Tag Archives: index

Global Innovation Index 2016

The Global Innovation Index (GII) 2016 is an annual publication which features a composite indicator that ranks countries/economies in terms of their enabling environment to innovation and their innovation outputs. The GII covers 141 economies around the world and uses 79 indicators across a range of themes. The Global Innovation Index 2016 was created by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO). The theme of the 2016 Global Innovation Index (GII) is ‘Winning with Global Innovation’.

Here is an overview of the indicators that are used to create the innovation index and how they are related:
Global Innovation Index factors

And this is how the measures are calculated:

  • The Global Innovation Index is the simple average of the Input and Output Sub-Indices.
  • The Innovation Efficiency Ratio is the ratio of the Output Sub-Index over the Input Sub-Index.
  • The Innovation Input Sub-Index is the simple average of the first five pillar scores.
  • The Innovation Output Sub-Index is the simple average of the last two pillar scores.

Global Innovation Index Ranking

Here is the 2016 ranking for the Global Innovation Index. Switzerland, Sweden, the United Kingdom (UK), the United States of America (USA) and Finland are the world’s five most-innovative nations:

  1. Switzerland
  2. Sweden
  3. United Kingdom
  4. United States of America
  5. Finland
  6. Singapore
  7. Ireland
  8. Denmark
  9. Netherlands
  10. Germany

The Netherlands falls five ranks to 9th place, mostly driven by an FDI-related (Foreign Direct Investment) variable and missing data points.

The GII rankings have shown a remarkable level of global diversity among innovation leaders over the years. Among the top-ranked 25 innovative nations this year are not only economies from Northern America (such as Canada and the USA) and Europe (such as Germany, Switzerland, the UK and the Netherlands) but also from South East Asia, East Asia, and Oceania (such as Australia, Japan, Korea, and Singapore) and Northern Africa and Western Asia (Israel).

The distance between the performance of the top 10 ranked innovation nations and all others is still wide. The innovation divides remains in 2016 according to the GII 2016.

The Netherlands in the Global Innovation Index

The Netherlands has been ranked in the top 10 economies of the GII since 2008. It’s fall on the ranking this year is largely because of methodological considerations (see below). This year its ranking is affected by its lower ranks on both the Innovation Input Sub-Index (12th) and the Innovation Output Sub-Index (9th).

The Netherlands achieves a top 25 ranking among all economies for all pillars of the GII, with a better ranking this year in Infrastructure (12th) and Business sophistication (9th). Conversely, the Netherlands’ performance falls at the pillar level in Knowledge and technology outputs, where it ranks 16th overall. This change is mainly a consequence of lower rankings in the Knowledge diffusion sub-pillar (114th) and the indicator FDI net outflows (118th).

The latter indicator, identified as highly volatile in previous GII editions, partly drives the fall in the ranking of the Netherlands. Also, for some new variables—namely, IP receipts and ICT services exports — the Netherlands lacks data.

Ranglijst van ranglijstjes

De ranglijst die FD publiceerde is een ranglijst van ranglijsten. Hij is gebasserd op:

De ranglijst is opgesteld door de posities op de verschillende ranglijsten op te tellen per land en vervolgens oplopend te sorteren.

Ranglijst

ranglijst der ranglijsten

Global Competitiveness Report 2015-2016

The World Economic Forum (WEF) published its Global Competitiveness Report, a comprehensive assessment of economic competitiveness across the globe. Each country’s relative economic strength is determined by analysing twelve pillars–including the capacity to innovate, infrastructure, and health factors. The top five is:

  1. Switzerland
  2. Singapore
  3. United States
  4. Germany
  5. The Netherlands

These results shouldn’t be a surpise if you are familiar with Global Innovation Index 2015 (GII), Digital Economy and Society Index (DESI) 2015 or for example the Bloomberg Innovation Index

Global Competitiveness Report – Interactive graphic

Over at Quartz they created an interesting interactive graphic based om the Global Competitiveness Report 2015-2016. Very illustrative although they restricted the factors to these seven:

 Global Competitiveness Report

  • Higher Education and Training
  • Internet Users
  • Public Institutions
  • Capacity for Innovation
  • Soundness of Banks
  • Life Expectancy
  • Total Tax Rate

Global Innovation Index 2015

The Global Innovation Index (GII) 2015 is an annual publication which features a composite indicator that ranks countries/economies in terms of their enabling environment to innovation and their innovation outputs. The GII covers 141 economies around the world and uses 79 indicators across a range of themes. The Global Innovation Index 2015 was created by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO).

Here is an overview of the indicators that are used to create the innovation index and how they are related:
Global Innovation Index factors

And this is how the measures are calculated:

  • The Global Innovation Index is the simple average of the Input and Output Sub-Indices.
  • The Innovation Efficiency Ratio is the ratio of the Output Sub-Index over the Input Sub-Index.
  • The Innovation Input Sub-Index is the simple average of the first five pillar scores.
  • The Innovation Output Sub-Index is the simple average of the last two pillar scores.

