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Daniela Benavente
Lead Researcher, Project Manager
The Global Innovation Index, INSEAD eLab
October 12-14, 2011
Fourth edition Five Knowledge Partners
Eight-month consultative approach with Knowledge Partners
Advisory Board of nine international experts
Statistical audit by the Joint Research Centre of the European Commission
• Developed with the OECD, the Handbook on constructing composite indicators (2008)
At the core of the publication: an index ranking countries innovation capabilities and results • 125 country profiles • 80 data tables (59 hard data, 15 composite
indicators, 6 survey questions) • Performances by regional and income groups
Five analytical chapters
• Innovation in Latin America (INSEAD/OECD) • Affordable innovations in India (CII) • Smart cities (Alcatel-Lucent) • The global footprint of R&D (Booz & co.) • Measuring creativity (WIPO)
Global coverage
Broad scope
Effort to capture innovation in emerging markets
Replicable and transparent
computation methodology
Indicator scores
Minimum indicator-
coverage of 50/80 per
country
(cut-off year at 2000)
Scaling
(by GDP current US$, GDP PPP$, population,
totals)
Treatment of outliers
(winsorization, natural logs,
up to absolute skewness > 2, kurtosis > 3.5)
Normalization
(change of direction, min-max except for
survey and indices, 0-100
range)
Sub-pillar scores
Weighted average of indicator
scores
(half weight if low country-coverage or combined)
GII
input and output sub-
indices
pillar scores
Average of sub-index, pillar, sub-
pillar scores respectively
Innovation efficiency
index
Ratio of output sub-index/input sub-index
Coherent and balanced GII framework
• Analysis of conceptual consistency: relevance, timeliness, scaling, etc.
• Data checks: missing values, outliers, skewness, kurtosis, etc.
• Statistical coherence and balance: principal component analysis confirms a single latent dimension
Rankings relatively robust to changes in modelling assumptions Computation
• Random weights for pillars, [10%, 20%] for input, [40%, 60%] for output
• 4,000 Monte-Carlo simulations (1000 runs per model, 4 models)
• Hot-deck v. no imputation (Manhattan distance, 2 nearest neighbors)
• Geometric v. arithmetic average (partially compensatory approach)
Reliable rankings Uncertainty analysis
• 75% of median GII ranks shift less than 5 positions (3 for input, 6 for output)
• 5 countries with unreliable rankings were dropped from the report
The choice of no imputation influences results Sensitivity analysis
HI UM LM LI Mean HI UM LM LI Mean
3.2.4 Share of renewables in energy use, % 11.6 14.8 36.0 68.2 24.4
5.2.3 R&D financed by abroad, % 8.2 8.1 9.3 19.9 9.4
6.2.1 Growth rate of GDP PPP$/worker, % 0.6 2.1 3.1 3.5 2.0
3.3.2 Gross capital formation, % GDP 21.0 23.7 24.4 22.0 22.7
3.3.3 Ecological footprint & biocapacity, ha/cap (2.1) (0.0) 0.7 (0.1) (0.5)
4.1.4 Microfinance gross loans, % GDP 0.0 1.0 2.0 2.0 1.5
6.1.3 Domestic res utility model ap/bn GDP PPP$ 2.5 1.1 10.6 2.5 4.0
7.1.1 Domestic res trademark ap/bn GDP PPP$ 31.5 47.3 63.2 15.7 40.6
2.2.3 Graduates in engineering, % 12.3 12.6 11.0 8.4 11.7
3.2.3 GDP/unit of energy use, PPP$/kg oil eq. 6.2 6.4 5.7 4.3 6.0
4.1.2 Depth of credit information* 4.4 4.7 3.7 1.7 3.9
Low income economies prevail
Lower-middle income countries prevail
Upper-middle income countries prevail
0
10
20
30
40
50
60
NAFTA1 United States of America
2 Canada3 Mexico
Mercosur +1 Chile2 Brazil
3 Argentina4 Uruguay5 Paraguay
6 Venezuela
CAN1 Colombia
2 Peru3 Ecuador4 Bolivia
SICA (6/7)1 Costa Rica2 Panama
3 Guatemala4 El Salvador5 Honduras6 Nicaragua
CARICOM (3/15)1 Guyana
2 Trinidad and Tobago3 Jamaica
America
0
10
20
30
40
50
60
ANZCERTA1 New Zealand
2 Australia
ASEAN (8/10)1 Singapore2 Malaysia3 Thailand4 Viet Nam
5 Brunei Darussalam6 Philippines7 Indonesia8 Cambodia
EAS others1 Hong Kong (SAR),
China2 Korea, Rep.
