Ranking the (Innovation) Rankings

On June 30, The Global Innovation Index 2011 was released jointly by INSEAD, Alcatel-Lucent, Booz & Company, the Confederation of Indian Industry (CII), and the World Intellectual Property Organization (WIPO).  The Global Innovation Index (GII) is calculated as an average of the scores across input pillars (which describe the enabling environment for innovation) and output pillars (which measure actual achievements in innovation).  This year, Switzerland ranked first, followed by Sweden (2) and Singapore (3).  The United States ranked seventh out of the 125 economies evaluated.  Some argue that these rankings are important because, as WIPO Director General Francis Gurry asserted, “Innovation is central to economic growth and to the creation of new and better jobs. It is the key to competitiveness for economies, for industries and for individual firms.”

The GII is just one of the many ranking systems related to innovation.  Others include the Information Technology and Innovation Foundation’s State New Economy Index (which measures the economic structure of states within the United States based on indicators in the categories of knowledge jobs, globalization, economic dynamism, transformation to a digital economy, and technological innovation capacity), Booz & Company’s Global Innovation 1000 (which evaluates companies’ financial performance related to how much they spend on R&D), the Economist Intelligence Unit’s 2009 report titled A New Ranking of the World’s Most Innovative Countries (which measures innovation based on the relationship in the country between innovation enablers and innovation performance), and the World Economic Forum’s Global Competitiveness Report (which evaluates countries’ competitiveness based on their institutions, infrastructure, macroeconomic environment, and health and primary education).  In the 2010-2011 Global Competitiveness Report, the United States ranks 4^th overall out of 139 countries, which is lower than its 2009-2010 ranking of 2^nd (out of 133) and its 2008-2009 ranking of 1^st (out of 134).  However, in the 2010-2011 report the United States ranked first (out of the 139 countries evaluated) in the “pillar” of innovation.

While the GII is the average across the Input and Output Sub-Indices, the Innovation Efficiency Index is the ratio of the Output Sub-Index over the Input Sub-Index.  In this way, it measures a country’s innovation results in relation to its enabling environment, thus highlighting both those countries that achieve more from lesser conditions and those that could more-fully take advantage of their innovation potential.  According to this index, Côte d’Ivoire is ranked first, followed by Nigeria (2) and China (3).  The top 10 countries as measured by the Innovation Efficiency Index also include BRICS stalwarts Brazil (7) and India (9).  The United States comes in later at 26^th in the rankings.

According to Karim Sabbagh, Senior Partner and the global leader of the Communications, Media, and Technology practice at Booz & Company, “The ability to innovate is the great equalizer in the global economy…Today, any country can advance with carefully focused investments in talent and R&D. The performance of some emerging economies in this year’s GII shows what nations can accomplish with a focus on building 21st century economies.”

Nevertheless, some are critical of ranking systems such as the GII, citing relatively significant margins of error, as well as detailed conclusions being extrapolated from the ensuing analyses.  As Konstantin Kakaes wrote, “At many junctures, the authors of the report repeat the same gambit: ‘There is no good way to measure X, they say. Here is a measurement of X. Here are the conclusions we draw, in granular detail, from that measurement.’”  However, Kakaes went on to write that “understanding these differences [between countries] is important to policymakers who seek to facilitate innovation. The report is a step forward in that understanding, despite itself.”

Posted by:  Erica Pincus

Sources:  Booz & Company, CNN Global Public Square, Intelligence Unit, Global Innovation Index 2011, Information Technology and Innovation Foundation, INSEAD, The Economist, The Times of India, Trade Arabia, World Economic Forum

Photo Credit:  globes by flickr user tuppus