Global Innovation Index reveals Switzerland as top performer

Which country tops the global innovation rankings? The Economist features that many would instinctively point to the United States, with some suggesting China.  

However, the Global Innovation Index, published by the World Intellectual Property Organization (WIPO), reveals a different story: the US holds the third position, while China ranks 11th. The index takes a comprehensive approach to defining innovation. It encompasses both “outputs”—like patents, scientific publications, and high-tech exports—and “inputs,” which include research and development spending, the number of engineering graduates, and venture capital investments. It evaluates not only a nation’s technology production but also its adoption and usage.

Countries that heavily import high-tech goods and invest significantly in foreign intellectual property tend to perform better on the index. Additionally, some of the criteria used are unconventional, such as the number of feature films produced and the extent of contributions to collaborative software projects on GitHub, a well-known platform for sharing data and code. 

According to these metrics, Switzerland emerges as the top performer on the index. Smaller nations can surpass scientific powerhouses like the US and China because many indicators are adjusted based on a country’s population or GDP. For instance, Switzerland filed 5,430 international patent applications in 2022, significantly fewer than the number submitted by the US. However, since Switzerland's economy is less than a tenth of the size of America's, it still ranks higher on this metric. Additionally, while it employs far fewer researchers than the US, it has a higher ratio of researchers relative to its population size. 

Though Switzerland's overall contribution to global innovation may be smaller than that of the US, it demonstrates greater innovation per capita. There is a strong correlation between a country's score on the index and its GDP per capita, with wealthier nations generally ranking higher. However, some countries outperform expectations based on their level of development. India is a prime example, ranking 39th despite a low GDP per capita that would typically place it outside the top 100. 

Similarly, China, categorized as an upper middle-income country, would be anticipated to rank in the 60s rather than 11th. In the past five years, the countries that have climbed the rankings the fastest include Indonesia, Mauritius, Saudi Arabia, Qatar, Brazil, and Pakistan. However, global progress in innovation has not been consistent. After experiencing an innovation boom from 2020 to 2022, this trend seems to have ended (see chart 2).

In 2023, the number of scientific publications dropped by 5 per cent, and international patent filings fell for the first time since 2009. While R&D investment from the world's largest corporations grew by 6 per cent in 2023, this is a slowdown compared to the 10-13 per cent growth seen from 2019 to 2021. Additionally, the number of venture-capital deals decreased by 9.5 per cent, with their total value plummeting by 39 per cent. Even in China, which improved its position in the global rankings, the venture-capital sector is struggling. 

Earlier this year, President Xi Jinping sought to understand the decline in new unicorns—startups valued at $1 billion or more. In June, the State Council acknowledged that investors were hesitant to fund high-risk ventures and faced challenges in exiting investments. Recently, financial regulators suggested allowing major state-owned banks to venture into capital investment through means previously used to support indebted firms. However, these financial giants are not typically known for their risk tolerance or innovative thinking. If their entry into venture capital proves successful, it would be an unexpected turn in the landscape of innovation.

By Naila Huseynova