Businesses typically require confidence to make long-term investments. It’s tempting when the global economy turns cold for finance-types to batten down the hatches and wait for the economic storms to pass. Many companies around the world have done this over the last six years, shedding jobs, cutting costs and deferring discretionary programmes to shore up profits and preserve cash. But, like a furnace that’s allowed to cool down, hunkering down risks delay before production can be ramped up again.
Innovation is one of those areas of investment that businesses could consider discretionary in difficult times. The difficulty with cutting back R&D investment when the storms are howling only becomes fully apparent when the economy is ready for recovery but the business has little to fan the furnace. But there is encouraging news. Despite the world’s persistent economic woes, investment in innovation has been found, alive and well, and quietly enjoying growth.
Today sees the publication of the Global Innovation Index (GII) for 2013, an annual assessment of the relative innovation capability of 142 countries representing 94.9% of the world’s population and 98.7% of global GDP. The main finding of the report is that investment in innovation has continued to thrive and grow amid the doom and gloom. Total research and development spending worldwide grew over the last 12 months, the third year of successive growth after a slight reversal in 2009.
Some countries, including India, Malaysia and China, contributed double digit growth to R&D investment in the last 12 months. As a result, R&D investment worldwide in 2013 exceeded pre-crisis levels. Innovation in R&D today is at an all time high.
Now in its sixth year, the Global Innovation Index, co-published by INSEAD, Cornell University and the World Intellectual Property Organisation, assesses national innovation capability using 84 different criteria, including the impact of institutions like government and the media, education, infrastructure and the level of market and business sophistication. As a relative worldwide index, smaller countries with limited resources like Denmark and (ahem) Ireland can outperform larger countries like the USA, France and Germany in the GII rankings.
The Index also categorises countries by income – high, middle and low. While there has been movement within the top 25 countries this year (with the UK and the US rising and Singapore and Finland falling), no new countries have broken into the top 25: all of the top 25 positions remain in the grip of high income nations.
But this lack of change among the top 25 countries belies the evidence that innovation, traditionally concentrated in developed markets, is spreading wider and more evenly across the world. Amongst the highest risers on the Index this year are Costa Rica, Argentina, Uganda and Mali. Given the power of innovation to create knowledge economies, new skills and to improve living standards for the people that need it most, this broadening of innovation capability globally is a welcome development.
Beyond matters of national competitiveness, today’s global economy means innovation from anywhere can drive change and create new opportunities everywhere. The value of innovation is to transform industries, businesses and people’s lives, not just locally but across the world.
While the GII 2013 report tells us little about the prospects for the global economy, it should provide crumbs of consolation that the innovation furnace has been kept stoked, ready to provide impetus and optimism for renewed global economic growth when the outlook for the world’s economy comes back out of hiding.
For a full copy of the report, see: http://www.globalinnovationindex.org/content.aspx?page=GII-Home