GE Innovation Scorecard

January 2012
Innovation Scorecard Country Innovation Profiles
Prepared for General Electric by the Milken Institute
Innovation Scorecard Country Innovation Profiles

January 2012
Prepared for General Electric by the Milken Institute
Table of Contents
Innovation Scoreboard ................................................................................................................. 2 Ranking Methodology .................................................................................................................. 3 Indicators ................................................................................................................................... 3 Sources ....................................................................................................................................... 4 Algeria ............................................................................................................................................ 6 Australia......................................................................................................................................... 8 Brazil ............................................................................................................................................ 10 Canada ......................................................................................................................................... 13 China ............................................................................................................................................ 16 France........................................................................................................................................... 19 Germany ...................................................................................................................................... 22 India ............................................................................................................................................. 25 Israel ............................................................................................................................................. 28 Japan ............................................................................................................................................ 30 Mexico .......................................................................................................................................... 33 Poland........................................................................................................................................... 36 Russian Federation ..................................................................................................................... 38 Saudi Arabia ................................................................................................................................ 41 Singapore ..................................................................................................................................... 43 South Africa................................................................................................................................. 46 South Korea ................................................................................................................................. 49 Sweden ......................................................................................................................................... 52 Turkey .......................................................................................................................................... 55 United Arab Emirates................................................................................................................. 57 United Kingdom .......................................................................................................................... 59 United States ................................................................................................................................ 62
Innovation Scoreboard
Country Univ./Indust. Algeria Australia Brazil Canada China France Germany India Israel Japan Mexico Poland Russian Federation Saudi Arabia Singapore South Africa South Korea Sweden Turkey UAE United Kingdom United States N/A VC Deals R&D Expend. Tech Exports Patents STEM Educ. Bus. Env.
Scorecard Legend Leading Above average Below average Lagging Unavailable 2
N/A
Ranking Methodology
Countries were ranked on each indicator against the top 100 countries in the World Economic Forum's Global Competitiveness Report 2011-2012. They were then placed in a quartile (leading, above average, below average, or lagging) based on their performance.
Indicators
University-Industry Collaboration in R&D: Source: The Global Competitiveness Report 2011-2012 (World Economic Forum) Measures the extent to which businesses and universities collaborate on research. Data is collected through survey responses. Venture Capital Deals: Source: The Global Innovation Index 2011 (INSEAD) The number of venture capital deals performed in a country. Gross Expenditures on Research & Development (GERD): Source: The Global Innovation Index 2011 (INSEAD) The total expenditure on research and development performed within the country by all sources during the year, calculated as a percentage of GDP. High-Tech Exports: Source: World Development Indicators 2008 (World Bank) Products with high R&D intensity, such as computers and pharmaceuticals, are included in this category. This indicator is calculated as a percentage of all manufactured exports. The most recent year for which the majority of countries had data was 2008. Utility Patents: Source: The Global Competitiveness Report 2011-2012 (World Economic Forum) Most patents issued by the U.S. Patent and Trademark Office (USPTO) are utility patents, or "patents for invention." This indicator captures any patent issued by the USPTO that "pertains to the invention of a new and useful process, machine, manufacture, or composition of matter." The number is given per million inhabitants. In the individual country profiles, "triadic patents" are frequently referenced. These are patents that have been registered with the USPTO, the European Patent Office (EPO) and the Japan Patent Office (JPO). While not all utility patents are triadic patents, the measure of triadic patents provides a general proxy for patent activity in a given country and is frequently cited by the OECD as a measure of innovation.
STEM Education: Source: The Global Competitiveness Report 2011-2012 (World Economic Forum) This indicator measures the quality of the science, technology, engineering and math education (STEM) in a given country. Business Environment: Source: Doing Business 2012 (a co-publication of the World Bank and the International Finance Corporation) This indicator is an index that ranks each countrys business environment on a number of factors such as time required to start a business, ease of acquiring electricity, accessing credit, paying taxes, cross-border trading, and more.
Sources
Boston Consulting Group, Innovation 2010: A Return to Prominenceand the Emergence of a New World Order A report produced by the Boston Consulting Group on the state of innovation in companies. It contains a list of the top 50 most innovative companies in the world. INSEAD, The Global Innovation Index 2011 (http://www.globalinnovationindex.org/gii/) This index ranks countries on their innovation assets, including institutions, human capital and research, scientific outputs, creative outputs, and more. The World Bank, World Development Indicators 2008, 2010 (http://data.worldbank.org/datacatalog/world-development-indicators): The indicators are compiled from a number of officially recognized international sources and are intended to be the most accurate list of global development data available. The World Bank/International Finance Corporation, Doing Business 2012 (http://www.doingbusiness.org/reports/global-reports/doing-business-2012): A report that ranks countries on their overall business environment based on factors that either constrain or enhance competitiveness. World Economic Forum, The Global Competitiveness Report 2011-2012 (http://www.weforum.org/issues/global-competitiveness): The most recent edition of a report that ranks countries based on a number of economic "pillars," such as education, infrastructure and innovation. INNO-Policy TrendCharts 2009 (http://proinno.intrasoft.be/index.cfm?fuseaction=page.display&topicID=263&parentID=52)
These reports, produced by PRO INNO Europe (an initiative of Directorate General Enterprise and Industry), are comprehensive reviews of policies regarding innovation in 39 countries. OECD Science, Technology and Industry Outlook 2010 (www.oecd.org/sti/outlook) The STI Outlook reviews key trends in these fields in the OECD countries, as well as a variety of emerging economies. OECD Reviews of Innovation Policy (www.oecd.org/innovation/reviews) These reports are comprehensive reviews of policies regarding innovation (similar to the INNOPolicy TrendCharts, but produced by the OECD). KPMG and SAVCA: Venture Capital and Private Equity Industry Performance Survey of South Africa covering the 2009 calendar year, May 2010 (http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Emerging-marketsAfrica/Documents/private-equity-survey-july-2010.pdf) This report presents data from a survey conducted by KPMG on venture capital and private equity in South Africa. The Global Biomedical Industry: Preserving U.S. Leadership (http://www.milkeninstitute.org/publications) A report that discusses the U.S. biomedical system and its relation to the emerging global biomedical industry. The Wall Street Journal, The Atlantic, The Economist, Forbes, and the Financial Times These publications provided supplementary information and commentary on countries innovation policies.
Algeria
Univ./Industry Collaboration Venture Capital Deals Gross R&D Expenditures High-tech Exports Utility Patents STEM Education Business Environment
Overview
Algeria performs poorly in absolute terms. The country is still experiencing aftereffects from the bloody civil violence of 1993-2001, which caused considerable economic turmoil. During that period, Islamist guerrillas targeted prominent intellectuals and researchers. Today the economy is heavily dependent on oil: Hydrocarbons provide the majority of budget revenue and nearly all of export revenues. On the other hand, the agricultural sector employs a quarter of the workforce and produces only 10 percent of GDP; nearly half of all food is imported. From 2000 to 2010, GDP per capita increased from $1,794 to $4,495, representing a compound annual growth rate of 9.6 percent.
Indicator Performance
University-Industry Collaboration (Lagging): The education system remains in its formative stages. Between 1998 and 2008, the number of publications grew from 266 to 925, representing a 13 percent compound annual growth rate. The two entities most closely linked with R&D are the National Fund for Research and Technological Development (part of the Ministry of Higher Education & Scientific Research) and the National Agency for the Valorisation of Research and Technological Development Results. Information on specific policies regarding university-industry collaboration is sparse. But as the political, economic and social situations stabilize and education advances, one can expect an increasing number of policy measures addressing this issue. In the GE Innovation Survey, 61 percent of respondents believed it was quite easy for companies to partner with universities. Venture Capital Deals (Lagging): As of 2005, there was only one recorded venture capital fund in Algeria, FINALEP, with total assets amounting to 9 million Euros. According to INSEADs 2011 Global Innovation Index, there is still minimal, if any, venture capital activity in the country. Gross Expenditures on R&D [GERD] (Lagging): Between 1995 and 2001, R&D spending increased from 0.1 percent of GDP to 0.27 percent of GDP, mostly funded by government. More recent information on these figures and the distribution between government and industry spending is lacking. 6
High-Technology Exports (Lagging): Algeria lags below the global average when it comes to high-tech exports, which accounted for a mere 0.6 percent of total exports in 2009. The country simply does not have a strong high-tech capacity; it will need considerable improvement to its education and R&D performance before it can compete on high-technology. Utility Patents (Lagging): Algerias patent output is quite lowthe country does not have the research apparatus and private investment to patent in large quantities. Algeria does have its own intellectual property office, but most researchers and companies prefer to patent through international organizations as they feel it affords them better protection. Algerian respondents to the GE Innovation Survey mirrored this opinion, as only 40 percent said the patent and copyright system is effective. STEM Education (Lagging): STEM education in Algeria lags behind the global average. The country's post-secondary system has only recently begun to expand and develop. It will take time to develop expertise in these areas, but there have been dramatic increases in enrollment in both graduate and undergraduate programs in the past few years. Business Environment (Lagging): The business environment in Algeria is not conducive to competition and growth. It takes 25 days to start a business, and the process is overly complicated. Getting electricity is also quite difficult, and the supply is often unreliable. There are significant government inefficiencies and corruption, and the total tax rate is incredibly high.
Conclusion
Algeria must correct numerous problems before it begins to develop a knowledge-based economy. There are high levels of unemployment and corruption; innovation has not been a priority in the past, given that most of the country's wealth relies on natural resources. Respondents from the GE Innovation Survey were apprehensive about the countrys innovation potential: 38 percent of respondents replied that government support for innovation was not efficiently organized, and 17 percent said that the innovation environment had not improved over the last five years. The INSEAD Global Innovation Index ranked Algeria last among all its surveyed nations.
Australia
Univ./Industry Collaboration Venture Capital Deals Gross R&D Expenditures High-Tech Exports Utility Patents STEM Education Business Environment
Overview
Australia performs extremely well on our innovation indicators, scoring as a leading nation in five of the seven categories and coming in as above average in the remaining two. Its government has a well-developed innovation policy document, "Powering Ideas: An Innovation Agenda for the 21st Century," which it regularly reviews and assesses, making adjustments as needed. However, 66 percent of Australian respondents in the GE Innovation Survey said that they did not think the governments support for innovation was efficiently organized. Australia does not place in the top 10 on any one of our indicators; while it performs quite well across the board, it does not dominate a single area.
University-Industry Collaboration (Leading): Australia is a leader in this area. Its innovation policy has seven priorities, two of which are aimed at facilitating greater collaboration. The government places strong emphasis on fostering partnerships and has so far committed almost AU $3.5 billion to establishing 44 cooperative research centres. Each of these government-sponsored organizations partners a public research facility with an "end-user" and encourages end-user-driven research. Yet surprisingly, only 64 percent of GE Innovation Survey respondents said it was easy for companies to partner with universities. Venture Capital Deals (Above Average): Australia may not be a leader in attracting venture capital, but it still rates well above average in this category. The level of VC investment in Australia has dropped off slightly over the last few years, but this is not surprising given the recent global recession and the dramatic effect this type of event can have on the availability of capital. Some 48 percent of survey respondents said that private investors were not supportive of companies that need fundinga response likely colored by the recession-related funding crunch. Gross Expenditures on R&D [GERD] (Leading): Australia is a global leader in R&D investment as measured by GERD as a percentage of GDP. With its R&D spending at 2.2 percent of GDP, Australia still comes in below the OECD average, but it is rapidly closing the gap. Its level of GERD increased at an annual rate of almost 10 percent between 2000 and 2008, more than triple the average annual growth rate of the OECD 8
countries. But since business R&D (rather than public-sector spending) was the primary driver behind this growth prior to 2008, it will be interesting to see if Australia's momentum continues when data is released for subsequent years. High-Technology Exports (Above Average): High-tech exports account for slightly more than 13 percent of Australia's total exports, making the countrys performance above average on this indicator. Minerals and fuels dominate the list of goods Australia ships abroad, but there has recently been growth in exports of automobiles (and personal auto components). While high-tech products have not been a central focus of the governments export strategy, Australia has nevertheless developed a competitive advantage in certain technologies (such as medical equipment). Utility Patents (Leading): Australia is a leading country in terms of generating utility patents, though it lags well below the world's most productive nations (such as the United States and Israel) on this indicator. There is some belief that the explanation for this gap lies in the fact that most Australian firms are SMEs that cannot devote the same level of resources to R&D as large firms. Therefore a large portion of the breakthroughs that come from Australian firms are process innovations rather than product innovations, which are often difficult to patent. This is borne out to some extent by the results of the GE Innovation Survey, in which 71 percent of respondents agreed that the current copyright and patent system is effective, but only 55 percent said that the IP system encourages innovation. STEM Education (Leading): Australia ranks among the global leaders in science, technology, engineering, and math education. There is a general recognition of the importance of these fields and of developing the highly skilled workforce of the future. In 2010 Australia convened a first-of-its-kind conference that brought together a wide array of stakeholders to discuss strategies for improving STEM education and learning outcomes. Business Environment (Leading): Australia has an exceptional business climate, with low barriers to entry. It only requires two days and two procedures to start a business there, and the cost of the procedures involved is quite low. It is also quite easy for companies to obtain credit. The general ease of doing business has made Australia quite attractive to investors.
