains somewhat insular, as reflected by its 66th place on knowledge absorption. It needs to be more open to ideas and know-how from abroad, to mesh with its own domestic capabilities.
India’s age-old issues with the quality of its institutions (regulatory, political institutions and government effectiveness; 80th rank) and infrastructure (77th) remain significant challenges despite various reforms of recent years. Chinese institutions too need attention, being ranked a relatively lowly 70.
Up and comers
Finally, both China and India are ranked at the lower end when it comes to inbound tertiary mobility. This is not surprising to some extent since both countries are “stretched” in meeting domestic requirements. Both countries recognise the need to open up their education systems to the world, to enhance export revenue, and to capitalise on the global flows of ideas and people-people connections.
However, at this stage, China is ahead of India across the board.
Although the top echelons of innovation rankings are seemingly entrenched, there is more than a hint that in the years to come, the status quo will be challenged, particularly by China, but don’t discount India.
Anand Kulkarni is Associate Director for Planning and Performance at Victoria University, Australia
This article was recently published in the University World News.
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