Which country is the most innovative nation on Earth and why? Leading news agency Bloomberg recently released its updated annual Innovation Index, which attempted to answer that question for 2019.
Before we explore the results, it’s important to acknowledge that ‘innovation’ has no fixed definition. It means different things to different people.
For some, innovation simply refers to a great idea. Others might define it as a new production process, a new business model or any big step forward in science or technology.
For its part, the Bloomberg Innovation Index looks at seven key indicators that represent different facets of a national economy. The index weighs them equally, tallies them up and produces a score between 0 and 100.
In alphabetical order, those indicators are:
- High-tech public companies
- Patent activity
- Research and development (R&D) investment
- Researchers, and
- Tertiary efficiency – i.e. how well the services sector is working
Tipping the scale
In terms of overall points, the ten highest-scoring countries were South Korea (87.4), Germany (87.3), Finland (85.6), Switzerland (85.5), Israel (84.8), Singapore (84.5), Sweden (84.1), the United States (83.2), Japan (82) and France (81.7).
It should come as no surprise that South Korea tops the list, considering that the country is home to manufacturing and tech giants such as Samsung and Hyundai. In fact, a simple logic underpins the entire lineup: nations with large, specialised manufacturing sectors and heavy R&D spend rise to the top.
Reinforcing that hypothesis, the order of this year’s Top 10 corresponded to the ranking of countries in terms of their funding for R&D activities. But a closer look at which countries ranked 1st, 2nd or 3rd for each of the Bloomberg indicators tells a more nuanced story.
South Korea, for instance, led the world in R&D and came second in manufacturing, but failed to reach third or higher in any other innovation. Overall runner-up Germany came second in R&D and third in manufacturing and public tech firms per capita, but didn’t make the other top slots.
A handful of countries nabbed top ranks in several indicators, but achieved lower overall scores. Notably, the US may have been world leader in patent activity and tech firms, but was absent from the top scores in other categories.
Ireland came first worldwide in manufacturing and productivity – exceeding South Korea, Germany and Finland in those areas – but wasn’t part of the most innovative nations overall. Similarly, China came second in patents and Luxembourg came third in both patents and productivity, but neither appeared in the general top ten.
Do your research
What can entrepreneurs take away from this? Before you up and move to South Korea, consider the wider implications of the study. If prioritising research and tech development leads to greater innovation in a country, the same might also be true for a startup.
Plan to invest in learning, building and refining your product over time. Doing that will show investors that you intend to grow and improve. They want to see that, and your pitch to them should provide a credible demonstration of your vision for the future.
Click here to learn more and find out how Innovation Warehouse can help grow your startup.