Bloomberg has released its 2019 Innovation Index. Now in its seventh year, the index analyses dozens of criteria using seven metrics – including research and development spending, manufacturing capability and concentration of high-tech public companies.
The 2019 ranking process began with more than 200 economies.
Each was scored on a 0-100 scale based on seven equally weighted categories. Nations that didn’t report data for at least six categories were eliminated, trimming the total list to 95.
The ranking comes as global elites gathered this week at the annual World Economic Forum in Davos, Switzerland.
South Korea retained the global crown in the 2019 Bloomberg Innovation index, though improvements by Germany in research and education brought Europe’s largest economy to near-parity in the annual ranking.
According to Bloomberg, Germany almost caught six-time champion South Korea on the strength of added-value from manufacturing and research intensity, much of it built around industrial giants such as Volkswagen AG, Robert Bosch GmbH and Daimler AG.
Although South Korea extended its winning streak, its lead narrowed in part because of lower scores in patent activity.
Sweden and China
Sweden, the runner-up in 2018, fell to the seventh spot.
Patent activity boosted the scores for China and Israel, which was a big winner by jumping five spots to fifth overall. The Middle Eastern country surpassed Singapore, Sweden and Japan in the process.
South Korea’s staying power at No. 1 should receive a boost from fresh investments in strategic technologies and a regulatory program that encourages startups, according to Khoon Goh, head of research at Australia & New Zealand Banking Group in Singapore.
He sees the challenge, though, in moving innovation beyond the highly concentrated large chaebols’, or family-run conglomerates.
“Innovation is becoming increasingly important to drive economic performance, particularly in the higher-income Asian economies where there is no longer a demographic dividend and higher value-added manufacturing assembly is being shifted to lower-cost countries in the region,” Goh said.
The UK fell one spot to 18th and lost out to China for the first time.
“China’s score reflects a dichotomy in the world’s second-largest economy: it ranked No. 2 in patent activity on the strength of R&D from Huawei Technologies Co. and BOE Technology Group, but still lags behind most innovative alums in overall productivity,” Bloomberg said.
The US rose three spots to eighth, after falling out of the top 10 for the first time last year. Faster product cycles and intensifying competition are changing the ways managers have to work, according to Pfizer Inc.’s presentation at a recent conference on health care.
Losers and new entrants
Among 2019’s ranked economies, the biggest losers were Tunisia and Ukraine – which both fell out of the top 50 – while ten economies joined the ranking in 2019 as more reliable data became available.
The United Arab Emirates made the highest debut in 46th place. Brazil rejoined the index in the 45th spot after not being ranked last year.
Also among the new entrants are some of the world’s largest emerging economies: India, Mexico, Vietnam and Saudi Arabia.
Notably, South Africa remains the only Sub-Saharan nation to be ranked.
South Africa placed 51st on the list – falling three places from 48th in 2018.
The country stood out for its ‘patent activity‘ which was ranked at 21 in the world.
Bloomberg calculated this activity based on resident patent filings, total patent grants, patents per population, filings per GDP and total grants awarded as a share of the world’s total.
According to Bloomberg, South Africa also stands out for its ‘high-tech density‘ which was ranked as the 35th highest in the world.
Bloomberg defined this density as the number of domestically domiciled high-tech public companies as a percentage of domestic publicly listed companies and as a share of the world’s total public high-tech companies.
On the other end of the scale, South Africa was one one of the lowest-ranked countries when it comes to ‘tertiary efficiency‘ which looks at total enrollment at tertiary institutions, graduation levels, and how many science/engineering graduates a country has.
The country also performed poorly in the ‘researcher concentration‘ metric which measures the number of professionals in the country who are currently engaged in research and development.
With reporting from Bloomberg.