3 Japan4 China
5 Mongolia
SAFTA (4/7)1 India
2 Sri Lanka3 Bangladesh
4 Pakistan
Asia and Oceania
Economy GII Insti t-
utions
Human
capita l
Infras -
tructure
Market
soph.
Bus iness
soph.Input Scienti fic
outputs
Creative
outputsOutput Efficiency
Income /
average 36.7 65.1 39.1 30.2 42.3 38.6 43.1 27.6 33.0 30.3 0.70
HI High 48.1 82.1 52.3 40.0 54.6 50.4 55.9 39.1 41.3 40.2 0.71
UM Upper middle 33.4 63.1 36.6 27.6 38.9 35.8 40.4 21.5 31.2 26.3 0.65
LM Lower middle 30.4 52.0 29.8 24.6 35.5 31.0 34.6 22.7 29.9 26.3 0.76
LI Low 25.9 50.7 27.8 21.0 30.6 28.3 31.7 18.4 21.8 20.1 0.64
NAC North America 56.5 89.9 55.6 48.9 67.1 56.6 63.6 50.0 48.6 49.3 0.77
ECS
Europe
Centra l As ia 43.0 74.6 46.5 34.4 47.9 44.1 49.5 34.7 38.0 36.3 0.73
EAS
East As ia
Paci fic 42.5 69.8 42.4 36.1 54.1 47.3 49.9 33.7 36.4 35.1 0.70
MEA
Middle East
North Africa 34.5 62.8 42.5 28.0 39.9 34.5 41.5 25.5 29.3 27.4 0.65
LCN
Latin America
Caribbean 31.4 55.7 31.6 28.2 35.5 34.0 37.0 19.0 32.7 25.9 0.70
SAS South As ia 29.9 50.1 23.1 24.8 33.2 26.2 31.5 22.9 33.9 28.4 0.91
SSF
Sub-Saharan
Africa 26.9 54.3 28.7 21.3 31.4 30.2 33.2 18.2 23.2 20.7 0.64
1 Switzerland 63.8 92.6 55.1 44.5 70.1 68.0 66.1 62.0 54.4 58.2 0.88
2 Sweden 62.1 87.3 63.3 51.7 58.9 63.1 64.9 62.1 56.7 59.4 0.92
3 Singapore 59.6 90.4 74.7 47.6 78.7 79.1 74.1 48.9 41.4 45.2 0.61
4
Hong Kong
(SAR), China 58.8 92.8 48.4 53.9 87.0 66.9 69.8 38.1 57.6 47.8 0.69
5 Finland 57.5 89.2 66.5 48.0 56.1 63.9 64.7 58.5 42.1 50.3 0.78
6 Denmark 57.0 94.2 60.2 45.9 64.5 58.1 64.6 46.3 52.4 49.3 0.76
7 US 56.6 86.5 57.4 44.6 70.9 54.8 62.8 57.4 43.2 50.3 0.80
8 Canada 56.3 93.3 53.9 53.1 63.4 58.4 64.4 42.5 54.0 48.3 0.75
9 Netherlands 56.3 87.5 47.6 43.6 61.8 61.6 60.4 53.8 50.6 52.2 0.86
10 UK 56.0 86.4 56.1 43.6 74.4 57.8 63.7 52.3 44.3 48.3 0.76
35 Ita ly 40.7 71.1 44.5 35.9 42.7 45.2 47.9 27.8 39.2 33.5 0.70
Rank 35 49 39 30 53 36 37 46 43 39 63
New metrics
•Tertiary inbound/outbound mobility (global reach)
•GDP per unit of energy use (efficiency)
•Renewable energy and ecological footprint (sustainability)
•Microfinance gross loan portfolio (inclusive innovation)
•Venture capital deals (investment of new ventures)
• Joint venture, strategic alliance deals (linkages)
•R&D financed by abroad/business (mode 2 type of innovation)
•PCT patent filings with foreign inventor(s) (international teams)
•Scaling by GDP in PPP$ (to neutralize the effect of large populations)
Traditional indicators (pillars 2 and 6)
•Education expenditure •School life expectancy •Tertiary enrolment •Graduates in science and engineering •Researchers headcount and gross expenditure on R&D •Employment of knowledge-intensive workers •Scientific and technical journal articles •Royalty and license fees’ receipts •High-tech exports •National office and PCT patent applications
