Is innovation always the best choice? A review of the Global Innovation Index 2013

How do you measure innovation? Is the exercise meaningful? Can any county innovate? And does it matter? These are some of the questions which are raised in the Global Innovation Index 2013 -- or which you should be asking yourself when you're reading it.  The IPKat asked Katfriend Suleman Ali (Holly IP) to review the Index. This is what he writes:

The ‘Global Innovation Index 2013’, a report written by the World Intellectual Property Organization (WIPO), Cornell University and INSEAD ('the Business School for the World'), has recently been released online, here. The IP Finance Blog has already commented here on the ranking of countries by the report based on innovation output. However, there is much more to this report than simply providing a ranking of countries: it sets out to understand the innovation that is happening around the world, and how it can be promoted. A lot of work has clearly gone into deciding which parameters to measure, and the sheer amount of data presented on each country is breathtaking. As expected the data broadly shows that innovation requires a ‘holistic’ approach. A country’s political, regulatory, business environments, infrastructure, institutions and economic and human capital all contribute. This inevitably means that richer, more developed, countries are better at innovation. It also means that there is no easy way to become a high innovation country if you are not one already, and the report notes the ‘persistent innovation divide’ between the haves and have-nots.

So how does one create innovation? The report sees innovation as R&D followed by commercialisation. This is best done in a cluster of some sort that brings together research and business people. Failure often happens because the commercialisation step goes wrong. That may be because funding for the project runs out soon after the R&D part, or because there are simply not enough entrepreneurs around. One way of dramatically increasing chances of success is to have an ‘enterprise champion’ in place, this being a company that has the skills to push commercialisation forward.

Government clearly has an important role to play in all of this. It has to have policies in place that will create the right climate for innovation to be possible. It has to create or enlist enterprise champions to be part of the cluster. But it must also realise where it must be hands-off. Government must be a ‘visionary catalyst’, providing appropriate incentives to each party, but letting business play an important role. It must also be a ‘clever strategist’, favouring projects that deliver visible results in a few years to give self-confidence to all parties. The report notes that many governments fail to fulfil these roles.

The subtitle of the report is ‘Local Dynamics of Innovation’, which is an acceptance that it is not easy to replicate Silicon Valley, and that innovation needs to happen in a way that is possible, given the resources which are available. There is an acknowledgment that perhaps ‘incremental’ innovation would sometimes be more appropriate, but there is no real analysis of how innovation should be done differently in the developing world.

The report measures innovation output in terms of new knowledge that is created and resulting products. That includes patent applications, scientific articles, new businesses and even Wikipedia edits and YouTube uploads. I wonder though whether this is the best way to look at innovation in the developing world. Perhaps it would be better for some countries to focus on using and commercialising knowledge generated elsewhere, rather than spending precious resources developing domestic R&D. The report does not comment on how the internet might be changing innovation, but the increase in online knowledge must represent an important opportunity for the developing world.

The report assiduously avoids controversial areas, such as the ‘brain drain’ suffered by many developing countries. It also fails to ask deeper questions about what the purpose of innovation should be in any given country, and the extent to which innovation should be focused on solving the dominant problems there. Perhaps there are situations in which innovation would not be best way to promote economic growth. The data in the report provides no way of assessing the stimulus to the economy that could be provided by innovation compared to other stimuli, such as building more roads, for example. The Global Innovation Index clearly provides much food for thought, and certainly provides a lot of data for analysing innovation. However, it could ask many more questions about what innovation is meant to achieve and whether it is always the best choice.