Innovation is the secret to economic growth, says the global Innovation Index 2016

Growing the economy requires investment in innovative technologies and practices, but national policies towards this end must not focus on local players alone. It must also explicitly favour international collaboration, says the Global Innovation Index 2016 report. 

INNOVATION is a key ingredient for economic growth, and governments need to facilitate more international collaboration and encourage the diffusion of knowledge across borders to sustain success in innovation, says the Global Innovation Index 2016 report.

Facilitated cross-border flows of knowledge enables innovation to be carried out through global innovation networks that leverage on talent worldwide.

This will benefit the larger economy as it inspires greater investment into industries previously not linked with innovation. In addition, it allows for more cross-border investments, notes the report released by Cornell University, INSEAD and the World Intellectual Property Organisation (WIPO) last week.

“Investing in innovation is critical to raising long-term economic growth. 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.

The Global Innovation Index (GII) also ranks world economies’ innovation capabilities and results. And according to the report, Switzerland, Sweden, the UK, the US, Finland and Singapore lead the 2016 rankings respectively.

China rose four ranks this year, coming in at the 25th spot, making it the first time a middle-income country has joined the ranks of the world’s 25 most-innovative economies. China’s progression reflects the country’s improved innovation performance.

Malaysia, on the other hand, moved down three spots to 35th overall due to declines in its innovation outputs. However, the report notes an improvement in Malaysia’s rankings across the human capital and research, infrastructure and market sophistication pillars.

The report states that more emerging countries are becoming successful innovators. But with the global economy still far from being robust, more efforts are needed to invest in innovation.

But rather than merely drive domestic innovation, the report points out that the more globalised innovation processes offer new possibilities that countries should seize upon.

“The global network presents opportunities for policy-makers to seek efficiencies that were not available when a few nations dominated science. With improved scanning of research and more effective communications, it may be possible to leverage foreign research, data, equipment, and know-how. Nations must learn to manage and benefit from a network,” the report says.

New ideas are emerging in different parts of the globe and successful innovation strategies have to leverage them effectively.

The report urges policymakers to not only facilitate international collaboration but to also carry out inward efforts with more outward-looking approaches.

National policies and related incentives should avoid focusing on domestic players alone to fully reap the benefits of global innovation. Fiscal incentives, grants, and other national innovation policies could more explicitly favour international collaboration and the diffusion and integration of knowledge across borders, it adds.

It is also crucial for new innovation policies to identify barriers to global cooperation and the flow of ideas. The vast array of global challenges requires more internationally coordinated efforts to seek fitting and timely solutions.

For a start, policies need to further support openness, says the GII report.

The question faced by the innovation community is how to more systematically spread research and development (R&D) to low- and middle-income economies to avoid an overreliance on a handful of countries to drive global R&D growth.

Even leading emerging countries, including China, spend only a small share of their research budget on basic R&D. These countries prefer to focus on applied R&D and development instead.

But with science and innovation becoming more internationalised and collaborative, there is certainly ample scope to expand global corporate and public R&D cooperation to foster future economic growth. New international governance structures should also aim to increase technology diffusion to and among developing countries.

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