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The Global Innovation Index 2013

The Local Dynamics of Innovation

The Global Innovation Index 2013

The Local Dynamics of Innovation

Soumitra Dutta

and Bruno Lanvin

Editors

The Global Innovation Index 2013: The Local Dynamics of Innovation is the result of a collaboration between Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO) as co-publishers, and their

Knowledge Partners.

The terms ‘country", ‘economy", and ‘nation" as used in this report do not in all cases refer to a territorial entity that is a state as understood by international law and practice.

The terms cover well-dened, geographically self-

contained economic areas that may not be states but for which statistical data are maintained on a separate and independent basis. Disclaimer: The index"s methodology and the rankings do not necessarily present the views of WIPO or its Member States. The same applies to the substantive chapters in this report, which are the responsibility of the authors and not WIPO.© Cornell University, INSEAD, and WIPO 2013. All rights reserved. No part of this publication can be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, or otherwise without the prior permission of WIPO. Please write to treaties.mail@wipo.int to obtain permission.

Suggested citation: Cornell University, INSEAD,

and WIPO (2013): The Global Innovation Index 2013: The

Local Dynamics of Innovation,

Geneva, Ithaca,

and Fontainebleau.

ISSN 2263 3693

ISBN 978-2-9522210-3-0

Printed and bound in Geneva, Switzerland, by the World Intellectual Property Organization (WIPO) and in New Delhi, India, by the Confederation of Indian Industry (CII). iii

THE GLOBAL INNOVATION INDEX 2013

Contents

Preface: Releasing the Global Innovation Index 2013: v

The Local Dynamics of Innovation Are Well at Play

By Soumitra Dutta, Anne and Elmer Lindseth Dean, and Professor of Management, Samuel Curtis Johnson Graduate School of Management, Cornell University; Bruno Lanvin, Executive Director, European Competitiveness Initiative, INSEAD; and Francis Gurry, Director General, World Intellectual

Property Organization

Foreword: A Virtuous Circle of Innovation vii

By Cesare R. Mainardi, Chief Executive Ocer, Booz & Company

Foreword: Local Solutions to Global Challenges ix

By Chandrajit Banerjee, Director General, Confederation of

Indian Industry

Foreword: Connectivity as the Driver of Innovation xi

By Osman Sultan, Chief Executive Ocer, du

Foreword: Open Innovation with a Global View xii

By Ken Hu, Deputy Chairman and Rotating Chief Executive

Ocer, Huawei Technologies

Contributors to the Report xv

Advisory Board to the Global Innovation Index xvii

Rankings

Global Innovation Index 2013 Rankings xx

Chapters

Chapter 1: The Global Innovation Index 2013: 3

Local Dynamics Keep Innovation Strong in the

Face of Crisis

By Soumitra Dutta, Cornell University; Daniela Benavente and Bruno Lanvin, INSEAD; and Sacha Wunsch-Vincent,

World Intellectual Property Organization

Annex 1: The Global Innovation Index Conceptual 37

Framework

Annex 2:

Adjustments to the Global Innovation Index

49
Framework and Year-on-Year Comparability of Results

Annex 3:

Joint Research Centre Statistical Audit of the

55

2013 Global Innovation Index

By Michaela Saisana and Dionisis Th. Philippas,

European Commission Joint Research Centre (Ispra, Italy)

Contents

Chapter 2: The Evolving Geography of Innovation: 69

A Territorial Perspective

By Annalisa Primi, OECD Development Centre

Chapter 3: Measuring Regional Innovation: 79

A European Perspective

By Hugo Hollanders, UNU-MERIT (Maastricht University)

Chapter 4: The Role of Enterprise Champions 87

in Strengthening Innovation Hubs By Barry Jaruzelski, Rasheed Eltayeb, Tamer Obied, and Hatem Samman, Booz & Company

Chapter 5: Open Innovation: The View of an 95

ICT Leader in Distributed Global Innovation

By Qian Xiangjiang, James Peng, and Joe Kelly,

Huawei Technologies

Chapter 6: Local Innovation Dynamics: Examples 99 and Lessons from the Arab World

By Jean-Eric Aubert, Tamer Taha, and Anuja Utz,

Center for Mediterranean Integration, World Bank

Chapter 7: Innovation Clusters Initiative: 107

Transforming India"s Industry Clusters for Inclusive

Growth and Global Competition

By Samir Mitra, Oce of Advisor to the Prime Minister of India Chapter 8: Creating Local Innovation Dynamics: 115

The Uruguayan Experience

By Fernando Amestoy, Pando Technology Pole, Universidad de la

República, Uruguay

Appendices

Appendix I: Country/Economy Proles 125

Appendix II: Data Tables 273

Appendix III: Sources and Denitions 363

Appendix IV: Technical Notes 379

Appendix V: About the Authors 385

v

THE GLOBAL INNOVATION INDEX 2013

Preface

P

REFACE

Releasing the Global Innovation

Index 2013: The Local Dynamics of

Innovation Are Well at Play

PR E FAC E We are pleased to present the Global Innovation Index (GII) 2013. The GII 2013, in its 6th edition this year, is co-published by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO, a specialized agency of the United Nations). Booz & Company, the Confederation of Indian Industry, du, and Huawei support the elaboration of the GII as Knowledge

Partners in 2013.

