The GCC's innovators: UAE, Saudi Arabia, Qatar and Kuwait lead the Middle East's innovation index
The United Arab Emirates, Saudi Arabia, Qatar and Kuwait lead the Middle East in overall innovation performance according to the Global Innovation Index 2013 (GII), published by Cornell University, INSEAD, the leading international business school, and the World Intellectual Property Organization (WIPO), a specialized agency of the United Nations.
This year's study benefits from the experience of its Knowledge Partners: Booz & Company, the Confederation of Indian Industry, du and Huawei, as well as an advisory board of 14 international experts.
Despite the economic crisis, innovation is alive and well. Research and development spending levels are surpassing 2008 levels in most countries and successful local hubs are thriving.
This year's report casts additional light on the local dynamics of innovation, an area which has remained under-measured globally. It shows the emergence of original innovation eco-systems, and signals a needed shift from a usual tendency to try and duplicate previously successful initiatives.
The GII 2013 is calculated as the average of two sub-indices. The Innovation Input Sub-Index gauges elements of the national economy which embody innovative capabilities grouped in five pillars: (1) Institutions, (2) Human capital and research, (3) Infrastructure, (4) Market sophistication, and (5) Business sophistication.
The Innovation Output Sub-Index captures actual evidence of innovation results, divided in two pillars: (6) Knowledge and technology outputs and (7) Creative outputs.
The United Arab Emirates ranks top in the MENA region in four pillars; Institutions (Political, Regulatory and Business Environment), Human Capital and Research (Education, Tertiary Education, and Research & Development), Infrastructure (Information & Communication Technologies, General Infrastructure and Ecological Sustainability), and Business Sophistication (Knowledge Workers, Innovation Linkages & Knowledge Absorption).
While Saudi Arabia ranks top in the MENA region in Market Sophistication (Credit, Investment and Trade & Competition), Kuwait in Knowledge & Technology Outputs (Knowledge Creation, Knowledge Impact and Knowledge Diffusion), and Qatar in Creative Outputs (Creative Intangibles, Creative Goods & Services and Online Creativity).
"Worldwide, innovation is increasingly seen as a powerful tool to strengthen the competitiveness and global relevance of corporations and nations," said Mr. Bruno Lanvin, the report's co-editor and Executive Director of INSEAD's European Competitiveness Initiative.
"In the Middle East and Northern Africa, recent political and social changes have also underlined the importance of addressing the needs and expectations of populations in terms of growth and job creation, especially for the young. This year's GII shows that, in this regard, performances in the region remain uneven, but innovation is becoming a visible and pertinent instrument for economic diversification, enhanced competitiveness and global integration in an increasing number of MENA countries."
Under performing MENA countries can catch up with innovation leaders if they "learn" to innovate. This will require them to transform their innovation inputs (on which they perform relatively well) into marketplace results (on which they perform considerably lower) more efficiently, said Hatem Samman, Lead Economist and Director of Booz & Company's Ideation Center.
These MENA countries can achieve this by strengthening and aligning their policies on innovation inputs—such as human capital and research—with policies that help translate them into tangible products and services—such as high- and medium-high tech output—to spur economic activities and create wealth.
Strong innovation hubs can provide an efficient platform for such transformation by facilitating knowledge creation and sharing, and by providing a bridge for the commercialization of ideas. As a result, more MENA countries can move up the innovation ladder towards innovation learners and chart their way into innovation leadership.
"In the Middle East, we are seeing governments focus on building innovation capabilities as a means of catalysing the growth and diversification of their economies. For instance, many MENA countries are establishing innovation hubs in which large state-owned enterprise champions, whose business goals are aligned with the objectives of the innovation hub, are acting as the critical drivers of hub activities," said RasheedEltayeb, Principal in the Public Sector Practice at Booz & Company.
"These state-owned enterprise champions have the talent pools to stimulate innovation, the financial resources to bridge the gap between research and commercial success, and the scale to create markets for innovative products."