Conclusion
Australian respondents to the GE Innovation Survey were fairly negative regarding a number of areas where the nation actually performs quite well. Although Australia was spared a severe downturn, the global recession certainly played a role in these responses. A surprising 85 percent of respondents said that the recession had forced firms to take fewer risks, and only 69 percent replied that the innovation environment had improved over the past five years (one of the lowest positive response rates out of the countries surveyed). These perceptions do not completely match up with the improvements Australia has made to its innovation system. 9
Brazil
Overview
One of the emerging powerhouse BRIC countries, Brazil is on a promising trajectory, though its absolute performance is mixed relative to its OECD counterparts. While known primarily for its strong, well-developed agricultural, mining, manufacturing, and service sectors, Brazil is beginning to shift toward more advanced manufacturing. From 1998 to 2008, high-tech exports increased at an average annual rate of 16 percent (relative to a 13 percent growth rate for manufacturing overall), suggesting increased global competitiveness. Unfortunately, Brazil's education system and business environment remain relatively poor. Only 11 percent of the population aged 25-64 has obtained tertiary level education. Furthermore, venture capital that might be drawn into public-private partnerships in more speculative fields that require government support is stifled by arduous and uncertain governmental grant processes; it takes 12 to 18 months on average to receive funding.
University-Industry Collaboration (Above Average): Brazils university-industry collaboration ranking rests in the lower half of the second quartile of nations, placing it slightly above average. The Ministrio da Cincia e Tecnologia (MCT) is the primary institution setting innovation policy, while implementation largely falls to the Financiadora de Estudos e Projetos (FINEP) and Brazilian Development Bank (BNDES). Graduate education financing policy is handled separately by CAPES, an agency of the Ministry of Education. Despite the rising prominence of these agencies, their efforts remain uncoordinated and require additional time to yield quantifiable results. The GE Innovation Survey reflects this, with 47 percent of respondents concluding that it is not easy for companies to partner with universities. Venture Capital Deals (Below Average): Venture capital in Brazil is stymied by an uncertain and uncoordinated regulatory environment. Brazil has developed an admirable scientific base, including research capacity in nanotechnology. But the kind of specialized venture capital and angel investor networks capable of supporting this industry are not yet sufficiently developed. Accordingly, the government has initiated the National Program of Nanotechnology of Brazil, which aims to access 1 percent of the global markets for materials, products, and processes related to nanotechnology and to realize $10 billion in exports within the next 10 years. Furthermore, the general climate is positive, with 10
69 percent of the GE Innovation Survey respondents affirming that private investors are supportive of companies that need funding. Gross Expenditures on R&D [GERD] (Above Average): From 2003 to 2008, the total volume of R&D spending increased 75 percent while intensity increased by 0.2 percent, reaching 1.46 percent of GDP. The Brazilian government has expanded support for small and medium-size enterprises by continuing to finance its flagship Economic Subsidy for Innovation program, initiating the PRIME program (aimed at addressing early-stage financing gaps for tech start-ups), and adding new agencies with greater financial clout to the mix, such as the Brazilian Development Bank (BNDES). However, GERD as a percentage of GDP remains below the OECD average, and 45 percent of respondents in the GE Innovation Survey believe that the government has been unsuccessful in supporting research and innovation. High-Technology Exports (Above Average): In 1989, 6.89 percent of Brazil's manufacturing exports were high-tech. By 2009, this percentage had increased to 13.90 percent. That represents an impressive leap, but comparing the numbers from 2000 and 2009 tells a very different story. In 2000, high-tech exports represented 18.56 percent of exports, 4.66 percent higher than the 2009 level. While the historical trend line is positive overall, there has been a marked decline over the past decade that can largely be traced to the global financial crisis and ensuing recession. Utility Patents (Below Average): While Brazil accounts for 1.6 percent of global production of knowledge, as measured by publications, its performance in generation of actual patents continues to lag. With 0.3 triadic patents per million population in 2008, Brazil remains well below the OECD average, but commensurate with the other BRIC nations (Russia, China, and India). This is reflected in the GE Innovation Survey, where 51 percent of respondents claimed that the current IP system is not conducive to innovation and 57 percent indicated that the current protection of copyrights and patents is ineffective. STEM Education (Lagging): STEM education, while improving, still lags OECD countries. In 2007, science and engineering degrees issued increased to 11 percent, approximately half of the OECD average. Furthermore, total tertiary education among those aged 25 64 remains at only 11 percent. Respondents of the GE Innovation Survey were slightly negative, with 63 percent indicating that the government has been unsuccessful in improving education and 49 percent disagreeing that local universities and schools provide a strong education. Business Environment (Lagging): Brazil is mired in the bottom half of the fourth quartile in this indicator, due to its immature governance system. Many institutions have poorly defined responsibilities. The two leading innovation agencies, FINEP (Financiadora de Estudos e Projetos) and BNDES (Brazilian Development Bank), have a long-standing institutional and programmatic rivalry, resulting in frequent duplication of efforts in certain sectors (i.e., seed capital, innovation financing, sector 11
programs for software, pharmaceutical, aeronautics, and biotechnology). This has led to increased poaching in one anothers institutional territory.
Conclusion
While Brazils performance is mixed, the country is clearly experiencing a remarkable rise, with more advanced manufacturing and new policies designed to spur innovation. Despite the nation's overall economic growth, Brazilians remain rather pessimistic, however, with 45 percent of respondents in the GE Innovation Survey disagreeing that the government has been successful in supporting research and innovation and 63 percent disagreeing that the government has been successful in improving education.
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Canada
Overview
Canada performs quite well on our innovation scorecard, placing among leading nations on six of the seven indicators (but below average on high-tech exports). Canadas innovation performance has remained fairly stable over the past five years. As the largest trading partner of the United States, Canada was hard hit by the recession; major manufacturers were forced to lay off large numbers of employees. However, the economy has rebounded somewhat and innovation expenditures have improved. Innovation initiatives in Canada are often criticized for a lack of coordination between federal and provincial agencies as well as the excessive number of redundant programs. Having a single, coordinated innovation strategy would help to remedy this problem. As it stands, the most comprehensive policy document is the federal governments 2007 science and technology strategy: Mobilizing Science and Technology to Canadas Advantage.
University-Industry Collaboration (Leading): Canada performs well on university-industry collaboration, leading most other countries. The government has emphasized university research for many years, and there are now a number of programs aimed at facilitating partnerships between businesses and educational institutions. The Networks for Centres of Excellence (NCE), the largest such program, incorporates academically led research networks that connect partners from academia, industry and government. This program has been running for over 20 years and has had many successes. There are also numerous provincially run programs as well as university business incubators and a healthy technology-transfer system. Seventy-five percent of respondents in the GE Innovation Survey said it was easy for companies to partner with universities. Venture Capital Deals (Leading): Canada's level of venture capital deals places it among the global leaders. The countrys domestic VC industry pales in comparison to the U.S. market, but Canada benefits from its proximity to the United States, as many American firms invest in Canadian companies. Canada's domestic VC industry generates a significant number of deals per capita, but the average deal is much smaller than those in the U.S. Canadian firms are not seen as being as innovative as U.S. firms, and this fact is often cited as one of the primary causes of this discrepancy. Despite this, Canada is still highly competitive in this indicator an opinion shared by respondents in the GE 13
Innovation Survey, 73 percent of whom said that private investors are supportive of companies in need of funding. Gross Expenditures on R&D [GERD] (Leading): Canada places among the global leaders in terms of its level of R&D spending. However, GERD was 1.8 percent of GDP, which is below the OECD average. In addition, improvements in GERD have been erratic (in 2005, it was closer to 2 percent of GDP). In 2008, industry financed only 48 percent of GERD, down from 50 percent in 2004 and significantly lower than the proportion in most leading countries. The proportion of GERD financed by government has risen to account for the falling levels from industry. High-Technology Exports (Above Average): Canada performs above average on high-tech exports, the one indicator on which it is not a leading country. Canadas share of high-tech exports fell dramatically after 2000 but has shown steady improvement since 2004. But low-tech exports still account for 6.6 percent of GDP, almost double what high-tech exports contribute. To some degree this is to be expected, given the size of the manufacturing sector and Canada's considerable trade with the U.S. Utility Patents (Leading): Canada performs extremely well in the global rankings for generation of utility patents, although it is not among the OECD leaders. Again in this category, Canada receives a boost from its international collaboration and deep economic ties with the U.S. Almost 30 percent of patents were developed with foreign co-inventors. GE Innovation Survey respondents were rather negative about the patent and copyright system in Canada, with only 66 percent saying it was effective. STEM Education (Leading): Canada's strong STEM education programs place it in the top tier globally, but it does trail the world's most innovation-driven countries. Slightly over 20 percent of Canadian students graduated with degrees in these fields, a number that has shown continued improvement over the last few years. If this trend continues, Canada will be well positioned to exploit its innovation advantage. Business Environment (Leading): The federal government has made changes in a few areas recently to improve Canadas business environment. In particular, the total tax rate has decreased and is now 28.8 percent. In addition, it takes only one procedure and five days to start a new business in Canada.
Conclusion
Canada posts strong performances across the board on many innovation indicators. Results from the GE Innovation Survey confirm this, with 84 percent of Canadian respondents stating that the government does a good job using its resources to support research and innovation. However, for Canada to continue improving on its position, it will need to reform and simplify its innovation 14
initiatives and incentives. Currently, indirect incentives (in the form of tax breaks) far exceed direct incentives, a proportion that may need to change. In addition, there are too many innovation programs offered by both the federal government and provincial governments, many of which overlap or are too small to be beneficial. Only 45 percent of survey respondents answered that government support for innovation is efficiently organized, and it is not difficult to see why. Despite Canadas strong performance, the country only has one company in the top 50 most innovative companies according to BCGs Innovation 2010 Report. But Canada has a strong base to build on, and the few problems that do exist have been identified. The nation is well positioned to leverage its innovation assets in the future.
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China
Overview
Perhaps the greatest success story of the past 30 years, China is shaking off its protected, insular and outdated economic model and is now a direct participant in many of the worlds greatest innovations. China has become not only one of the worlds great exporters of high-tech manufactured goods, but also one of its fastest-growing consumers, as befits what is now the worlds second-largest economy. To meet the need for human capital in the knowledge-based economy, China almost tripled its number of college graduates between 2000 and 2010. Although the free market and international investment have increasingly played a role in Chinese innovation, the government still takes a leading role. Its Medium- and Long-Term Plan of Science and Technology Strategic Development 2006-2020 plan aims to position China as a leader in developing innovation, not just manufacturing innovative goods.
University-Industry Collaboration (Above Average): Although Chinas level of university-industry collaboration is above average, it still significantly trails leaders in North America and Western Europe, ranking closer to Saudi Arabia, South Africa and Brazil. China is attempting to address this directly. As noted in a recent Milken Institute study on the global biomedical industry, the Chinese government is actively attempting to break down bureaucratic barriers between universities and business in order to encourage more technology commercialization in biotech and the life sciences. Venture Capital Deals (Above Average): As China has increasingly opened its economy to foreign investment and partnerships, the rise of new technology entrepreneurs has created an opportunity for foreign venture capital investment. These funds not only come from traditional sources in the U.S., but also from significant networks of expatriate Chinese living abroad. Gross Expenditures on R&D [GERD] (Above Average): Not willing to rest on its laurels as a manufacturing powerhouse, China has made a concerted effort to boost its role in research and development, more than doubling its GERD from 0.73 percent of GDP in 1991 to 1.5 percent of GDP in 2008. Business expenditures on R&D showed the greatest rise, now accounting for a full 70 percent of GERD, and rising an impressive average of 27 percent a year from 1997 to 2007. The foreign component of GERD is growing but still 16
remains low, standing at only 1.2 percent in 2008. Concerns about protection of intellectual property and control of research have limited investment, but access to Chinas vast market increasingly outweighs such concerns. High-Technology Exports (Leading): The combination of comparatively low costs, modern manufacturing facilities, loose environmental regulations and a reliable supply of human capital has made China the most significant export manufacturer in the world and also one of the key exporters of high-tech products, including those produced for highly regarded firms such as Apple. In addition to focusing on exports, China has utilized growing demand in its domestic sector to help push into fields such as green technology and aerospace. The nation ranks towards the top of the first quartile globally, and its ranking is likely to rise further as it continues its push into green technology (five of the top 10 solar manufacturers in 2010 were Chinese). Utility Patents (Above Average): China is finally starting to make a push into business and scientific patents, although it still finds itself just barely in the top half of innovating countries in this regard. It still lags behind neighbors Japan and South Korea by a large margin on a per capita basis, although the countrys sheer size has allowed it to accumulate an increasingly impressive patent portfolio. Chinas share in triadic patent families sat at 1.1 percent in 2008, placing it outside the top 10 in total patents, but still easily in the top 20 in the world. STEM Education (Above Average): Chinas total percentage of college graduates translates into a relatively modest global ranking toward the top portion of the second quartile. But the sheer size of Chinas population allows the country to have as many researchers as the United States at 1.4 million, and the numbers have grown at over 9 percent a year. For Chinese executives in the GE Innovation Survey, opinions on government efforts are positive, with 61 percent believing the government has been successful at improving education. A similar number, 60 percent, believes local universities and schools provide a strong education, which is comparable to levels in the United States. Business Environment (Below Average): Although there is no question that the government has played a significant role in the transformation of the Chinese economy, its continued strong presence, combined with inconsistent regulatory enforcement at the local level, has helped to create a business environment that just barely makes it into the third quartile of the global rankings. It is worth noting that even with concerns over patent and intellectual property protections, ownership limitations, and the risk of local competition, China still ranks well ahead of its fellow BRIC members Brazil, Russia and India, each of whom rank solidly in the fourth quartile.