Moldova (Republic of)Ukraine
ItalyRussian Federation
Venezuela (Bolivarian…Hungary
OmanLithuania
GreeceNetherlands
SpainHong Kong (SAR), China
CyprusCzech Republic
EstoniaSlovenia
QatarUnited Arab Emirates
PortugalBelgium
FranceJapan
CanadaBahrain
SwitzerlandUnited Kingdom
New ZealandLuxembourg
United States of AmericaNorway
GermanyIreland
AustraliaAustria
Korea (Republic of )Denmark
SwedenIcelandFinland
IsraelSingapore
GeorgiaAlbaniaAlgeriaTurkey
Costa RicaSwaziland
Brunei DarussalamBrazil
MongoliaKazakhstan
MexicoMacedonia (the…
ChileUruguayGuyanaJamaicaKuwait
Trinidad and TobagoRomania
BotswanaArgentina
NamibiaMorocco
GhanaBulgaria
Iran (Islamic Republic…Tunisia
ChinaSyrian Arab Republic
SerbiaSaudi Arabia
ZimbabweLebanon
JordanBosnia and…
PolandLatvia
SlovakiaMauritius
KenyaCroatia
Malaysia
SudanPakistanEthiopiaNigeria
CambodiaNicaragua
Burkina FasoCôte d'Ivoire
UgandaPhilippines
MadagascarBangladesh
BeninZambia
MaliParaguay
GuatemalaPeru
EgyptSenegal
El SalvadorIndia
EcuadorSri Lanka
HondurasNiger
CameroonTajikistanTanzania…
IndonesiaKyrgyzstan
MalawiRwanda
South AfricaColombia
AzerbaijanYemen
ArmeniaThailand
Bolivia…Viet Nam
Panama
High-tech
Computer and communication service
Foreign Direct Investment
Royalty and license fees
Mirror image of each other
The adoption of innovations developed
elsewhere constitutes an innovation
INPUT
5 Business sophistication
5.3 Knowledge absorption
payments
net inflows
imports
imports
OUTPUT
6 Scientific outputs
6.3 Knowledge diffusion
receipts
net outflows
exports
exports
4.1 Credit Conditions Strength of legal rights for credit
Depth of credit information
Flows Domestic credit to private sector, % GDP
Microfinance gross loans, % GDP
4.2 Investment Conditions Strength of investor protection
Flows Market capitalization, % GDP Total value of stocks trade, % GDP Venture capital deals / GDP PPP$
4.3 Trade & competition
Conditions Applied tariff rate weighted mean, % Market access trade restrictiveness, % Intensity of local competition
Flows Imports of goods & services, % GDP
Exports of goods & services, % GDP
Flo
ws
Co
nd
itio
ns
Investment Flo
ws
Co
nd
itio
ns
Credit
Flo
ws
Co
nd
itio
ns
Trade & competition
▪ Italy
0 10 20 30 40 50 60 70
Brunei DarussalamTrinidad and Tobago
GreeceIndia
OmanSaudi Arabia
KuwaitRomaniaBahrainCroatiaPoland
BulgariaLithuaniaSlovakia
LatviaItaly
United Arab EmiratesPortugal
SpainSlovenia
ChinaCyprus
Czech RepublicQatar
HungaryBelgiumEstoniaFrance
AustraliaJapan
AustriaNorway
LuxembourgKorea (Republic of )
New ZealandIsrael
IrelandGermany
IcelandUnited Kingdom
NetherlandsCanada
United States of AmericaDenmark
FinlandHong Kong (SAR), China
SingaporeSweden
Switzerland
High income (HI)
European Union (EU)
China India
United States
China
Germany
France
United Kingdom
Brazil
Canada
Korea, Rep.
