‘Full force’ innovation swing toward emerging economies

Developing economies are showing “stellar innovation performance” as the landscape shifts towards Asia, while Sub-Saharan Africa leads global spending on education and investment.

Innovation continues to be dominated by Europe and North America, but this year’s Global Innovation Index shows that China, Vietnam, India, and the Philippines are consistently on the rise.

“An impermeable innovation glass ceiling exists that divides middle- and high-income economies. But for the past decade, innovation activity has moved towards Asia,” index co-editor Sacha Wunsch-Vincent tells SciDev.Net.

“In developing countries, governments largely shoulder innovation and R&D expenditures, to invest in innovation. The private sector investment in innovation is largely untapped.”

Sacha Wunsch-Vincent, World Intellectual Property Organization

“This trend is undeniable and in full force.”

In South-East Asia, Thailand was ranked number one in business research and development, while Malaysia was top in high-tech net exports globally.

From Sub-Saharan Africa, Botswana led the world in education spending and Mozambique led investment. Mexico was the largest creative goods exporter worldwide.

The index is co-published by Cornell University, INSEAD and the World Intellectual Property Organization (WIPO), a specialised agency of the UN. Among its rankings is a list of the top 100 global science and technology ‘clusters’, which this year includes middle-income leaders Brazil and India.

Research funding

Finance and funding for innovative ventures from private equity is in decline across Asia, North America and Europe as the COVID-19 pandemic hits economies, the index shows. Developing countries and research-intensive start-ups will feel the greatest impact from any decline in innovation finance, experts say.

“Finance is crucial, and good ideas for innovation can be supported by a range of sources from governments, financial institutions, and venture capitalists, on the one hand, to the unpaid labour of ‘sweat capital’ and crowd funding on the other,” professor of innovation studies at the University of Queensland Business School, Mark Dodgson, tells SciDev.Net.

“What matters most is investment that factors in the risks of innovation, and is long-term in orientation.”

A central challenge facing innovators worldwide, but particularly those in developing countries, is access to stable sources of finance.

“In developing countries, governments largely shoulder innovation and [research and development] expenditures, to invest in innovation,” Wunsch-Vincent says.

“The private sector investment in innovation is largely untapped.”

He says that firms are closer to the marketplace, and therefore in a better position to decide the direction of innovation and find ways of successful commercialisation. “[T]hey would benefit from more incentives to invest in innovation,” he says.

The COVID-19 pandemic has slowed down global innovation at a time when it is most needed, the authors say. Yet, the pandemic has catalysed interest in innovative solutions for health, remote work, distance education, e-commerce and mobility.

“Innovation will be of critical importance in both finding the medical solutions to prevent and treat COVID-19 and to jumpstart economic growth in the aftermath of the pandemic,” says Wunsch-Vincent, chief of economics and data analytics at WIPO.

A European science conference last week heard that COVID-19 solutions are coming from the global South as the world science order shifts.

Analysts have struggled to fully quantify innovation in the global South, Wunsch-Vincent tells SciDev.Net. “Developing countries harbour much informal or grassroots innovations, which are not perfectly captured by hard innovation data,” he says.

The index is considered a yardstick for measuring innovation to achieve the Sustainable Development Goals and aims to support evidence-based policy decisions.

This piece was produced by SciDev.Net’s Asia & Pacific desk.