Conclusion
Although the indicator results place China in the second quartile of innovative countries, the world can see that the country is catching up rapidly. While only 7 percent of Chinese 17
respondents in the GE Innovation Survey ranked China as the leading innovator, the country finished first among respondents from two other countries, and second among respondents from three others. Further, individual Chinese firms are now asserting themselves on the world stage: Four Chinese businesses made Boston Consultings 2010 list of the 50 most innovative companies in the world. The one Chinese company in the top 10 (battery and car maker BYD) has attracted significant investment from Warren Buffett.
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France
Overview
France, while performing well in absolute terms, falls into the middle of the "innovation followers" category on the Europe Innovation Scoreboard (EIS), slightly above the EU average but well behind countries like Denmark, Finland, Germany, and Sweden. From 2000 to 2010, GDP per capita increased from $21,828 in 2000 to $39,460, representing compound annual growth of approximately 6 percent. In terms of training the high-tech workforce of the future, France comes in above the OECD average with 27.6 percent of new degrees issued in science and technology, but that has not translated into prolific patent production, where France is slightly below the OECD average. French respondents to the GE Innovation Survey were fairly positive, with 67 percent agreeing that government has been successful in supporting research and innovation. But half also indicated that they did not believe government has been successful in improving education.
University-Industry Collaboration (Above Average): France places in the second quartile for university-industry collaboration, but this is perhaps its weakest link in the innovation value chain. In a survey conducted in France, 53 percent of Public Research Organizations (PROs), which receive the largest share of government funding, indicated that they were not active in technology transfer. Private investment accounts for a mere 2.7 percent of funding in public academic laboratories. This figure is 12.7 percent in Belgium, 8.7 percent in Canada, 12.6 percent in Germany, 5.6 percent in the United Kingdom, and 5 percent in the United States. According to the GE Innovation Survey, 39 percent of respondents disagreed that it was easy for companies to partner with universities, much higher than in comparable counties like Germany, the United Kingdom, and the United States. Venture Capital Deals (Leading): Venture capital investment in France equals 0.13 percent of GDP, above the OECD average of 0.1 percent. Research indicates, however, that there is a dearth of venture capital for early-stage seed funding. Moreover, only 5 percent of overall investment fund activity focuses on venture capital, while 80 percent has concentrated on leveraged buyouts. In the GE Innovation Survey, 55 percent of respondents said that private investors are not supportive of new companies that need funding, and 19 percent were unsure.
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Gross Expenditures on R&D [GERD] (Leading): R&D spending in France was slightly below OECD average at 2 percent in 2008. Business expenditure on R&D (BERD) was 1.3 percent in 2008 and has been declining since the 1990s. France aims to achieve 3 percent GERD, 2 percent of which would be driven by the private sector. Historically, the French system has focused on academic institutions and public research organizations, but this engendered insufficient coordination with industry. More recent initiatives have focused on fostering more inclusive and cooperative technology clusters. High-Technology Exports (Leading): France does quite well in exporting high value-added products. Aerospace, pharmaceuticals, and electronics remain its primary high-tech industries. Airbus is headquartered in Blagnac, France, along with its leading-edge manufacturing. Recent legislation placing emphasis on tech-based "competitiveness clusters" aims to improve Frances global performance in emerging fields such as biotechnologies and nanotechnologies. Utility Patents (Leading): At 38 triadic patents per 1 million residents in 2008, France was slightly below the OECD average and far below countries like Sweden, which produced 88. However, France is in the top five for scientific articles published (with 800 per 1 million residents, representing 3 percent of world output). Patent production from France has remained fairly constant, with its number of patents published by the European Patenting Office (EPO) holding steady from 2004 to 2009. From 2003 to 2008, patents grew at only 0.1 percent per year. Respondents on the GE Innovation Survey were mixed, with 40 percent of respondents stating that the current intellectual property system does not support innovation and 11 percent unsure. STEM Education (Leading): France is among the European leaders in STEM education. In fact, it ranks higher on the global index than Japan, the United Kingdom, Germany, and the United States, but still below countries like Singapore, Finland, Switzerland, and Canada. Human resources in science and technology remain one of Frances greatest assets. With 27.6 percent of new degrees issued coming from science and engineering degrees, France is above the OECD average. France also produces 3 percent of the world output of scientific articles, ranking among the top five nations in 2008. However, half of the respondents in the GE Innovation Survey believed that the government has been unsuccessful in improving education. Business Environment (Above Average): On a global scale, France falls in the upper part of the second quartile in terms of business environment. In recent years, the government has placed a large focus on increasing partnerships between the public and private sectors. The three primary policy instruments to promote innovation in France include research tax credits, the "competitiveness cluster" policy, and strategic investment funds. These are designed to address three primary innovation challenges: increasing business investment in R&D, improving technology transfer, and fostering innovative SME growth through better funding. In 2009, France released its first national innovation policy,
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the National Research and Innovation Strategy, designed to coordinate and prioritize research goals.
Conclusion
France performs well in global terms, but its performance is only middling relative to other OECD countries. It has one of the world's best education systems, but a comparatively poor technology transfer program. The government is trying to bolster the nation's innovation ecosystem through targeted policies, though French respondents in the GE Innovation Survey were relatively pessimistic about the success of these efforts to date.
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Germany
Overview
Germany performs quite well across the board on our innovation indicators, placing among the leading nations in four of the seven categories and above average in terms of venture capital deals, STEM education, and high-tech exports. The country ranks 12th in the INSEAD Global Innovation Index and has an outstanding reputation for design and engineeringin fact, many respondents in the GE Innovation Survey named Germany as an "innovation champion." Germanys high ranking on the survey is likely a result of the nation's strong competitive position and its history of product and process innovations; it is frequently viewed as a model for other nations to follow. Germany has three firms in the top 50 most innovative companies as defined by BCGs Innovation 2010 Report. Germanys labor force includes a high share of science and technology occupations, and has built a reputation for medium- and high-technology manufacturing prowess. The government has instituted a number of robust innovation policy initiatives, which it actively renews and revises. It recently updated its most important national science, technology, and innovation blueprint, the High-Tech Strategy 2020.
University-Industry Collaboration (Leading): Respondents in GE's Innovation Survey overwhelmingly agreed that it is easy for universities and industry to collaborate, and it's no surprise that Germany placed among the leading nations in this indicator. In addition, as part of the countrys High-Tech Strategy, the government committed close to 1 billion to small and medium-size enterprises (SMEs) for research and has placed increased emphasis on partnerships between business and public research. External research funding for SMEs has been a recurring challenge for Germanys innovation system and is one of the reasons that the government is providing such strong support for smaller firms now. Although only 43 percent of survey respondents believe that SMEs will prove to be innovation leaders over the next decade, this may change given the level of government support now available. Venture Capital Deals (Above Average): Only 38 percent of respondents in the GE Innovation Survey said that private investors are supportive of companies that need funding; a majority felt that German society is not open to 22
taking risks. Although Germany does perform above average on venture capital deals, this is an area that is extremely sensitive to global macroeconomic conditions, which may explain the discrepancy between the opinions expressed in the survey and the actual indicator performance. Gross Expenditures on R&D [GERD] (Leading): In 2008, GERD was 2.6 percent of Germany's GDP, which is above the OECD average. GERD has been steadily increasing since 2000. The GE Innovation Survey results echo this, with 80 percent of respondents saying that the government does a good job allocating its resources and budget to support innovation and research and 79 percent stating that companies were spending more on R&D due to the crisis. High-Technology Exports (Above Average): Germany finds its comparative advantage in high-tech and medium-high-tech products. Consequently, Germany has a high share of employment in medium and high-technology manufacturing. Utility Patents (Leading): Germany is a global leader in producing patents, performing well above the OECD average. Additionally, Germany has unique strengths in certain sectors such as automotive manufacturing, machinery, and electrical engineering that may be less R&D-intensive than emerging industries such as biotechnology but still produce a high number of patent applications. Sixty-seven percent of respondents from the GE Innovation Survey believe that the patent and copyright systems in Germany are effective. STEM Education (Above Average): Germany places above average in our global indicator for STEM education, but this represents its weakest category. However, the federal and state governments have introduced two initiatives that help strengthen Germanys science, technology, engineering and math programs. The Higher Education Pact will provide 275,000 new students with funding to pursue higher education (the state governments will focus on promoting the STEM fields), and the Excellence Initiative aims to create research schools and clusters that will be internationally visible research beacons. Business Environment (Leading): Germany's business environment ranks well on a global basis. While it takes a lengthy 15 days to start a company, the country excels in other areas of importance such as the time required for obtaining electricity, enforcing contracts, and cross-border trading. However, almost 60 percent of GE Innovation Survey respondents did note that trade regulations were a barrier to innovative commercial success.
Conclusion
Germany has consistently ranked high on the INSEAD Global Innovation Index, though it has taken a dramatic fall from its 2nd-place ranking in 2009 to its 2010 rank of 12th. However, the government has a number of strong initiatives under way to boost innovation, and the vast 23
majority of survey respondents believe the innovation environment in Germany has improved over the last five years. An astounding 99 percent of German survey respondents believe their country has a reputation as an innovative market, while 96 percent felt the government does a good job of allocating its resources to various budget areas. These responses are indicative of the pride Germans take in their legacy of excellent research, engineering, and design, and of the nation's commitment to maintaining this edge in the years to come.
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India
Overview
While India performs comparatively poorly on the innovation indicators, it is clearly a nation on the rise. The majority Bharatiya Janata Party (BJP) began economic liberalization efforts in the early 1990s. Since then, Indias GDP per capita has increased from $309 in 1991 to $1,477 in 2010, representing an 8.6 percent compound annual growth rate. From 2000 to 2010, the number of triadic patents produced in India grew on average 20 percent per year. The government is making concerted efforts to improve general education, technical training, and innovation. Two major recent initiatives include the National Science and Technology Nano Mission and the National Council for Skills Development, the latter of which is chaired by Prime Minister Manmohan Singh. The technology service and biomedical fields have also been growing rapidly. In order to make pharmaceutical R&D more attractive, the government removed its 12 percent service tax on R&D related to new chemical development, removed import duties on investigational drugs, trimmed months from its regulatory timeline, and committed funding to develop 20 biopharmaceutical research parks throughout the country. Nonetheless, India has many challenges to overcome, including vast infrastructure needs. Approximately half the population is still employed in agriculture and only 11.4 percent of the population aged 25-64 has a tertiary degree.
University-Industry Collaboration (Below Average): There is comparatively little university-industry collaboration in India. Some 68 percent of R&D is conducted in government-sponsored research systems, including institutions of higher learning, while only 30 percent of R&D is conducted by businesses. Furthermore, more than 70 percent of technologies developed under the public system that were transferred to the National Research Development Council were never turned into real-world products and technologies. However, the prime minister has indicated that one of the primary objectives of recent legislation dealing with innovation is to double businesses contribution to GERD and reduce government involvement. This shift is reflected in the GE Innovation Survey, where an unusually high 41 percent of respondents stated that it is not easy for companies to partner with universities.
