Global Innovation Index: Fourth Industrial Revolution coming

Denmark, Finland, Singapore and Sweden are among the top ten countries in the most recent Global Innovation Index (GII) for 2016, with Switzerland retaining the top position for the 6th consecutive year. China also joins the world’s 25 most-innovative economies, marking the first time a middle-income country has joined the highly developed economies that have dominated the top of the GII in its nine editions of surveying the innovative capacity of over 100 economies.

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Despite China’s rise, an “innovation divide” persists between developed and developing countries amid increasing awareness that fostering innovation is crucial to a vibrant, competitive economy.

“In this current economic climate, uncovering new sources of growth and leveraging the opportunities raised by global innovation are priorities for all stakeholders,” says WIPO Director General Francis Gurry.

Fifteen of the top 25 economies in the GII come from Europe. Following regional leaders Sweden and UK are Finland (5), Ireland (7), Denmark (8), Netherlands (9), and Germany (10), which joins the top 10 in 2016.

Among upper-middle-income economies, China (25th), Malaysia (35th), and Thailand (52nd) rank first in the region. Vietnam (59th) maintains its top place among lower-middle-income economies, followed by the Philippines (74th,) and Indonesia (88th).

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The GII theme this year is ‘Winning with Global Innovation.’ The report explores the rising share of innovation carried out via globalized innovation networks, finding that gains from global innovation can be shared more widely as cross-border flows of knowledge and talent are on the rise. The report also concludes that there is ample scope to expand global corporate and public R&D cooperation to foster future economic growth.

Bruno Lanvin, INSEAD Executive Director for Global Indices, and co-author of the report, underlines: “Some may see globalization as a trend in search of its ‘second breath.’ Yet, the relative contraction of international trade and investment flows does give even more strategic importance to the two sides of global innovation: on one hand, more emerging countries are becoming successful innovators, and on the other hand, an increasing share of innovation benefits stem from cross-border co-operation.”

Johan Aurik, Managing Partner and Chairman of GII Knowledge Partner A.T. Kearney, the global consultancy, says: “Digital has become a primary driver of strategy development and innovation for business in almost all sectors; I am convinced we are only at the beginning. Notably for established organizations, the challenge lies in finding ways to successfully innovate by using and transforming existing resources and business practices. Realizing success in today’s new landscape requires creative, forward-thinking strategies that embrace digital and address the need to change the fundamental ways of working in the company.”

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Seven countries stand out on digital innovation with their high levels of networked readiness and entrenched business ICT adoption. And the technology-enabled innovation evident in Finland, Switzerland, Sweden, Israel, Singapore, the Netherlands and the US will likely keep these markets ahead of the pack as it unleashes new competitive pressures that call for yet more innovation by tech and non-tech firms alike, according to the Global Information Technology Report 2016 from the World Economic Forum.

Singapore ranks highest in terms of ‘network readiness’ with its ranking down largely to strong government commitment to a digital agenda, including the market’s Smart Nation programme. The report says Singapore makes excellent use of digital technologies to provide access to basic and government services and to ensure that schools are connected.

Finland places second, due in large part to its extremely good access to the latest technologies as well as to venture capital, while its businesses are highly connected, and the country gets high scores for infrastructure and skills.

Third-ranked Sweden benefits from very levels of individual and business digital usage, with Swedish firms good at taking advantage of the fact that their consumer base is highly connected, giving the market one of the highest rates of B2C interaction in the world. The study is thinking big here. The report says we are at the dawn of the ‘Fourth Industrial Revolution’, with new systems built on the infrastructure of the third, digital revolution. The key factors here are the availability of global, digital communications, low-cost processing and high-density data storage, along with an increasingly connected population of active users of digital technologies.

“As these individual technologies become ubiquitous, they will fundamentally alter the way we produce, consume, communicate, move, generate energy, and interact with one another.”

The WEF also issues a warning: “The fundamental and global nature of this revolution also poses new threats related to the disruptions it may cause – affecting labour markets and the future of work, income inequality, and geopolitical security as well as social value systems and ethical frameworks.”

The Global Innovation Index 2016 (GII), in its 9th edition this year, is co-published by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO, a specialized agency of the United Nations).

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