Over the course of the last six years, the GII has established itself as a leading reference on innovation for researchers and for public and private decision makers. It has evolved into a valuable benchmarking tool to facili- tate public-private dialogue. The GII recognizes the key role of innovation as a driver of economic growth and prosperity, and adopts an inclusive, horizontal vision of innovation applicable to both developed and emerging economies.

Local innovation matters

The theme of the GII 2013 is ‘The Local Dynamics of Innovation". The GII 2013 report shows that regional innovation is alive and bustling. New regions are emerg- ing and rejuvenation is taking place even in developed metropolises such as New York City, where Cornell

NYC Tech was invited to set up a unique campus

focused on technology and innovation on Roosevelt Island. The hope is that this new campus will attract a new talent pool, lead to innovation, create novel jobs, and positively impact the economy of New York City and the surrounding region. The theme ‘Local Dynamics of Innovation" reflects the importance of local hubs and geographic concentra- tions of universities, companies, specialized suppliers, service providers, and associated institutions in foster- ing innovation. Clusters have an impact on competitive- ness by pooling talent, know-how, research labs, and manufacturing capabilities and concentrating them in a small area. They often specialize in niche markets with

a multiplier effect at the national level by fomenting a culture of entrepreneurship. Well-known examples include California in the United States of America, Baden-Württemberg in Germany, the Capital Region of the Republic of Korea, Guangdong Province in China, Stredni Cechy in the Czech Republic, the Mumbai region in India, Tel Aviv in Israel, São Paulo in Brazil, and the list goes on. New initiatives continue to develop in other emerging economies such as in Kenya and the United Republic of Tanzania, Colombia and Viet Nam.

At no other point in history has so much money been spent on R&D worldwide. Never before has innovation been so well distributed among countries. The GII 2013 sheds light on the factors leading to the excellence of innovation hubs, such as the role of local ‘champions" (large corporations), the availability of funding for the development of start-ups, and the importance of path dependency. Linkages among stake- holders (governments, firms, academia, and society) in the development of innovation capabilities—such as the existence of incubators and technology transfer pro- grammes and the interaction of innovation clusters with local, inter-regional, and global networks and value chains—are included in the analyses. Continuing towards better innovation metrics and policy The innovation framework underlying the GII contin- ues to evolve as we try each year to be responsive to both the availability of data across a diverse set of coun- tries and to our growing understanding of the phenom- enon of innovation. Our goal is to use the GII to cap- ture the multi-dimensional facets of innovation across both developed and emerging economies. We also hope that users of the GII will go further than just focus- ing on year-to-year comparisons of the country rank- ings. Rather, the GII results are useful for benchmark- ing countries against their peers, to study country pro- files over time and identify their relative strengths and weaknesses from the rich and unique GII dataset. We are encouraged by the fact that more and more ministers

© WIPO, 2012. Photo by Emmanuel Berrod.

vi

THE GLOBAL INNOVATION INDEX 2013

Preface

and other policy makers around the world are using the

GII for just this purpose.

We welcome four new members to our Advisory

Board: Robert D. Atkinson, President, The Information

Technology and Innovation Foundation, USA; Robert

Bell, Program Director, National Science Foundation,

USA; Dongmin Chen, Professor/Dean, School of

Innovation and Entrepreneurship and Director, Peking University, China; and Diego Molano Vega, Minister of Information Technologies and Communications,

Colombia.

We believe that the collective efforts of all members of the GII project is paving the way for better and more informed innovation policies around the world.