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Venture Capital Deals (Above Average): Though India's venture capital market ranks above average on a global scale, it is still in its infancy. Fortunately, the government has sponsored several initiatives to spur entrepreneurship and venture capital. The National Innovation Projects is designed to help entrepreneurs and small enterprises develop technological abilities, diffuse existing technologies, and provide a small amount of venture capital funding itself. There is also the Biotechnology Industry Partnership Programme (BIPP), which helps share the cost of business endeavors in high-risk discovery and innovation, especially in "futuristic" areas. This program provides grants of 30-50 percent to industry for discovery-linked innovation. Respondents in the GE Innovation Survey were very optimistic, with 75 percent agreeing that private investors are supportive of companies that need funding. Gross Expenditures on R&D [GERD] (Above Average): India's GERD equals slightly more than 1 percent of GDP, but the government is committed to increasing this figure to at least 2 percent of GDP. Instrumental to this policy goal is encouraging business R&D, which currently represents only 30 percent of GERD (as compared to 68 percent by government-sponsored entities). Only 8-9 percent of R&D spending went to higher education in 2009, lagging well behind 20-28 percent in the OECD countries and leading Asian countries like China, Japan, and Singapore. High-Technology Exports (Below Average): Exports accounted for 14.6 percent of India's GDP in 2007-2008, which is low on a global scale. (By comparison, Singapores exports equaled 180 percent of GDP and Chinas were 37 percent of GDP.) But the trend is toward growth: India's high-tech exports as a percent of total exports nearly doubled from 2000 to 2009, increasing from 4.8 percent to 8.6 percent. Utility Patents (Below Average): From 2000 to 2010, the number of triadic patents in India grew at an average rate of 20 percent per year. And over the previous two decades, total patents had nearly doubled. However, registration is still largely dominated by foreign patents, which outnumber Indian patents 4 to 1. Respondents in the GE Innovation Survey were slightly negative with respect to intellectual property, with 41 percent not believing that protection of copyrights and patents was effective. STEM Education (Above Average): Education has become a major public policy issue in India. The government's eleventh Five-Year Plan (which runs from 2007 to 2012) increases the education budget fivefold. The ultimate goal is to allocate the equivalent of 6 percent of GDP to education and to increase enrollment in higher education from 11 percent to 15 percent. Relevant policy initiatives include the establishment of a science and technology steering committee for the Five-Year Plan, the National Council for Skills Development, the National Science and Technology Nano Mission, and the National Knowledge Commission. Respondents in the GE Innovation Survey were highly positive in this category; 76 percent felt that the government has been successful in improving education. 26
Business Environment (Lagging): While many companies have moved to India due to low labor costs and its English-speaking populace, the business environment remains difficult to navigate. Of the 183 countries in the Doing Business 2012 report, India ranks 166th in starting a business, 181st in dealing with construction permits, 147th in taxes, and 182nd in enforcing contracts. Moreover, because there is no overarching national policy on innovation, procedures for governance, coordination, and monitoring have been ambiguous and complex. Most policy has taken a sector-based approach, focusing on specific industries like space, atomic energy, pharmaceuticals, and information technology. The R&D tax incentive system also remains weak due to a lack of legal provisions that would enable the Science and Technology Ministry to effectively monitor the grants they give to businesses. Regardless, 76 percent of respondents in the GE Innovation Survey agreed that government has been successful in supporting research and innovation.
Conclusion
While India cannot yet be considered in the vanguard of world innovation, it is accelerating rapidly. Respondents in the GE Innovation Survey conveyed a clear sense of optimism that development is heading in the right direction. The government appears committed to innovation as well as inclusive development policies. Government spending still accounts for approximately two-thirds of R&D funding, but the current administration aims to reverse this and shift the impetus to the private sector.
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Israel
Overview
Israel is a top performer on our innovation indicators. Its lack of natural resources has forced the country to find other areas of competitive advantage and Israel has successfully leveraged its human capital to create an innovation-driven economy. On four of seven indicators, Israel is a leader, and it is also above average in high-tech exports and business environment. The GE Innovation Survey reflects a high level of optimism pertaining to many areas of innovation, including the governments involvement and support.
University-Industry Collaboration (Leading): There is a high level of collaboration between Israeli universities and firmsin fact, the country is one of the most active in the world in this regard. Israel is home to some of the worlds top university research centers and as well as major research centers for both IBM and Intel. In addition, the Ministry of Industry, Trade, and Labour (MITL) has committed increased funding to the Office of the Chief Scientist (OCS), which in turn distributed funding to small and medium-size enterprises for research and development. There is also strong support for university research within the government. Eighty-two percent of survey respondents from the GE Innovation Survey said that it was easy for companies to partner with universities, the highest percentage of any surveyed country. Venture Capital Deals (Leading): One of the factors behind Israels success in high-tech markets is availability of venture capital. Israel's strong and active VC network has led to the creation of many firms. Not surprisingly, Israel is a leading country on this indicator, with around 70 private venture funds. In 2009, just under 450 companies received venture funding. However, the global downturn has forced a significant contraction within the venture capital industry. But this effect has occurred globally, and relative to other countries, Israel is still a world leader. GE Innovation Survey respondents overwhelmingly agreed that private investors were supportive of innovative companies, but they also acknowledged that the recession had made it more difficult to raise private funding. Gross Expenditures on R&D [GERD] (Leading): Israel leads the world in R&D spending relative to GDP. In 2008, GERD stood at 4.9 percent of GDP significantly above the OECD average of 2.3 percent. The government does a good job of 28
supporting and investing in research and development, but most spending originates from private industry. In 2008, the business enterprise sector accounted for 81 percent of GERD. However, the government has been very effective in directing its R&D funding to attract private investment. For every NIS 1 million in government funding, firms invested NIS 1.28 million in direct response. Eighty-five percent of GE Innovation Survey respondents say that the government does a good job allocating its resources toward science and innovation. High-Technology Exports (Above Average): Israel is highly dependent on exports. Some 45 percent of its GDP comes from exports, and almost a quarter of that is high-technology. There is a very strong tech sector in Israel (information communication technology makes up almost 10 percent of GDP), including hightech manufactured goods for export. In 2007, high-tech industries contributed 1.6 percent to the manufacturing trade balance. The caveat is that Israels export machine is not immune to broader global macroeconomic conditions. Utility Patents (Leading): Israel is one of top global producers of utility patents. Israeli inventors are especially prolific in the life sciences, biopharmaceuticals, and medical devices. Again, Israeli respondents to the GE Innovation Survey were more positive than respondents from any other nation when asked about the effectiveness of their patent and copyright system. Israel also ranks above the OECD average on patents with foreign co-inventors, due in large part to extensive research partnerships with the United States. STEM Education (Below Average) This indicator represents the weak spot in Israel's innovation ecosystem. Israeli policymakers focus most of their attention on industrial innovation, and higher education has not received the same level of support. This problem has been recognized within the country, and there is a renewed focus on the quality of education and the retention of skilled scientists. An initiative was recently approved to create 30 centers of academic excellence. Business Environment (Above Average) Israel's business climate ranks above average globally. However, the country suffers from lengthy business start-up times and arduous procedures to obtain basic infrastructure such as electricity. To offset this, Israel has excellent cross-border trade regulations and great credit accessibility.
Conclusion
Despite strong outcomes and a world ranking of 14th on the INSEAD Global Innovation Index, few respondents in the GE Innovation Survey from other countries identify Israel as an innovation champion. Israel may be overshadowed by larger nationsbut there is no denying its strong track record for ingenuity and its forward momentum. In fact, 96 percent of respondents said the innovation environment has improved over the last five years.
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Japan
Univ./Indus. Collaboration Venture Capital Deals Gross R&D Expenditures High-tech Exports Utility Patents STEM Education Business Environment
Overview
Japan performs quite well on our innovation indicators. One of the worlds three largest economies, it has a long track record of being on the cutting edge in many sectors. Five Japanese companies rank among the top 50 most innovative firms on BCGs Innovation 2010 report. The country ranks among the global leaders on five indicators, is above average on one and lags on venture capital deals (the only area of real weakness in Japans innovation portfolio). The Japanese government has consistently shown a strong commitment to innovation, maintaining strong levels of funding despite the recession. The countrys science and technology strategy sets ambitious targets for 2020, including boosting R&D spending over 4 percent of GDP. The government also plans to improve and increase the number of leading universities and research institutions and to place greater emphasis on green innovation. Respondents from the GE Innovation Survey were often quite pessimistic when asked about their country's innovation performance. Given the strong performance Japan exhibits on our scorecard, this may have more to do with macroeconomic conditions than with innovation per se. After the "lost decade" of the 1990s, growth was tepid during the 2000s. No sooner had the most recent global recession started to recede when Japan was hit by triple tragedy of the March 2011 earthquake, tsunami and nuclear crisis, all of which will require considerable investment for recovery. Japan is the most heavily indebted OECD country, and its deficit is growing at a rate that is second only to the United States. Only 30 percent of Japanese respondents in the GE Innovation Survey said the government is doing a good job using its resources to support research and innovation.
University-Industry Collaboration (Leading): Japan is a global leader in university-industry collaboration. There are almost 50 technology licensing organizations attached to various universities in the country. This is in large part due to the TLO Act, which has promoted technology transfer at universities since its passage in 1998. In 2004, the government permitted all of its public universities to "incorporate," giving them a much higher degree of autonomy. This allowed each university to set its own academic agenda, control its budget and manage its internal organization. The number of joint research projects in 2009 was nearly doubled the number before incorporation. The Japanese government has done an impressive job fostering greater collaboration between firms and universities.
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Venture Capital Deals (Lagging): Venture capital is the one area where Japan does not perform well, and its performance comes as a surprise given the assets it has in other areas. Only 31 percent of respondents from the GE Innovation Survey said that private investors supported companies in need of funding. The reality of the situation is that venture capital in Japan was the second lowest in the OECD in 2008, and had declined by 20 percent from the preceding year. Existing venture capital firms invested in 40 percent fewer new companies as well. Gross Expenditures on R&D [GERD] (Leading): Japan commits an impressive level of expenditures to R&D. In 2008, GERD equaled 3.4 percent of GDP, the third-highest level among OECD countries. Industrys proportion of GERD rose to 78 percent, which is equivalent to 2.7 percent of GDP (the highest proportion in the OECD). However, government-financed GERD decreased (possibly in response to the offset from industry) to 16 percent; it was 20 percent in 2000. Japan is in the fortuitous position of having a strong and committed industrial sector when it comes to research and development. High-Technology Exports (Above Average): High-tech exports have been hurt by the rise of the yen, which has appreciated by nearly 50 percent relative to the U.S. dollar over the past five years. In 2000, high tech's share of total manufacturing exports peaked at 28.4 percent; by 2009, this figure had dropped to 19.6 percent. Toyota Motors reportedly loses 30 billion in earnings for every 1in appreciation relative to the U.S. dollar. The government is currently pursuing measures to limit the volatility of the currency and cap its rapid appreciation. Utility Patents (Leading): In 2008, Japan had 111 triadic patents per million residents, ranking second in the OECD. The country also had 28 percent of patents in the triadic patent family, second after the United States. In the GE Innovation Survey, 52 percent of respondents believed that the current intellectual property system in Japan allows innovation and 66 percent believed that the protection of copyrights and patents is effective. STEM Education (Leading): Japan lies in the bottom of the first quartile in global rankings for STEM education. Twenty-four percent of all new degrees issued are in science and engineering, above the OECD average (though this figure dropped by 2 percentage points between 1998 and 2007). Japan is also above the OECD average with 11 researchers per 1,000 workers. In 2008, Japan produced 81,000 scientific articles, the second-highest number, representing 4.8 percent of the worlds output of scientific articles, but slightly below the OECD average when normalized for population. In the GE Innovation Survey, Japanese respondents were decidedly negative, with 71 percent believing that the government has not been successful in improving education and 62 percent disagreeing that local universities and schools provide a strong education.
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Business Environment (Leading): The business environment in Japan is generally strong, lying in the bottom of the first quartile of the global rankings. The government has demonstrated a commitment to innovation through its policies and institutions; the prime minister himself chairs the Council for Science and Technology Policy (CSTP). The New Growth Strategy adopted in 2010 sets forth several targets: more world-leading universities and research institutions; full employment for science and technology doctorates; utilization of intellectual property of SMEs; more efficient use of information and communication technologies in both production and consumption; and increasing GERD to over 4 percent of GDP. Nonetheless, the Japanese system exhibits several difficulties, including starting a business, which takes 23 days and requires 8 procedures; dealing with construction permits, which takes 193 days and requires 14 procedures; and paying taxes, which are collected 14 times per year and require approximately 330 total hours to complete.