"Dynamic innovation hubs are playing a greater role in the Middle East's innovation efforts, and are multiplying around the world despite the difficult state of the global economy. These hubs leverage local advantages with a global outlook on markets and talent," said WIPO Director General Francis Gurry.
"For national-level policy makers seeking to support innovation, realising the full potential of innovation in their own backyards is often a more promising approach than trying to emulate successful innovation models elsewhere."
The GII 2013 looked at 142 economies around the world, using 84 indicators including the quality of top universities, availability of microfinance, venture capital deals - gauging both innovation capabilities and measurable results. Published annually since 2007, the GII has become a chief benchmarking tool for business executives, policy makers and others seeking insight into the state of innovation around the world. United Nations Secretary-General Ban Ki-moon joined the authors of the report and its Knowledge Partners in presenting the GII 2013 findings at the High-Level Segment of the United Nation's Economic and Social Council (ECOSOC) on July 1st, in Geneva.
"The results of the GII provide testimony to the global nature of innovation today. The top 25 ranked countries on the GII are a mix of nations from across the world - North America, Europe, Asia, and Oceania. While high income economies dominate the list, several new players have increased their innovation capabilities and outputs. On average, high-income countries outpace developing countries by a wide margin across the board in terms of scores; a persistent innovation divide exists," stressed Mr.Soumitra Dutta, co-editor of the report and Anne and Elmer Lindseth Dean, Samuel Curtis Johnson Graduate School of Management, Cornell University.
Switzerland and Sweden's performance reflects the fact that both countries are leaders in all components (pillars) of the GII, consistently ranking in the top 25. The United Kingdom has a well-balanced innovation performance (ranking 4th in both input and output), in spite of a relatively low level of growth in labor productivity. The United States continues to benefit from its strong education base (especially in terms of top-rank universities), and has seen strong increases in software spending and employment in knowledge-intensive services. The US was last in the GII top 5 in 2009, when it was number one.
Innovation Leaders and Innovation Learners:
The GII 2013 shows a striking pattern of stability among the most innovative nations. While individual countries swap their respective rankings within the top 10 or the top 25, not a single country moved in or out of such groups in 2013.
One interpretation of this could be that innovation success leads to the emergence of a virtuous circle: once a critical threshold has been reached, investment attracts investment, talent attracts talent, and innovation generates more innovation.
Through several of its analytical chapters, the 2013 edition of GII explores how innovation has benefitted from 'local specifics' in different parts of the world. One key message is that too many innovation strategies have been focused on trying to replicate previous successes elsewhere, like Silicon Valley in California. However, fostering local innovation requires strategies that should be deeply rooted in local comparative advantages, history and culture. They should be combined with a global approach to reach out to foreign markets, and attract overseas talent.
"The creation of an environment that could unleash the potential for innovation for all in a sustainable manner is the way to unlocking the true, tangible potential of value creation; it will lay the groundwork for societal change and develop a framework for cohesive synergies through collaboration. The unprecedented socio-economic momentum that has been created in the last few decades in the United Arab Emirates makes this country very well positioned to continue to play a pivotal role in this exciting journey as a regional hub for innovation," said Osman Sultan, Chief Executive Officer of du.
Research and Development Strong:
On the research and development (R&D) front, the GII 2013 brings a dose of cautious optimism: despite adversity and tightened budget policies, R&D expenditures have grown since 2010. On the business front, the R&D expenditures of the top 1,000 R&D spending companies have grown between 9 and 10 % in 2010 and 2011. A similar pattern has been observed in 2012.
A most remarkable characteristic of that trend is that emerging markets have increased their R&D faster than high-income countries. Over the last five years, China, Argentina, Brazil, Poland, India, Russia, Turkey and South Africa (in that order) have been at the forefront of this phenomenon. Emerging markets, and notably China, are also largely driving the growth in patent filings worldwide.
- 2014 in three words: deflation and lower returns
- How fear can be a good force in the workplace
- Housing and education costs eating away Dubai's tax-free benefits
- With World Cup under its sleeve, Qatar comes fourth in global slavery index
- The quiet overachiever: Is Oman going to do better than its GCC peers in 2015?