SOUMITRA DUTTA

Dean, Samuel

Curtis Johnson Graduate School of Management, Cornell University

FRANCIS GURRY

Director General, World Intellectual

Property Organization

BRUNO LANVIN

Executive Director, European

Competitiveness Initiative, INSEAD

vii

THE GLOBAL INNOVATION INDEX 2013

Foreword

F

OREWORD

Booz & Company is honoured to be a Knowledge

Partner in the Global Innovation Index report for the third consecutive year. This work is a vital part of our continuing efforts to illuminate the nature and mecha- nisms of innovation and to assist companies and govern- ments globally as they seek to capture its rich economic and social returns. One disturbing reality that our research has turned up is a major fault line at the front end of innovation. Booz & Company"s most recent Global Innovation 1000 study revealed that just 43% of senior innovation execu- tives and chief technology officers at nearly 700 com- panies believe their organizations are highly effective at generating new ideas, and only 36% believe they are highly effective at converting ideas to product devel- opment projects. Still fewer—one-quarter of respon- dents—indicate that their organizations are highly effective at both. This year"s Global Innovation Index report is espe- cially timely because it explores a proven solution to the conundrum at the front end of innovation: the inno- vation hub. As innovation hubs such as Silicon Valley in the United States and the Daedeok Innopolis in the Republic of Korea have demonstrated, idea gen- eration and conversion flourish in these robust ecosys- tems. Moreover, success begets success: as the compa- nies in these hubs prosper, they invest more in research and development and attract more talent. They produce more ideas and convert more of those ideas into success- ful products. A virtuous circle is created. For this reason, innovation hubs should be of intense interest to compa- nies and governments worldwide.

There are several models for innovation hubs. In

every case we have examined, large enterprises—hub champions—have played a central role in hub develop- ment and success. These champions support innovation hubs by providing capital and connections, by facilitat- ing knowledge creation and sharing, and by providing a bridge for the commercialization of ideas.Governments, especially in emerging economies, play an equally important role. Their policies attract enterprise champions and create fertile conditions for hub growth by providing direct investment, streamlin- ing business and logistical processes, and ensuring the availability of talent. Innovation is the process by which ideas are gener- ated and commercialized, and innovation hubs can help elevate that process to the level of a differentiating capa- bility. We at Booz & Company are convinced that such capabilities are an essential mechanism in the achieve- ment of a company"s, or a nation"s, larger strategy—what we call its ‘way to play". A truly differentiating capa- bilities system is difficult to develop, but, likewise, it is hard for others to replicate. Thus it offers a sustainable competitive advantage that provides the right to win in the market. We believe that both the public and private sectors have important roles to play in the formation of healthy innovation ecosystems. Furthermore, when they work together, as they do in developing innovation hubs, they can raise their innovation capabilities to new heights and drive corporate and national prosperity.

CESARE R. MAINARDI

C hief Executive Officer

Booz &

Company

A Virtuous Circle of Innovation

ix

THE GLOBAL INNOVATION INDEX 2013

Foreword

F

OREWORD

The Global Innovation Index (GII) has emerged as a truly successful indicator for setting up a benchmark in the innovation ranking of nations across the globe. It is heartening to see the journey closely and remain associ- ated with this publication, which has not only demon- strated success in standardizing the uncertainties of mea- suring innovation but also helped in building a consen- sus among world leaders about the effectiveness of such a study to build future policies. The theme of year"s report, ‘The Local Dynamics of Innovation", is highly relevant when we see the dif- ferent regional growth patterns of the world influenced by local actors and their interactions. These are unique and reflect the characteristics of each nation"s land, its people, and its culture. Studying these local dynamics is important because it can provide valuable insight into ways that successful models of innovation have taken shape in different conditions and their recipes for suc- cess. It can also help determine how these models can be replicated where the conditions are identical or adjusted where the conditions are similar. One of the important aspects of studying local inno- vation dynamics is associated with the tracking of the movements of the tacit knowledge that prevails in such localized environments and that is mostly insulated from outside world. These localized innovation systems do not always correspond to well-defined innovation parameters such as R&D expenditure or patents or pub- lications, but instead they go much deeper to the psyche of individuals, groups, and society. In India, for exam- ple, we can observe how local innovation functions and adapts in an environment that is constrained by avail- able resources. The Confederation of Indian Industry (CII) has been at the core of the Indian journey of innovation for years, and has worked very closely with industry, government (central and state), academia, entrepreneurs, and other actors. In its engagement with the innovation stakehold- ers in the country, the CII has come across some fun-

damental weaknesses of the Indian innovation system. Some of these inefficiencies are reflected in the coun-

try"s current low R&D expenditure in cutting-edge technology and basic sciences, its low rate of commer- cialization of technology, and its inadequately skilled workforce, to name a few. Despite all these challenges, India has grown rapidly with the help of its people, who are inherently innovative and entrepreneurial, even if their innovations in some cases have been temporary and makeshift.

Like India, many developing and developed nations

have much to offer to the world in terms of their inno- vation models of growth. This current edition of GII provides some interesting and thought-provoking sto- ries and examples of local innovation dynamics that will enable others to gather helpful insights about different models of innovation.

On behalf of the CII, I congratulate INSEAD, the

World Intellectual Property Organization, and the new member of the league, Cornell University, for leading this initiative to publish this important innovation index for a global audience. I also thank the other Knowledge Partners for their support and contributions to its suc- cess. Last but not the least, I congratulate the GII core team and the wonderful people associated with it, with- out whom the GII would not have been possible.