Conclusion
Overall, Japan is clearly in the vanguard of innovative nations. Education, R&D expenditures, patent production and university-industry collaboration are all high. The business environment is also strong, difficult tax reporting and other arduous business-starting procedures notwithstanding. On the other hand, venture capital is markedly low and high tech exports have decreased in response to the yens appreciation. Interestingly, while many countries view Japan as an innovation leader, the Japanese are comparatively pessimistic. 65 percent of respondents in the GE Innovation Survey believed that government has not supported research and innovation.
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Mexico
Overview
Similar to Brazil, Russia, and China, Mexico posts a mixed performance on the innovation indicators. While its overall results do not stack up well relative to its OECD peers, growth in several key sectors proves promising. From 1998 to 2008, high-tech manufacturing increased by 10 percent annually, which was higher than the increase in total manufacturing exports. Between 2000 and 2010, GDP per capita increased from $5,817 to $9,166, representing a compound annual growth rate of 4.7 percent. While the country was hard hit by the effects of the U.S. recession (GDP per capita was actually higher in 2008, at $9,909), GDP rebounded strongly in 2010 with a 5.5 percent growth rate, nearly double that of the United States. Unfortunately, Mexico's economy remains dominated by monopolies, a structural issue that discourages competition and innovation. The education, regulatory and financial systems also remain comparatively poor, providing a disincentive for foreign direct investment, venture capital, and research and development.
University-Industry Collaboration (Above Average): Mexico is slightly above average in university-industry collaboration, falling near the bottom of the second quartile in our global rankings. The country has several public research institutions, such as the research centers of the National Council on Science and Technology (CONACyT), that help facilitate technology transfer, but it lacks intermediate institutions or technology brokers to help disseminate advanced technical knowledge and encourage upgrades to newer technologies. In the GE Innovation Survey, respondents were slightly negative with 36 percent saying it is not easy for companies to partner with universities. Venture Capital Deals (Lagging): Information on venture capital activity in Mexico is sparse. Barriers to foreign direct investment in Mexico remain higher than the OECD average. Moreover, there is still relatively little competition in key sectors like financial services, telecommunications, energy and transportation infrastructure. Due to a historically conservative banking system, access to capital for high-tech firms is low. All of this contributes to very low venture capital activity in Mexico. Respondents in the GE Innovation Survey reflected this, with 49 percent of respondents saying that private investors are not supportive of companies that need funding.
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Gross Expenditures on R&D [GERD] (Below Average): At 0.4 percent of GDP in 2007, gross expenditures on research and development are the lowest among the OECD countries. R&D spending has fluctuated near that level since 2000. The government accounts for 50 percent of expenditures on R&D, while industry drives 45 percent. In the GE Innovation Survey, 51 percent of respondents said the government has not been successful in supporting research and innovation. High-Technology Exports (Leading): Between 1998 and 2008, high-tech manufacturing increased by 10 percent annually. To give just one example, Bombardier in 2008 decided to build its Learjet 85 in Quertaro in cooperation with the Mexican government, which agreed to train 120 technicians for the purpose. However, high-tech exports as a percentage of total exports remained fairly constant between 2000 and 2010, fluctuating around 22 percent. Utility Patents (Below Average): In 2008, Mexico was the least prolific among OECD nations with 0.14 triadic patents and 73 scientific articles per 1 million residents. The country also had the lowest density of researchers among OECD countries, with fewer than one researcher per 1,000 workers. Forty-one percent of respondents in the GE Innovation Survey felt that the current intellectual property system in Mexico does not encourage innovation, and 49 percent found the protection of copyrights and patents ineffective. STEM Education (Lagging): STEM education remains poor in Mexico. Tertiary-level graduates represent only 18 percent of the workforce, which is below the OECD average. However, 24.7 percent of all new degrees issued were in science and engineering, above the OECD average. Regardless, 50 percent of respondents in the GE Innovation Survey felt the government had not been successful in improving education and 44 percent did not feel that local universities and schools provide a strong education. Business Environment (Below Average): Restrictive trade policies and barriers to foreign direct investment have inhibited innovation and productivity growth in Mexico. Competition has also been slowed by de jure or de facto private monopolies in certain industries, as well as by the abuse of amparo procedures. This has contributed to higher input costs and corresponding barriers to entry. Furthermore, Mexicos bank overhead costs and net interest margins are among the highest among OECD countries, indicating inefficiency in the banking system. In response, many firms rely on supplier credit in lieu of bank credit. This lack of access to cheap capital dampens entrepreneurial activity.
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Conclusion
Mexicos performance is mixed relative to its peers. Though it has a strong manufacturing capacity and benefits enormously from trade with the United States, its entrenched government and private interests as well as restrictive trade practices remain prohibitive for businesses, especially early-stage innovators. The country performs poorly in STEM education and venture capital deals and below average in GERD, utility patents and business environment. Respondents in the GE Innovation Survey reflect this sense of unfulfilled potential, with 51 percent disagreeing that government has been successful in supporting innovation and 50 percent stating that the government has not improved education.
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Poland
Overview
Poland does not perform well on our innovation scorecard, lagging in one indicator and coming in below average on the other six. Poland has seen uneven investment in its innovation system over the last decade, and has experienced problems with both the coordination and delivery of its programs in this area. The Innovative Economy 2007-2013, one of the country's major strategy documents, aims to enhance the economy through the development of innovative enterprises. Unfortunately, there are multiple strategies managed by different government ministries, which complicates the overall approach and reduces the effectiveness of the program as a whole. This is echoed in responses from the GE Innovation Survey; only 22 percent of those surveyed believe that government support for innovation is efficiently organized.
University-Industry Collaboration (Below Average): A low level of university-industry collaboration is one of the most significant innovation challenges in Poland. Business expenditure on R&D (BERD) in Poland is quite low, and actually decreased from about 0.4 percent of GDP in the 1990s to 0.2 percent in 2008. BERD as a percentage of GDP in Poland is one of the lowest in the OECD. Until firms start to invest more heavily in research and development, it is unlikely that their collaboration with public research institutions will improve. Additionally, only half of the respondents from the GE Innovation Survey said it was easy for companies to partner with universities. Venture Capital Deals (Lagging): Polands venture capital industry is quite weak, producing one of the lowest levels of VC investment on our list of countries. It is likely that there is just not enough innovative activity in the country yet to encourage or attract high levels of VC. In the GE Innovation Survey, only 27 percent of respondents said that private investors were supportive of companies in need of funding, and 77 percent said access to start-up capital has become more difficult due to the recession. Gross Expenditures on R&D [GERD] (Below Average): Totaling only 0.6 percent of GDP, R&D spending levels in Poland are far below the OECD average of 2.3 percent of GDP and are not competitive with innovation-driven countries. Poland ranks below average on this indicator. Unfortunately, the level of GERD in Poland has not been 36
increasing consistently and was in fact higher in the 1990s than it is now. Industry only accounts for 31 percent of R&D investment, much lower than in leading nations. It will be hard for Polands level of GERD to reach a competitive level without the private sector taking the lead. High-Technology Exports (Below Average): Manufacturing in Poland is dominated by low- and medium/low-tech industries, so it's not surprising that Poland performs below average in this indicator. High-tech industries accounted for less than 5 percent of manufacturing in 2009. Utility Patents (Below Average): On a global scale, Poland performs below average in terms of the number of utility patents it produces. There have been some improvements over the last five years, but Poland still has significant ground to overcome in this area. Respondents from the GE Innovation Survey do not view the country's intellectual property and copyright system favorably; only half said it is effective. STEM Education (Below Average): STEM education is another area where Poland struggles to excel; it ranks below average on this indicator. Increasing the number of highly skilled knowledge workers and the quality of science, technology, engineering and math education in Poland is a recognized priority for the government, which has launched a major development program in this area. Business Environment (Below Average): Poland's business climate ranks below average. While businesses can easily engage in crossborder trade, there are other important areas of weakness. It takes 32 days to start a business and 143 days to get electricity.
Conclusion
Respondents from the GE Innovation Survey were mostly negative in their assessment of Polands innovation system and its outcomes. For the most part, their responses align with the countrys performance on our innovation indicators. Only 50 percent of respondents said that the government does a good job allocating resources to support innovation and research. However, only 7 percent thought that the innovation environment had worsened over the last five years, indicating that some improvements are being made.
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Russian Federation
Overview
Since the 1990s, the Russian economy has become more globally integrated. From 2000 to 2010, GDP per capita increased from $1,775 to $10,440, representing a 19.4 percent annual growth rate. However, Russia still lags the OECD countries in several key respects, largely due to its distinct historical and political heritage. It is dominated by a small group of large businesses that have demonstrated comparatively little interest in innovation. The education system remains strong, with a much larger percent of the total population obtaining tertiary degrees than the OECD average. Though R&D spending is above average, a very large portion is funded by government. In 2008, industry financed only 29 percent of GERD while the government accounted for 65 percent. . Russia has recently begun to implement policies to foster entrepreneurship and support small and medium-sized enterprises (SMEs). The Long-Term Socio-Economic Development of the Russian Federation CLTD 2020 aims to encourage scientific and technological breakthroughs while decreasing the countrys dependence on natural resources.
University-Industry Collaboration (Below Average): Russia's collaborative model is unique among more developed nations: Industry does not shoulder the burden of research and development, and universities are not encouraged to commercialize their products, traditionally relying on direct grants from the government for support. This has engendered a disjointed innovation system. In recognition of this, the government has attempted several initiatives aimed at fostering SMEs and start-ups. Federal Law No. 217 FZ focuses on standardizing the creation of start-up and spin-off companies founded by federally funded scientific and education institutions, outlining the relationship between universities, research institutions, and microfinance organizations. Venture Capital Deals (Lagging): Russia lacks a healthy venture capital market. Drags on the system include a lack of competition, low levels of trust, and high levels of corruption; attempts to change or improve this system are often frustrated by resistance from entrenched interests. In 2006, the government started the Russian Venture Company with the aim of stimulating a VC industry. The government has also encouraged the development of regional venture funds, producing 23 funds in 21 regions. However, the impact of these endeavors appears limited, funding fewer than 50 companies by 38
2009. In the GE Innovation Survey, respondents were mixed: 45 percent agreed that private investors are supportive of companies that need funding, while 40 percent disagreed. Gross Expenditures on R&D [GERD] (Above Average): While Russia's R&D spending places the country in the middle of the second quartile in our global rankings, it has shown a negative trend since the 1990s, dropping from a high of 2 percent in 1990 to a low of 1 percent in 2008. In 2008, the government financed a full 65 percent of GERD, while industry supplied only 29 percent. In the same year, business expenditures on research and development dropped to 0.7 percent of GDP, less than half the OECD average of 1.6 percent. Furthermore, from 1998 to 2008, governments share of R&D funding in the business sector increased from 43 percent to 56 percent. Interestingly, despite governments comparatively strong role in R&D funding, 49 percent of respondents GE Innovation Survey respondents did not feel that the government has been successful in supporting research and innovation. High-Technology Exports (Above Average): Russia falls between the second and third quartiles in the global rankings for high-technology exports. From 2000 to 2010, high-tech goods as a percent of total exports actually decreased from 17.23 percent to 9.33 percent. However, Russia is quite strong in fields such as nuclear engineering, new materials, information and communication technologies, and defense and aerospace. Utility Patents (Above Average): Russia lies at the bottom of the second quartile in our global ranking for the generation of utility patents. Overall, at 0.5 triadic patents per 1 million residents, Russias patent production is fairly low. Similarly, its 176 scientific articles per 1 million residents is comparatively low. In 2008, the government launched a new intellectual property rights system, which was mostly in line with developed countries, but enforcement of this policy is less certain. Russians were quite negative in the GE Innovation Survey: 54 percent did not feel that the current intellectual property system allows innovation and another 54 percent found the protection of copyrights and patents ineffective. STEM Education (Above Average): In global measures of STEM education, Russia again places between the second and third quartiles. In 2008, 53 percent of the population aged 25 to 64 had university type-A degrees, well above the OECD average of 38 percent, and 25 percent of all new degrees issued were in science and engineering. While the country had the highest number of R&D workers and 451,000 researchers in 2008, this number has been decreasing at a rate of 1 percent annually since 1998. By 2008, the country had 6.4 researchers per 1,000 workers. Fifty-two percent of respondents in the GE Innovation did not feel that the government has been successful in improving education, and 56 percent did not feel that local universities and schools provide a strong education.
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Business Environment (Lagging): Russia's business environment does not stack up well in global terms. Domination by large corporations has lead to a lack of competition. When combined with low levels of trust and high levels of corruption, this creates a particularly poor environment for small businesses. Furthermore, because sub-national authorities have limited fiscal autonomy, they frequently pursue their own objectives informally with large enterprises working in their territory. This also increases the barriers to entry for small firms. In order to avoid this pattern, the government has attempted to create various technoparks and special economic zones, including developments in St. Petersburg, Zelenograd, Dubna, and Tomsk. However, they have yet to enjoy real success. On the plus side, there is also buzz about the creation of Skolkovo, a project intended to partially recreate Silicon Valley. Cisco and Nokia have signaled their intention to invest, but the project is ongoing.