Global Innovation Index Ranking

Here is the 2015 ranking for the Global Innovation Index. Switzerland, the United Kingdom (UK), Sweden, the Netherlands, and the United States of America (USA) are the world’s five most-innovative nations; at the same time, China, Malaysia, Viet Nam, India, Jordan, Kenya, Uganda, and a group of other countries are outpacing their economic peers in 2015. Global Innovation Index Ranking

The top 25 countries in the GII consistently score well in most indicators and have strengths in areas such as information and communication technologies and business sophistication, which includes knowledge workers, innovation linkages, and knowledge absorption; they also create high levels of measurable outputs including creative goods and services.

Technology Gap

On average, the technology gap between developing and developed countries is narrowing. One explanation for this phenomenon is that more and more developing countries outperform in innovation inputs and outputs relative to their level of development.

By tracking global progress in innovation and focusing on those developing countries that out- perform in innovation compared to countries at similar levels of development, the GII can be used to monitor progress in innovation and identify areas of strengths and weaknesses in innovation efforts.

At low income levels, countries that outperform their peers focus on removing structural obstacles to innovation, such as poor access to finance and poor linkages within the innovation systems. At higher income levels, efforts concentrate on increasing investments, spurring growth in innovation outputs, and improving human capital.

Research and development (R&D) is one of the key policy areas that can secure technological potential and, therefore, innovation and economic growth. In order to reach the income levels of high-income countries, low- and middle-income countries need to expand their access to technology and their capacity to use it.

And digital?

Given the importance of strengths in areas such as information and communication technologies (ICT) for leading countries in innovation, it should be no surprise that the top 10 shares a lot of countries with the leader in the Digital Evolution Index. Especially since innovation is one of the underlaying drivers in the DEI.

Same remarks hold for the Digital Economy and Society Index. Only the latter is just focussed on Europe.

Digital Economy and Society Index (DESI) 2015

The data presented by Digital Evolution Index seems supported by data from the European Commission. The EU defined a Digital Economy and Society Index to support and measure progress on the digital agenda for Europe:

The Digital Economy and Society Index (DESI) is a composite index that summarises relevant indicators on Europe’s digital performance and tracks the evolution of EU member states in digital competitiveness.

The Digital Economy and Society Index (DESI) is based on five dimensions:

  1. Connectivity – The Connectivity dimension measures the deployment of broadband infrastructure and its quality. Access to fast broadband-enabled services is a necessary condition for competitiveness.
  2. Human Capital – The Human Capital dimension measures the skills needed to take advantage of the possibilities offered by a digital society. Such skills go from basic user skills that enable individuals to interact online and consume digital goods and services, to advanced skills that empower the workforce to take advantage of technology for enhanced productivity and economic growth.
  3. Use of Internet – The Use of Internet dimension accounts for the variety of activities performed by citizens already online. Such activities range from consumption of online content (videos, music, games, etc.) to modern communication activities or online shopping and banking.
  4. Integration of Digital Technology – The Integration of Digital Technology dimension measures the digitisation of businesses and their exploitation of the online sales channel. By adopting digital technology businesses can enhance efficiency, reduce costs and better engage customers, collaborators and business partners. Furthermore, the Internet as a sales outlet offers access to wider markets and potential for growth.
  5. Digital Public Services – The Digital Public Services dimension measures the digitisation of public services, and focuses in particular on eGovernment and eHealth. Modernisation and digitisation of public services, including eHealth, can lead to efficiency gains for the public administration, citizens and businesses alike as well as to the delivery of better services for the citizen.

Note that factors included in the Digital Evolution Index like market supply and demand, and innovation are not included in the DESI.

Same leaders

Both the Digital Evolution Index and the Digital Economy and Society Index show the same countries as leaders in the digital market in Europe.
Digital Economy and Society Index

Denmark, Sweden, The Netherlands and Finland are the highest performing countries. They are not only ahead in the EU, but they are world leaders in digital.

DESI shows progress for Europe

The Digital Economy and Society Index improved from 2014 to 2015:
Digital Economy and Society Index progress
Keep in mind that there is no benchmark to non-European countries! Besides that it is remarkable that all countries improved. Also the Digital Evolution Index didn’t show progress for the highest performing countries. I think there’s a little too much optimism here.

The Digital Economy and Society Index has a more optimistic outlook for the digital economy in Europe compare to what the Digital Evolution Index shows us. However both support the case for a digital agenda for Europe in 2020.

Nevertheless the Washington Post showed in June Europe has an acute need for harmonisation. The article states that it’s easier for Europeans to buy and sell online with non-member countries, especially the United States, which accounts for more than half of all the EU’s digital business. Which is rather unexpected for a union. So there is a lot to do for Europe if the leading countries want to keep playing at the world top level and for the other countries not to fall to far behind.

