The sixth annual Global Innovation Index ranking the world’s most innovative economies was published this month.[i]  New Zealand ranked 17th worldwide out of 142 economies included in the index.  This was good enough for a ranking of third among economies in the Southeast Asia and Oceania region, behind only Hong Kong and Singapore and leading 13 other countries including Korea, Australia, Japan and China.

Switzerland and Sweden retained their respective positions as the two most innovative economies in the 2013 index, with the top 10 rounded out by the United Kingdom, Netherlands, United States of America, Finland, Hong Kong, Singapore, Denmark and Ireland.

New Zealand’s relatively high ranking was largely attributable to strengths identified in the political, regulatory, and business environments, where the country consistently ranked in the top five countries in the world under a number of indicators.  However, the report also identified weaknesses in other key areas, including relatively low proportions of tertiary graduates in the science and engineering disciplines, research and development financed by local businesses and foreign sources, and high-tech manufacturing.[ii]

These strengths and weaknesses are reflected in a higher ranking of 15th on the innovation input sub-index, which measures elements of the national economy enabling innovative activities, and a lower ranking of 19th on the innovation output sub-index, which measures the results of innovative activities including the number of patent and trade mark application filings.  This indicates that New Zealand has all the necessary ingredients for a highly innovative knowledge-based economy and high-tech manufacturing, but there remains room for improvement in realising and commercialising intellectual property.

The report notes the growing influence of emerging markets including Brazil, Russia, India and China, which are increasing their research and development expenditure at a faster rate than high-income countries, including New Zealand, and rapidly accounting for an increasing share in patent filings.[iii]

Although New Zealand’s 2013 overall ranking of 17th represents a decline of three places compared to the 2012 ranking of 14th, the drop is largely attributable to changes in the ranking methodology rather than any new data indicating a decline in innovation relative to other countries.[iv]

The Global Innovation Index is jointly published by the World Intellectual Property Organization (WIPO), Cornell University, and the graduate business school INSEAD.  The rankings are based upon 84 indicators including political stability, government effectiveness, tertiary enrolment, patent and trade mark filings, and ease of starting a business.