Conclusion
Russia has a well-educated population and a decent university system. The country maintains its historic strengths in nuclear engineering, new materials, information and communication technologies, and defense and aerospace. But its business environment needs reform. It is not conducive to entrepreneurship and ingenuity, and it has produced a poor venture capital market. In the GE Innovation Survey, 49 percent of respondents believed that the government has not successfully supported research and innovation, 52 percent stated that the government has not improved education, and 56 percent did not feel that local universities and schools provide a strong education.
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Saudi Arabia
Overview
Saudi Arabia has decidedly mixed outcomes on our innovation scorecard. It is one of the topperforming countries on business environment and comes in above average on three other indicators, but ranks near the bottom on the remaining metrics. This is largely explained by the Saudi economy high level of dependence on petroleum and petroleum products. Petroleum exports account for almost 90 percent of all exported goods. However, the petroleum industry only accounts for about 10 percent of employment. A number of factors are likely to threaten the country's economic stability going forward: First, oil prices are rising, but the trend can no longer be expected to last indefinitely; and second, a huge youth population will soon be entering the workforce. The Saudi government is under pressure to diversify the economy, and has issued development reports that outline goals for creating a more knowledge-driven economy.
University-Industry Collaboration (Above Average): Saudi Arabia has an above-average level of university-business collaboration. The country has made steady improvements since 2007 (when its data was first collected). The opening of the King Abdullah University of Science and Technology (KAUST) in late 2009 has been a clear step forward. But only 66 percent of respondents from the GE Innovation Survey said that it was easy for companies to partner with universities, indicating there is room for improvement. Venture Capital Deals (Lagging): The availability of venture capital in Saudi Arabia lags most other countries. The sectors that dominate the Saudi economy do not require high levels of research or venture capital; it is likely because the need never arose that the country did not develop a mature venture capital industry. Yet respondents from the GE Innovation Survey were fairly positive in their assessment of access to capital, with 75 percent replying that investors were supportive of companies in need of funding. Gross Expenditures on R&D [GERD] (Lagging): R&D spending in Saudi Arabia lags most nations. While there has been slight improvement in this area over the past couple of years, Saudi Arabia is still well below the OECD average.
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High-Technology Exports (Lagging): High-tech goods make up less than 1 percent of total Saudi exports, so it's no surprise that the country does not rank well on this indicator. Given the dominance of petroleum, this area will not improve until the economy diversifies. Utility Patents (Above Average): Saudi Arabia performs slightly above average on utility patents, though its performance comes in far below most innovation-driven countries. The nation will need to make dramatic changes before it can claim to have a competitive advantage in this area. Until the country diversifies, there will not be a strong need to patent. In addition, respondents from the GE Innovation Survey indicated that the patent and copyright system likely needs improvement: Only 60 percent answered the laws were effective, and only 55 percent believe that the intellectual property system allows innovation to flourish. STEM Education (Above Average): On a global scale, STEM education in Saudi Arabia is above average. The country has seen a significant improvement in this area since 2007, with a sharp increase after 2009 that is likely driven by the creation of KAUST. The university was created as part of a long-term plan to diversify Saudi Arabias economy; it only provides graduate education and specializes in sciences and technology. The goal is to eventually attract world-renowned scientists and top students, encouraging knowledge flow and innovation. Business Environment (Leading): Saudi Arabia has made significant strides in recent years to both liberalize its markets and eliminate excess bureaucracy. These efforts have paid off as the country has quickly improved its standing in the World Bank Doing Business Report. It takes only one day to register property, and dealing with construction permits is considerably easier than in most countries. There have also been recent reforms making it easier to start a business; it now only takes five days to complete this process.
Conclusion
The Saudi government is attempting to navigate the difficult transition from a resourcedependent economy into one that is driven by knowledge and innovation. Respondents from the GE Innovation Survey were quite positive overall, and were especially optimistic about future outcomes. Ninety-six percent of respondents said that the innovation environment had improved over the last five years. It is possible that Saudi Arabia could become an innovation leader in the future, but a great deal of work lies ahead to fulfill this goal.
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Singapore
Overview
One of the world's few newly industrialized nations, Singapore has made immense changes to its economy over the past 40 years and performs exceptionally well on our innovation scorecard. Singapore ranks among the leaders on all of our indicators except for venture capital deals, where it is above average. The government initially placed great emphasis on efficiency, which attracted a significant amount of foreign direct investment and led to rapid economic growth. With a population of slightly over 5 million, the government was forced to create economic policy based on factors that do not rely on size. After the Asian financial crisis of 1997, the government shifted its focus to industry and innovation. Singapore has been successful in attracting foreign companies and skilled foreign workers, and so far the country's strategies have paid off. The government is constantly creating new initiatives aimed at improving innovation and research capacity, and has become a model for other industrializing nations.
University-Industry Collaboration (Leading): Singapore is a leader in university-industry collaboration. The government has encouraged greater research cooperation between industry and universities by creating research hubs. In 1980, the government created the Singapore Science Park, which served as an incubator for hightech industries and became the nucleus for R&D in Singapore. More recently, the government has announced a 20-year, $7 billion commitment to launch the ambitions One North project, which will be a 500-acre research district close to both research universities and hospitals. But surprisingly, only 63 percent of respondents in the GE Innovation Survey said that it was easy for companies to partner with universities. Venture Capital Deals (Above Average): Singapores venture capital ranking falls slightly behind its outcomes on our other innovation indicators, though it is still above average on a global scale. The government has been a crucial actor in launching Singapores venture capital industry, starting early VC funds and allocating over $1 billion in various investment funds. The growth of this industry over the last 15 years has been significant, though it remains quite difficult to raise early-stage seed capital, limiting the ability and economic potential of new start-up firms. GE Innovation Survey respondents did
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not perceive their country to be a leader in this regard, with only 63 percent stating that private investors are supportive of companies in need of funding. Gross Expenditures on R&D [GERD] (Leading): Singapore's R&D spending equaled 2.5 percent of GDP in 2007, placing the country above the OECD average and well above most countries in the world. Singapore has seen incredible increases in GERD (in 1997, GERD was only 1.5 percent of GDP). Singapores national innovation strategy has paid off: The country has strong levels of business investment in R&D, and government investments help attract additional funding. High-Technology Exports (Leading): Singapore has one of the highest proportions of high-tech exports in the world, which is especially impressive given its industrial composition just 40 years earlier. Singapore has become an important international business hub, especially in knowledge-intensive manufacturing. Hundreds of multinational firms have operations in Singapore, where the excellent business environment successfully attracts companies that export high-value products. Utility Patents (Leading): Singapore is a global leader in generating utility patents. The government has recently enacted new regulations aimed at improving intellectual property protection. Created in 2001, the Intellectual Property Office of Singapore (IPOS) is charged with promoting greater IP creation and protection in addition to developing global networks and copyright treaties. In the GE Innovation Survey, 78 percent of respondents said that the IP and copyright system is effective. STEM Education (Leading): Singapore tops our list of countries on STEM education. It has a number of world-class university programs in science, engineering, and technology. In addition, government grants encourage international collaboration between researchers, and a number of leading international universities have set up their Asian campuses in Singapore (including MIT, Wharton, and INSEAD). Business Environment (Leading): Singapore offers a world-class business environment. The government's efforts to improve competitiveness began with reductions to bureaucracy and efficiency improvements. It takes only three days to start a business and 36 to get electricity. Cross-border trading is incredibly easy, and the total tax rate is quite competitive.
Conclusion
Singapore is becoming recognized as a world leader in terms of its innovation policy and capacity. The government has taken appropriate measures to ensure Singapore stays competitive as it navigates its way through the global recession. Overall, local respondents from the GE Innovation Survey recognized their country's achievements and were mostly positive in their assessment (although they were critical in a few specific areas). 85 percent believe that the 44
government successfully supports innovation and research, and the vast majority said that the innovation environment had improved over the past five years.
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South Africa
Overview
South Africas performance on the innovation indicators is decidedly mixed. With unemployment near 25 percent and national debt mounting, the country is struggling to stimulate growth and reduce its deficit. Moodys recently changed its outlook on South Africas credit rating from stable to negative. Nonetheless, from 2000 to 2010, GDP per capita increased from $3,020 to $7,275, representing a healthy 9.2 percent compound annual growth rate. The Economist recently noted that while the ruling African National Congress remains fixated on redistributing wealth rather than creating it, there are nonetheless many promising signs, including the growing presence of multinational firms. It also observes that old-line conglomerates are losing their dominance and a host of new companies, especially in mobile technology, have burst onto the scene.
University-Industry Collaboration (Above Average): While South Africa places above average in our global ranking of university-industry collaboration, information about specific programs is sparse. The quality of universities is relatively high, with the University of Cape Town ranking 103rd and two others ranking in the mid 200s on the Times Higher Education list. In the future, the orchestration of technology transfer and collaboration between industry and university may fall under the purview of the Technology Innovation Agency (TIA), which is scheduled to begin operation in 2013. South African respondents to the GE Innovation Survey were optimistic, with 78 percent believing that it is easy for companies to partner with universities. Venture Capital Deals (Below Average): South Africa lies in the middle of the third quartile in global venture capital rankings. As of the end of 2009, funds represented 3.0 percent of GDP. Since 1999, funds have grown at a healthy compound annual growth rate of 14.2 percent. However, the majority of capital remains foreign. Of total funds raised and not yet returned to investors, the United States represents 32 percent, the United Kingdom 23 percent and South Africa 29 percent. Between 2008 and 2009, activity dipped dramatically from 18.9 billion rand to 7.0 billion rand. Third-party funds raised for earlystage companies also dipped as a percentage of total funds, from nearly 20 percent in 2008 to 3.5 percent in 2009. Only 56 percent of respondents in the GE Innovation Survey believed that private investors are supportive of companies that need funding. 46
Gross Expenditures on R&D [GERD] (Above Average): Between 2000 and 2009, it rose from 0.73 percent to 0.9 percent of GDP, representing a compound annual growth rate of 8.4 percent. The distribution of expenditures between business and government in 2007 was quite even, with industry financing 43 percent and government 46 percent. High-Technology Exports (Below Average): High tech's share of total exports has been relatively volatile since 2000, ranging from almost 7 percent in 2000 to 5.6 percent in 2009. Because of apartheid, the country developed a bifurcated society, part first-world and part third-world. But the country is learning to use this as an advantage, facilitating interaction between the developed and emerging worlds. Caterpillar and Microsoft recently teamed up with the South African companies Barloworld and Blueworld to enhance their distribution systems in markets they would not normally be able to reach. The country also has respectable aviation industry and a burgeoning mobile technology sector. Utility Patents (Above Average): South Africa falls in the bottom of the second quartile for the generation of utility patents. While it exceeds the global average, it still produces less than one triadic patent per million residents, far below the OECD average. Respondents in the GE Innovation Survey were mixed, with 56 percent believing that the current intellectual property environment allowed innovation and 36 percent disagreeing. However, 65 percent of respondents believed that the protection of patents and copyrights was effective. STEM Education (Lagging): While the education system in South Africa is decent, the science and engineering programs rank at the very bottom of the fourth quartile among the countries surveyed. Only 16 percent of all new degrees issued are in science and engineering. South Africa is all also well below the OECD average in researchers with only 1.5 per 1,000 workers. South Africans responding to the GE Innovation Survey were markedly negative, with 60 percent believing that government has not improved education. Nonetheless, 60 percent of respondents did feel that local universities and schools provide a strong education. Business Environment (Above Average): The business climate in South Africa places it in the middle of the second quartile. In the Doing Business 2012 report, South Africa performed relatively well in measures for obtaining credit, protecting investors and dealing with construction permits (ranking 1st, 10th and 31st, respectively). On the other hand, it performed rather poorly in registering property, resolving insolvency, enforcing contracts and trading across borders (ranking 76th, 77th, 81st and 144th, respectively). In order to promote innovation, the government recently issued South Africas Ten-Year Innovation Plan (TYIP), which addresses five grand challenges: strengthening the biotech sector, developing space science and technology, focusing on energy security, engaging in efforts to address climate change, and contributing to a greater understanding of the role of science in simulating growth. 47
Conclusion
South Africas innovation performance is mixed. While the country performs generally above average, it is currently facing a difficult economic situation with mounting national debt, skyhigh unemployment and persistent poverty. Yet its long-term trajectory is clearly rising. In the GE Innovation survey, respondents were slightly positive, with 66 percent believing that government has supported research and innovation.