From that perspective it is remarkable that there seems to be little focus on harmonising laws and bringing down barriers for digital trade in the Digital Single Market initiative.

Links and references

Digital Evolution Index shows Western Europe is stalling

Earlier this year The Fletcher School published the Digital Evolution Index. The Digital Evolution Index analyses the key underlying drivers and barriers that govern a country’s evolution into a digital economy:

  • Demand – including consumer behaviours and trends, financial and Internet and social media savviness.
  • Supply – including access, fulfilment, and transactions infrastructure.
  • Institutional Environment – including government effectiveness and its role in business, laws and regulations and promoting the digital ecosystem.
  • and Innovation – including the entrepreneurial, technological and funding ecosystems, presence and extent of disruptive forces and the presence of a start-up culture and mindset.

The data/ scores for all 50 of the included countries (XLS) can be downloaded.

The index is developed to identify how a group of countries stack up against each other in terms of readiness for a digital economy. Based on the performance of countries on the index during the years 2008 to 2013 they are categorised to one of four trajectory zones: Stand Out, Stall Out, Break Out, and Watch Out.

  • Stand Out countries have shown high levels of digital development in the past and continue to remain on an upward trajectory.
  • Stall Out countries have achieved a high level of evolution in the past but are losing momentum and risk falling behind.
  • Break Out countries have the potential to develop strong digital economies. Though their overall score is still low, they are moving upward and are poised to become Stand Out countries in the future.
  • Watch Out countries face significant opportunities and challenges, with low scores on both current level and upward motion of their DEI. Some may be able to overcome limitations with clever innovations and stopgap measures, while others seem to be stuck.

How to read the Digital Evolution trajectory chart

Digital Evolution Index
..

The Digital Evolution trajectory chart

The Digital Evolution trajectory chart
.
In the example of The Netherlands, their Digital Evolution index is still top-10, however the Evolution within the Digital Ecosystem is at the bottom of the 50 included countries. Similar data is seen for more Western European countries. Of that region the United Kingdom and Ireland are just in the group of Stand Out countries.

Harvard Business Review uses the Digital Evolution Index to compare The Netherlands and Singapore:

Take, for example, Singapore and The Netherlands. Both are among the top 10 countries in present levels of digital evolution. But when we consider the momentum – i.e., the five-year rate of change from 2008 to 2013 – the two countries are far apart. Singapore has been steadily advancing in developing a world-class digital infrastructure, through public-private partnerships, to further entrench its status as a regional communications hub. Through ongoing investment, it remains an attractive destination for start-ups and for private equity and venture capital. The Netherlands, meanwhile, has been rapidly losing steam. The Dutch government’s austerity measures beginning in late 2010 reduced investment into elements of the digital ecosystem. Its stagnant, and at times slipping, consumer demand led investors to seek greener pastures.

Actions for Western Europe

The Stall Out economies of Europe, including the Netherlands, Finland, Belgium and France, could jumpstart their recovery by taking advantage of increased regional integration, selling goods across national borders to the 500+ million consumers in the wider EU.

The Washington Post is skeptical on the creation of a single European digital market. In June 2015 an article stated that it will be hard for Europe to overcome their innovation deficit. This is largely due to confusing and complex national regulations.

Besides that Stall Out countries are also tend to be “aging”. Attracting talented, young immigrants can help revive innovation.

Germany is also in the Stall Out countries but is home to a very ambitious company Rocket Internet. Their mission:

To Become the World’s Largest Internet Platform Outside the United States and China

They have been busy launching e-commerce start-ups across a wide range of emerging and frontier markets. Their companies are poised to become the Alibabas and Amazons for the rest of the world: Jumia, which operates in nine countries across Africa; Namshi in the Middle East; Lazada and Zalora in ASEAN; Jabong in India; and Kaymu in 33 markets across Africa, Asia, Europe, and the Middle East.

Update October 2015

In the last days of October 2015 HBR published a post: Europe’s other crisis a digital recession. It looks into how Europe has dealt with falling behind in the digital era. The post covers 3 reactions:

  • Frustration with — and even rejection and censure of — the more dominant U.S. position.
  • At the regulatory and policy levels, authorities have doggedly pursued U.S. tech companies.
  • Acknowledgement by the President of the European Commission (EC), Jean-Claude Juncker, of Europe’s severe digital decline. The EC’s pronouncements signal the beginnings of a “Digital Maastricht Treaty.” The proposal is to create a “Digital Single Market” in the EU.

The story offers Europe 4 take aways:

  1. Harmonizing across the e-commerce value chain.
  2. Reforming immigration policies.
  3. Investing in innovation capacity.
  4. Developing a risk-tolerant culture.

Links and references