CHANDRAJIT BANERJEE

Director General

Confederation of Indian Industry

Local Solutions to Global Challenges

xi

THE GLOBAL INNOVATION INDEX 2013

Foreword

F

OREWORD

In today"s globalized landscape, innovation is often asso- ciated with progress. It represents a business"s tenacity in evolving and adapting to the changing face of compe- tition and market conditions. In short, to innovate is a survival instinct compulsory to staying relevant.

Organizations today can no longer take a myopic

stance, as their very existence is largely interdependent on the environment in which they exist and to which they cater. Organizations have a moral obligation to ensure that innovation is given a larger mandate to be the engine that enables economic growth, thereby driv- ing societal changes and laying the foundations of an empowered and competitive nation.

The Global Innovation Index is an inspiration for

those of us striving to be instruments of change and sets a precedent for those of us looking to make a difference. This year"s theme, ‘The Local Dynamics of Innovation", is more pertinent than ever; it articulates the need for a collaborative and defining effort from all concerned in shaping the future.

We are in the midst of an evolution. This is the

communication era, in which connectivity has become a basic human right. Connectivity is making the world a smaller place by fuelling interaction and opening up access to information and knowledge in myriad ways. This, in turn, spurs economic activity through a process of empowerment. The socioeconomic momentum cre- ated in the United Arab Emirates (UAE) in the last few decades makes the country very well positioned to con- tinue to attract a flow of intellectual capital, establishing itself as a hub for innovation in this part of the world. The democratization of innovation in a reliable and sustainable manner is key to unlocking the true poten- tial of value creation in a tangible manner; it will lay the groundwork for societal change and develop a frame- work for cohesion through collaboration. At du, we have established several knowledge plat- forms through which we are able to mentor the future generation of leaders, aspiring young talent, and entre- preneurs, giving them the tools they need to succeed.Being environmentally conscientious, we have adopted a green business philosophy of energy con- servation to reduce our carbon footprint, contribut- ing to the protection of our natural resources and the environment.

As an economic enabler, we provide a climate

that encourages communities to build and grow their businesses—not just in the UAE, but regionally and internationally.

As part of our moral obligation to the communi-

ties we serve, we have created a proactive and informa- tive intelligent ecosystem to address healthcare issues in the UAE.

In every aspect of these endeavours there is an

underlying theme: connectivity. Connectivity lays the groundwork for empowerment and the framework for innovation. Innovation itself is more than just a process. It is a belief, a philosophy that embeds itself in the fundamen- tal elements of governance, sustainability, efficiency, and the competitive agility needed to deliver value.

Understanding the benefits of value through inno-

vation is what will define us now and into the future. Achieving this is the responsibility not of one, but of many; a collaborative approach will drive innovation for the benefit of our future generations, our community, and the environment—as the whole is greater than the sum of its parts.

OSMAN SULTAN

C hief Executive Officer du

Connectivity as the Driver of

Innovation

xiii

THE GLOBAL INNOVATION INDEX 2013

Foreword

F

OREWORD

Open Innovation with a Global View

Innovation creates social progress and improves the economic well-being of people. The invention of the wheel shortened the distance between locations; the telephone reduced our dependence on the wheel. Today the Internet, over fixed and mobile networks, connects people from around the world, changing the way we communicate, work, learn, and innovate. Designed as an open, global platform, the Internet enables people to share thoughts and ideas, eliminating the boundaries of geography and providing the abil- ity for people to engage in collaborative innovation. Experts in different locations and from diverse back- grounds can collaborate in real time. As a result, innova- tion cycles are shortened and the barriers to innovation are lowered, opening up opportunities for all.

Open innovation—the principle that companies

offer their own innovation to third parties and use the innovation of others in their own products—cre- ates win-win opportunities. Wherever there are open markets, free-trade policies, and favourable investment environments, capital investment will follow to fos- ter innovation. Within this environment, assets such as talent, capital, and knowledge can be aligned and the impact of innovation in one location can spread to help improve the world as a whole.

Open innovation provides opportunities for pub-

lic and private enterprises and research institutions, as well as industry chains, to cooperate on multiple levels. Businesses engage customers and partners in new prod- uct development. Competitors work together to address common challenges. Duplication is eliminated to enable the creation of better products, faster. Cross-industry and cross-cluster collaboration also creates exciting pos- sibilities. For example, the energy and ICT sectors have joined forces to create smart energy grids that provide significant environmental benefits. Participation in open innovation is reciprocal: all parties benefit and contribute. This commitment to open, customer-centric innovation has helped Huaweiquotesdbs_dbs18.pdfusesText_24

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