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South Korea
Overview
South Korea performs very well across nearly all of the innovation indicators. From 2000 to 2010, its GDP per capita increased from $11,347 to $20,757, representing a compound annual growth rate of 6.2 percent. However, because the country is the worlds fourth-largest importer of oil and because its economy is largely dependent on exports, it was hard hit by the global recession. However, the government seized this opportunity to make reforms in three broad areas: (1) regulations (making them more favorable for venture capital), (2) venture financing (more tax incentives for investors and some government backed funds), and (3) research support (R&D funding, tax waivers, tariff exemptions for R&D equipment, and military service exemptions for researchers). The government and indeed the population as a whole are also very pro-technology and exhibit rapid adoption rates.
University-Industry Collaboration (Leading): Korea places in the bottom of the first quartile in our global ranking for university-industry collaboration. Overall, the education system is strong and has experienced rapid advances in the science and engineering fields. However, there remains a disconnect between universities and the private sector. The Ministry of Education, Science and Technology (MEST), the organization which is responsible for the public science base and education, is operated independently of the Ministry of Knowledge Economy (MKE), which is responsible for industrial technology R&D and cluster policy. Furthermore, while 70 percent of those with doctorates work in the university system, they perform only 10 percent of research. In the GE Innovation Survey, 47 percent of respondents said it is not easy for companies to partner with universities. Venture Capital Deals (Below Average): The venture capital market in South Korea is comparatively small. In 2008, VC investment represented 0.07 percent of GDP, below the OECD average. The country's chaebol system remains in place, with large, diversified, family-owned companies dominating industry and acting as self-sufficient entities. While this strongly hierarchal structure has helped the country catch up to the rest of the developed world in technological production, it has left small and medium enterprises comparatively weak.
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Gross Expenditures on R&D [GERD] (Leading): With R&D spending equal to 3.4 percent of GDP in 2008, South Korea has the fourth-highest R&D intensity in the OECD after Sweden, Finland and Japan. From 2000 to 2008, average annual growth in real GERD was nearly 10 percent. Of total expenditures, industry financed 73 percent and government 25 percent. In terms of performance, industry performed 76 percent of research activities, government 12 percent and the higher education sector 11 percent. High-Technology Exports (Leading): The proportion of medium-high- and high-technology exports from Korea has grown rapidly since the 1990s. Korean businesses sport the largest world market share in TFT-LCD and CDMA cellular phones and DRAM semiconductors. The country is also home to such giants as Samsung, Hyundai and LG. Utility Patents (Leading): With 44 triadic patents per million residents, Korea slightly exceeded the OECD average in 2008. Moreover, the countrys share of patents in the triadic patent family rose from 1.6 percent in 2000 to 4.3 percent in 2008. The country also produced an average of 762 scientific articles per million residents, which was very close to the OECD average. Korean respondents in the GE Innovation survey were very positive, with 75 percent agreeing that the current intellectual property system supported innovation and 86 percent agreeing that the protection of copyrights and patents was effective. STEM Education (Leading): In 2008, science and engineering degrees represented 36 percent of all new degrees issued, the highest share among OECD countries. From 2000 to 2008, the number of researchers per 1,000 workers doubled (from five to 10), also above the OECD average. Furthermore, in the decade leading up to 2008, the number of researchers increased at a compound annual growth rate of 9.8 percent. Interestingly, while 90 percent of respondents in the GE Innovation Survey believed that the local universities and schools provide a strong education, 58 percent did not believe that the government had improved education. Business Environment (Leading): South Korean business is still largely dominated by chaebols, or large, family-owned businesses, which include Samsung, Hyundai and LG. Over the past few decades, these strongly hierarchal organizations have been instrumental in updating Korean technology infrastructure. However, now that the country has reached critical mass, it has recognized the need to shift emphasis to smaller, more innovative firms. The 2004 Implementation Plan for the National Innovation System aims to remedy some of the economic imbalances in favor of new creative firms by improving knowledge flows and technology transfer. The model also targets regional imbalances and offers a portfolio of programs designed to build up regions outside the capital city, Seoul.
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Conclusion
South Korea performs very well across the innovation indicators. The country has made great strides in developing its technology infrastructure and is poised to become a more creative economy. STEM education is very strong, but cooperation between the university and industry systems could be improved. Overall, respondents in the GE Innovation Survey were mixed, with 51 percent stating that the government has supported not research and innovation.
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Sweden
Overview
Sweden consistently ranks in the top tier of world innovation. Its economy is strong: From 2000 to 2010, GDP per capita increased from $27,879 to $48,832, representing a 5.8 percent compound annual growth rate. The country avoided a mortgage crisis and posted a budget surplus every year from 1994 to 2009. In 2008, Sweden had the highest level of R&D spending among OECD countries. It has a high concentration of researchers and is proficient at generating patents. Eighty-seven percent of GE Innovation Survey respondents agreed that the Swedish government successfully supports research and innovation, and 85 percent felt that the government has done a good job in improving education.
University-Industry Collaboration (Leading): Research and innovation in Sweden is markedly split between two sectors: business and higher education. Government and institutional research is comparatively low. Industry in Sweden is dominated by large corporations, and there is a prevailing sentiment that only these companies are the best drivers of business-related R&D spending. Accordingly, most of the partnerships between universities and industry have been initiated by large firms themselves. However, in the new Research and Innovation Bill, the government is proposing an initiative to increase commercialization of academic research results for industry use, with a total of SEK 150 million per year allocated to this end. Overall, research and innovation is strong in Sweden, but the main focus of recent policy still lies mainly on getting the research out as opposed increased university-industry collaboration. Nonetheless, 75 percent of respondents in the GE Innovation Survey still believed that it was easy for companies to partner with universities. Venture Capital Deals (Leading): Sweden has a healthy venture capital market, with investment equal to 0.2 percent of GDP in 2008. This level is 2nd in the world, behind only Finland and ahead of the United Kingdom, Norway, Denmark, France, the United States, Germany, and Italy. However, the venture capital market is dominated by large institutional investors, which have focused primarily on management buy-outs and have avoided the risk of early-stage financing. Sixty-seven percent of GE Innovation Survey respondents believed that private investors are supportive of companies that need financing.
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Gross Expenditures on R&D [GERD] (Leading): R&D spending equaled 3.75 percent of GDP in 2008, the highest among the OECD countries. However, this was lower than the 2001 level of 4.2 percent. In 2008, business drove 74 percent of GERD expenditures, with 21 percent by higher education and 4.4 percent by government. High-Technology Exports (Above Average): Sweden sports two leading makers of heavy trucks and construction equipment as well as two automakers. Together, the motor vehicle industry accounts for approximately one quarter of private-sector R&D and one-fifth of investments in machinery and inventory. But while these industries involve advanced manufacturing and technologies, they are not strictly high-tech, according to the World Banks development indicators. Regardless, Sweden still lands in the upper part of the second quartile. Utility Patents (Leading): In 2008, Sweden produced 88 triadic patents per 1 million residents, ranking 3rd among OECD countries. The Research and Innovation Bill encourages the commercialization of technology by requiring professors in higher education institutions to inform their employers of results that can be patented. In the GE Innovation Survey, 77 percent of respondents indicated that Sweden's intellectual property system supports innovation and 63 percent agreed that the protection of copyrights and patents is effective. STEM Education (Above Average): On a global scale, Sweden places in the upper part of the second quartile, ahead of the United Kingdom, the United States, and Germany, but below countries like Singapore, Finland, Switzerland, and Canada. In 2008, Sweden exceeded the OECD average with science and engineering degrees representing 25 percent of all new degrees issued. In 2008, the government issued the five-year Research and Innovation Bill, which is designed to revamp university research programs, incorporating a quality assessment system and focusing funding on areas considered to have strategic value for the Swedish economy. Sixty-six percent of respondents in the GE Innovation Survey agreed that local universities and schools provide a strong education. Business Environment (Leading): Sweden has one of the best business environments in the world. Consistent with their growing global presence, many Swedish multinationals have begun conducting business in English, which has helped to facilitate interactions with investors and partners. However, Sweden has a high overall tax rate, with total tax revenue representing 47 percent of GDP in 2008.
Conclusion
Sweden is clearly a global innovation leader, with one of the highest levels of levels of R&D investment in the world. Venture capital is readily available, and its high concentration of researchers is notably productive in generating new patents. The thriving nature of this
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ecosystem is reflected in the optimism and approval expressed by Swedish respondents in the GE Innovation Survey.
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Turkey
Overview
Turkey does not perform well on our innovation scorecard, coming in above average on only one of the indicators and below average or lagging on the remaining six. The Turkish economy did contract significantly at the beginning of the global recession but it has since seen a slight recovery; in fact, it weathered the recession better than most due to strong reforms put in place after the crisis it suffered in 2001. Turkey has a good innovation policy mix that focuses on increasing R&D spending, intensifying university-industry collaboration, improving commercialization rates, and ensuring the creation of new research-intensive firms. Although Turkey may be improving its innovation track record, it is still a developing country and will need to overcome some basic problemssuch as the need for labor market reform, a skills mismatch, and high unemploymentif it is to become more competitive in the knowledge-based economy.
University-Industry Collaboration (Below Average): University-industry collaboration is a recognized weakness in the Turkish innovation system. Currently, most R&D is performed in research universities, and the current incentives for collaboration appear to be too weak. Increased incentives may be needed to stimulate research demand in the private sector. Respondents in the GE Innovation Survey confirm this challenge, as only 53 percent of them say it is easy for companies to partner with universities. Venture Capital Deals (Lagging): The VC industry in Turkey is negligible: There are fewer than 10 venture capital firms, and annual investment is often under $150 million. Not surprisingly, Turkey lags in this indicator. Early-stage financing is almost nonexistent, and most investors avoid investing in small and medium-sized firms. Just slightly over half of respondents from the GE Innovation Survey answered that private investors support companies in need of funding. Gross Expenditures on R&D [GERD] (Above Average): R&D spending is the one innovation area where Turkey performs above average. In 2008, GERD equaled 0.73 percent of GDP, a significant improvement from a decade earlier. The Turkish government has made a concerted effort to increase investment in research and development, and to its credit, GERD has consistently gone up (though it remains well below 55
most OECD countries). The government has set a goal of increasing GERD to 2 percent of GDP. This will bring Turkeys investment in research and development much closer to many innovation-driven countries, and should be a high priority for the government. High-Technology Exports (Lagging): Turkey's largest industrial sector is textiles and the countrys major export is automobiles, so it's not surprising that Turkey lags on high-technology exports. The country simply does not yet have the research or development apparatus it would need to be a world leader on high-tech products. Utility Patents (Below Average): Turkey performs below average on the number of utility patents it produces. Slightly over half of GE Innovation Survey respondents said that the IP system allows innovation to flourish, and only 61 percent said that the copyright and innovation system were effective. Although confidence in the IP system from survey respondents is low, the level of patent output likely results from weaknesses in the innovation system as a whole. On the positive side, patents have been increasing at an impressive rate: Between 2004 and 2006, almost 20 percent of firms introduced "new-to-market" innovations and 51 percent introduced non-technological innovations. STEM Education (Lagging): Turkey does not perform well in global measures of STEM education. Both enrollment numbers and learning outcomes are sub-par. There is likely little demand for these types of skills given that the major industrial sectors in Turkey are in textiles and low-end auto manufacturing. Business Environment (Below Average) The business environment in Turkey is not ideal; it suffers from complicated bureaucracies and corruption. It takes six days to start a business and 70 days to get electricity; the total tax rate is over 40 percent. In addition, excessive labor market regulation has led to the formation of an informal labor market. Firms operating in this space do not have the same access to the innovation tools provided by the government and thus have much lower overall productivity. The existence of these informal firms hurts growth.
Conclusion
Despite Turkeys overall weak performance on our innovation indicators, its economy is based on some strong fundamentals, and its innovation capacity has seen significant improvements over the past decade. Respondents from the GE Innovation Survey were quite positive overall, with 84 percent saying that the government successfully allocates its budget and resources to support innovation. This is slightly odd given some of the negativity around specific areas of the innovation system, but may be the result of increasing optimism surrounding the countrys broader fortunes. Additionally, there is strong support for further investment in innovation, as 87 percent of respondents believe it to be the best way to create jobs.
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United Arab Emirates

36
42
N/A
69
50
26
33
Overview
The United Arab Emirates (UAE) performs above average on most of our innovation metrics. The country is just now beginning to look to innovation as the next step in its economic development. Realizing the risks of heavy dependence on petroleum exports, the UAE has begun to explore ways to transition to a knowledge-based economy. The countrys wealth has helped it perform well on some of our indicators, but the UAE is not as yet an innovation-driven economy in practice, even if it is clearly taking steps in that direction. Both Abu Dhabi and Dubai have instituted long-term strategies to become more competitive.