Netherlands
Switzerland
Sweden
Norway
Austria
Denmark
India
Russian Federation
Turkey
Iran Venezuela
Argentina
Japan
Italy
Spain
Australia Belgium
Poland
Mexico
Indonesia
Saudi Arabia
Greece
15
20
25
30
35
40
45
50
55
60
65
0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1
Glo
bal
Inn
ova
tio
n In
dex
Innovation Efficiency Index
Efficiency in innovation and GDP in PPP$
Relatively efficient
Relatively inefficient
Japan
Italy
Spain
Poland
Malaysia
Indonesia
Mexico Philippines
Ethiopia
Egypt
South Africa
Colombia
Sudan
Kenya
Algeria
Morocco
Peru
Saudi Arabia
China
United States
Brazil
Viet Nam
Germany
Thailand
France
United Kingdom
Korea, Rep.
Canada
India
Pakistan
Bangladesh Nigeria
Russian Federation Turkey
Iran
Ukraine
Tanzania
Argentina
Uganda Venezuela
R² = 0.7059
15
20
25
30
35
40
45
50
55
60
65
6 7 8 9 10 11 12
Glo
bal
Inn
ova
tio
n In
de
x
GDP per capita in PPP$ (ln)
Innovation GDP per capita and population
Inefficient
Efficient
Poly. (4)
Laggards
Leaders
Learners
Strengths
• 6 Creative goods exports
• 6 State of cluster development
• 12 Applied tariff rate
• 13 School life expectancy
• 13 Time to start a business
• 14 Trademark registrations filed through the Madrid System
• 14 Computer and communications service imports
• 18 GDP per unit of energy use
• 20 Trade and transport-related infrastructure
• 20 Employment in knowledge-intensive services
Weaknesses
• 119 Total tax rate
• 110 Imports of goods and services
• 107 Ecological footprint and biocapacity
• 99 Growth rate of GDP per person engaged
• 97 Legal rights strength to get credit
• 95 Exports of goods and services
• 89 Gross capital formation
• 86 Cost to start a business
• 86 Foreign direct investment net inflows
• 84 Rigidity of employment
Strengths
• 1 Trademark registrations filed through the Madrid System
• 1 Total value of stocks traded
• 1 Press freedom
• 1 Applied tariff rate
• 1 Computer software spending
• 1 Patent applications filed through the PCT
• 2 Scientific and technical journal articles
• 2 University/industry collaboration on R&D
• 2 Quality of research institutions
• 3 Employment in knowledge-intensive services
Weaknesses
• 119 Strength of investor protection
• 105 Ecological footprint and biocapacity
• 97 Creative services exports
• 76 Gross capital formation
• 75 Time to start a business
• 69 Growth rate of GDP per person engaged
• 58 Imports of goods and services
• 56 Online participation
• 49 Tertiary outbound mobility
• 48 GERD financed by abroad
1. Innovation leaders are found outside OECD countries
2. All regions show potential as hubs of innovation, companies and organizations need to look at global networks
3. Biggest progress in Institutions and Market sophistication
1. China is the only developing economy in the top 30 (29th)
2. East Asia and the Pacific (EAS) and the Middle East and North Africa (MEA) have similar income structures, the former prevails in the rankings, at par with Europe and Central Asia (ECS)
3. Latin America and Caribbean economies show average performance in the rankings, South Asia and Sub-Saharan Africa with some challenges to take-off
1. Top 10 of the Efficiency Index includes six densely populated economies: Nigeria, China, Pakistan, Brazil, India and Bangladesh
2. Those with challenges in converting their enabling capabilities into results: Malaysia, Chile, Lithuania and South Africa (top 40 on Input, lower on Output)
3. South Asian economies highly efficient (Bangladesh, India, Pakistan, Sri Lanka): Input Sub-Index ranks within 87th and 123rd, Output Sub-Index ranks within 44th and 69th
1. Many different roles for different actors: action and cooperation
2. Governments must adopt policies friendlier towards technological catch-up and the absorption of knowledge
3. Relevance of venture capital , joint ventures, strategic alliances, dynamic stock markets, increased employment in knowledge-intensive services, etc.
1. This is not the 'ultimate ranking' but part of a journey to better understand, measure and facilitate innovation
2. Some linkages are confirmed in the data: deficits in the Human capital and research pillar lead to mediocre performances on Scientific outputs
3. But need for better statistics, with greater economy-coverage
1. Prominence of trade-related variables over output variables
2. Importance of count variables over value variables
3. Weakness of creative output pillar due to lack of statistics
4. Challenges in comparisons year to year