University-Industry Collaboration (Above Average): The United Arab Emirates performs above average in our global ranking of university-industry collaboration. Specific data on the type of collaboration and the amount of research occurring within UAE universities is not readily available. However, only 63 percent of GE Innovation Survey respondents believe it is easy for companies to partner with universities. Venture Capital Deals (Below Average): The UAE does not have a large venture capital industry. The country performs below average on a global scale, and studies have suggested that VC is quite difficult to obtain. None of this is surprising given the scarcity of new knowledge-intensive companies or products in the UAE. Still, 66 percent of GE Innovation Survey respondents said that private investors were supportive of companies in need of funding. This response is more positive than expected given the level of venture capital and is likely due to the high level of optimism surrounding the future of the UAE economy. Gross Expenditures on R&D [GERD] (N/A): Data on R&D spending is not collected in the United Arab Emirates. This is obviously an important measure of innovation that the country will need to track in the coming years. High-Technology Exports (Lagging):
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The UAE lags most other countries on high-tech exports. The nation's wealth comes from oil exports, and until this changes, it is unlikely that the country will perform competitively in the technology arena. Utility Patents (Above Average): Patenting activity in the Emirates is just barely above average, but this does not place the country in a competitive position with innovation-driven countries, with only 1.5 patents per million residents. However, 68 percent of respondents in the GE Innovation Survey said the patent and copyright system in the UAE is effective. STEM Education (Above Average): The UAE performs well on STEM education. Unfortunately, detailed data is not available, but both quality and enrollment in science, technology and engineering is certainly higher than in other fields. However, if there is not adequate domestic capacity to absorb these graduates, the UAEs performance on this indicator may go to waste. Business Environment (Above Average): The United Arab Emirates has made some significant reforms in regards to its business environment in recent years, and the country now performs above average on this indicator. Major reforms have made it both easier and faster to start a business (although it still takes 13 days). Companies now enjoy easier access to credit.
Conclusion
The future of innovation in the United Arab Emirates (as well as the country's overall stability) depends on whether the country meets with success in building a more diverse economy. Almost 80 percent of respondents in the GE Innovation Survey think the government is doing a good job using its resources to support innovation and that its support is efficiently organized. However, only half said that innovation had improved over the last five years, indicating that the UAE still has a long way to go before it is competitive on innovation. A good first step would be to improve data collection on innovation metrics; the lack of information on important indicators such as R&D spending makes it harder to address gaps in the overall innovation system.
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United Kingdom
Overview
The United Kingdom ranks in the top tier of innovative nations. From 2000 to 2010, its GDP per capita increased from $25,089 to $36,100, representing a 3.7 percent compound annual growth rate. The country was hard hit by the financial crisis and contracted sharply in 2009, only to experience slightly positive growth in 2010. While reductions to the science budget have hereto been avoided, recent fiscal austerity measures are likely to hamper overall spending on innovation in the near-to-medium term. Nonetheless, its financial markets are among the deepest in the world; in 2008, before the crisis, they supplied nearly 12 percent of all venture capital among OECD countries. The United Kingdom is in the vanguard of research, with a prolific output of scientific articles (1,250 per 1 million residents).
University-Industry Collaboration (Leading): University-industry collaboration is strong in the United Kingdom. In the GE Innovation Survey, 78 percent of respondents agreed that it is quite easy for firms to partner with universities. The Higher Education Funding Council for England (HEFCE) recently launched the Economic Challenge Investment Fund, which will enable universities and colleges to provide specialized training, development, and professional support to individuals and businesses. The government has also supported innovation vouchers that allow businesses to purchase engagement with knowledge-based institutions. Venture Capital Deals (Leading): The venture capital market in the United Kingdom is one of the strongest in the world, equaling 0.2 percent of GDP. In nominal amounts, the United Kingdom is second only to the United States, and as a percent of GDP, the United Kingdom ranks third, behind Finland and Sweden. Some continue to worry, however, that the government has not fully addressed financing for early-stage, high-growth businesses. Respondents in the GE Innovation Survey were mixed, with 45 percent stating that private investors are supportive of companies that need funding, 41 percent disagreeing, and 14 percent uncertain. Gross Expenditures on R&D [GERD] (Leading): At 1.8 percent of GDP, the U.K.'s R&D spending was below the OECD average in 2008. Industry financed 45 percent of GERD, while government funded 31 percent. Business 59
expenditures on R&D (BERD) equaled 1.1 percent of GDP. Boosting the intensity of innovation activity in enterprises is one of the nation's top policy challenges as cited by the INNO-Policy TrendChart report. High-Technology Exports (Leading): The United Kingdom performs comparatively well in high-technology exports, placing in the top of the first quartile globally. The top innovative sectors remain pharmaceuticals, defense, and aerospace. Going forward, the principal areas of growth appear to be in the green economy, the creative economy, and in advanced health care involving biotechnology. Utility Patents (Leading): In 2008, the United Kingdom produced 27 triadic patents per 1 million residents, which was below the OECD average, but still in the first quartile of countries surveyed. While not typically highlighted, the manufacturing industry plays a large part in the U.K.s economy. Between 1997 and 2009, the country's manufacturing productivity increased by 50 percent, and in 2009, manufacturing represented 13 percent of GDP. In the GE Innovation Survey, 60 percent of respondents agreed that the protection of copyrights and patents was effective. STEM Education (Above Average): In global rankings for science, technology, engineering, and math education, the U.K. places in the bottom half of the second quartile, ahead of Russia, the United States, and Germany, but still well behind countries like Singapore, Finland, Switzerland, and Canada. In 2008, the United Kingdom was slightly above average with eight researchers per 1,000 workers; 23 percent of all new degrees were in science and engineering. Respondents in the GE Innovation Survey were relatively negative; 46 percent believed the government had not been successful in improving education. Business Environment (Leading): A renowned international marketplace, the United Kingdom maintains one of the best environments for starting and growing a business. The financial markets are well developed and venture capital is abundant. In 2008, nearly 18 percent of gross expenditures on R&D were financed from abroad, greater than three times the OECD average. The governance system is also markedly strong, with significant stakeholder involvement and strong appraisal processes in effect. More recently, the government introduced the Enterprise Finance Guarantee (EFG), based on the previous Small Firms Loan Guarantee, which extends credit to companies with viable business plans that would normally be able to obtain funding in more stable financial circumstances.
Conclusion
While the United Kingdom performs very well in global comparative terms, both domestic and foreign respondents in the GE Innovation Survey did not perceive it to be a prominent innovator. Domestic respondents were relatively pessimistic, with 39 percent stating that government had
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not been successful in supporting research and innovation, and 46 percent believing that the current intellectual property system is not conducive to innovation.
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United States
Overview
The worlds largest economy, the United States has been an innovation leader since the mid1800s. It remains on the leading edge today, if not necessarily by such a large a margin as in previous decades. In fact, the United States continues to perform strongly in almost every metric. International respondents from 20 of the 22 countries included in the GE Innovation Survey ranked the United States in first or second place as a leading innovation champion (respondents from the other two countries placed the U.S. third). Only Germany came close to matching this reputation. Perhaps most telling is the fact that respondents from both China and Japan overwhelmingly considered the U.S. to be the gold standard for innovation. The chief area of concern for the United States when it comes to innovation is the future. Any examination of the U.S. education system with regard to science, technology and math makes it clear that the nation is falling short in terms of developing tomorrow's workforce. Education is fast becoming a disadvantage to the United States, especially relative to rising economies in Asia. In addition, federal and state deficits threaten to reduce the amount of public funding that is directed to research.
University-Industry Collaboration (Leading): Spurred by groundbreaking legislation such as the Bayh-Dole Act of 1980 (which allowed private and university control of federally funded research), the United States has consistently been among the leading countries in technology transfer programs. This system has led to extensive collaboration between universities, governments and corporations on pivotal research. Many firms, including several recognized global leaders like Google, have been the direct offshoots of universities. So it's no surprise that the U.S. places near the top of the global rankings in terms of university-industry collaboration. However despite the fact that 88 percent of U.S. respondents in the GE survey considered SMEs and individuals to be as innovative as large firms, only 68 percent felt that it is easy for such companies to partner with universities (well below the response rates of Israel, Germany and even Russia). This can limit opportunities for SMEs to engage in tech transfer and fully utilize their potential for innovation
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Venture Capital Deals (Leading): The United States is home to by far the largest venture capital pools in the world, providing it with strategic advantages in entrepreneurial activity. There is also a well-established legal framework for deals. Although the largest global concentration of venture capital lies in Californias Silicon Valley, the U.S. has additional hubs of VC deal-making that promote startups on a more national level. This has allowed the United States to stay near the top in this ranking, even when VC is adjusted relative to GDP. This legacy is reflected in the GE Innovation Survey, where 76 percent of U.S. respondents consider private investors supportive of companies that need funding. Yet maintaining that competitive edge is not a given: 71 percent of respondents believe that access to venture capital has become more difficult, and the total number of VC establishments in the United States has declined significantly since the peak of the tech bubble in 2000, shrinking from 1,022 active firms to just 462 by 2010. Further, VC activity declined dramatically during the credit crunch, shrinking 38 percent from its 2006 peak to the end of 2010. Gross Expenditures on R&D [GERD] (Leading): Although the United States does not rank quite as highly in this category as it does in the prior two indicators, its overall showing outpaces all of the other worlds largest economies except Japan. Significant government-funded efforts through the Departments of Defense and Energy as well as through organizations such as the National Science Foundation have resulted in significant gains for decades. In 2008, GERD had increased to 2.8 percent of GDP, and had reached a level in purchasing power parity that was fourth-highest in the OECD. Two-thirds of GERD was financed by industry, with a third coming from government sources. High-Technology Exports (Leading): Once the leading manufacturer of high-tech exports in all categories, the United States is still in the top tier, and remains the worlds leading exporter of high technology by total value. However, the increasing shift of manufacturing, even for sophisticated high-tech items, to locations such as Mexico, China and Thailand, continues to erode the U.S. lead. The combination of the North American Free Trade Agreement in 1994, Chinas joining the WTO in 2001, and comparatively high costs in the United States continue to put pressure on high-tech manufacturing. Utility Patents (Leading): The U.S. remains the single greatest generator of patents on a global scale, trailing only Japan in our indicators. In 2008, the U.S. recorded a significant 49 patents per million residents. It accounted for half of all medical patents and 43 percent of pharmaceutical patents. Although other countries such as China are now producing noteworthy inventions, the United States still holds a significant comparative advantage. Its system of intellectual property protection and enforcement further encourages this dynamic.
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STEM Education (Below Average): The United States falls just slightly into the third quartile in global rankings for science, technology, engineering and math education. Although this is not far behind the U.K. and Germany, it is a dramatic departure for a nation that was once regarded as the world's education leader for decades. A significant 51 percent of U.S. respondents in the GE survey feel that the government has not been successful in improving education. The comparative decline of the US in this field has attracted the attention of policymakers, leading to passage of the American COMPETES Act in 2007. Additional efforts to bolster STEM learning have come through the National Science Foundation and NASA, although the comparative decline of NASA is often cited as a reason for the decline in popularity of STEM in the general populace. Business Environment (Leading): The U.S. economy remains sluggish, as reflected by the 70 percent of GE survey respondents who consider the federal government to be unsuccessful in creating jobs. But an astonishing 76 percent of respondents who feel that government support for innovation is efficiently organized. A high corporate income tax rate of 35 percent, however, has encouraged many companies to keep profits overseas rather than investing them back in the United States. Although not limited to the U.S., uncertainty in the financial markets and in government policy has further encouraged cash buildup, with the Federal Reserve reporting in mid-2010 that cash accounts for a significant 7 percent of corporate assets of U.S. companies, the highest level since 1963. Despite these recent concerns, the U.S. continues to be one of the best places in the world to do business, with excellent protection of intellectual property, respect for the rule of law and a predictable regulatory environment.
Conclusion
The United States is near the top in almost all metrics, and is widely considered to be one of the principal global leaders in innovation, whether from a government, corporate or individual perspective. In fact, of the 50 most innovative global companies listed in the Boston Consulting Group 2010 survey, nearly half (22) are American, including four of the top five and six of the top 10. (GE itself came in ninth.) The chief areas of concern remains the continued deterioration of STEM education, federal cutbacks in R&D funding and the ongoing loss of high-tech manufacturing jobs to nations with lower cost structures. The U.S. still sets the pace of global innovation, but its position is not as secure as it once was.
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GE Innovation Scorecard

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January 2012

Innovation Scorecard Country Innovation Profiles

Prepared for General Electric by the Milken Institute

Innovation Scorecard Country Innovation Profiles

Prepared for General Electric by the Milken Institute

Scorecard Legend Leading Above average Below average Lagging Unavailable 2

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