Innovation has always been the domain of rich countries. Switzerland has consistently ranked first in the Global Innovation Index (GII) for the past six years.
The next 23 are all high income countries led by Sweden, United Kingdom, United States of America (US), Finland, Singapore, Ireland, Denmark, Netherlands, Germany, and Korea (see table).
The World Bank defines a high-income economy with a gross national income per capita (GNIPC) above $12,475 USD. Globally, there are 79. Switzerland has $61,930 USD GNIPC.
“The top 25 GII slots are occupied by a stable set of high-income countries that consistently lead in innovation. In past years, hardly any country moved in or out of this group of top performers.” (GII)
For the first time, China joined the ranks of the leading innovators.
“China is the first middle-income economy to join the top 25 of the GII, a group typically composed of high-income countries. China also moves to 17th place in innovation quality this year, narrowing the distance with the high-income economies.” (GII)
A middle-income country has a GNIPC between US$1,036 and $12,475. China has $14,160 USD GNIPC.
The GII 2016 is a collaboration of Cornell University, the European graduate business school INSEAD, and the World Intellectual Property Organization (WIPO). It includes 128 countries, or 92.8% of the world’s population and 97.9% of the world’s GDP.
GII relies on two main things: innovation input, as shown by five pillars—institutions, human capital and research, infrastructure, market and business sophistication; and innovation output shown by two pillars—knowledge and technology, and creativity.
GII measures these particular indexes because of their consistently high correlation with innovation.
A wide variety of countries outperform their income group on at least four of the seven GII pillars, like Cambodia, Indonesia, Mexico, and the Philippines.
The Philippines ranks 74 in the GII. Its GNIPC of $7,254 puts it in the lower-middle income. It scored high in certain indexes under Knowledge and Technology outputs and some areas under Infrastructure (ecological sustainability) and Market and Business sophistication (knowledge absorption). But its weakness in Education and R&D particularly, along with other weak indicators resulted in a below median rank. Its weak creative output only produced about 29 patents in 2016.(see profile)
How did China do it?
“China’s innovation rankings this year also reflect high scores in both the Business sophistication and Knowledge and technology outputs pillars.” (GII)
“This inclusion is driven not only by China’s innovation performance but also by methodological considerations, such as the addition of four new indicators where China does particularly well. For example, the country has a particularly high number of R&D-intensive firms among the top global corporate R&D spenders.” (GII)
The three other new indicators which propelled China’s rank are: domestic market scale, research talent in business enterprise, and industrial designs by origin.
Aside from R&D, China also strengthened its academics, part of the development and creation of human capital, like tertiary enrollment, school life expectancy, tertiary inbound mobility, its top universities rank (7th), and citable documents (16th).
“China is now the only middle-income economy with innovation quality scores that display a balance similar to that of high-income economies. The rest of the middle-income economies still depend on their top university rankings to improve their combined quality scores.” (GII)
China also showed the strongest improvement over the years in creative output, like information and communication technology (ICT) services imports, high-tech exports, creative goods exports, and intellectual property (IP).
Nationally and internationally, there was a consistent and significant surge in China’s IP applications, especially for patents.
“Between 2000 and 2015 the number of domestic invention patent applications in China grew by a factor of 38—from about 25,300 to more than 968,000 applications per year.” (GII)
By the end of 2105, China became the first intellectual property office to ever receive more than a million patent applications in a single year, says the World Intellectual Property Indicators (WIPI) 2016 report.
Globally, China’s ZTE and Huawei were the top international patent filers in the international register Patent Cooperation Treaty (PCT), followed by USA’s Qualcomm, Japan’s Mitsubishi Electric, and Korea’s LG Electronics. Of the top 10 applicants, seven companies were from Asia, then from US, says WIPO (see table).
By filing one international patent application under the PCT, applicants can simultaneously seek protection for an invention in all 152 contracting states.
China accounted for 84 percent of the total growth in the estimated 2.9 million patent applications filed globally in 2015. It’s PCT filing grew by 18.7 percent, while the total growth was 7.8 percent.
Digital communication (8.5%) accounted for the largest share of published PCT applications, followed by computer technology (8.2%), electrical machinery (6.9%), medical technology (6.8%), and measurement. These top 5 fields of technology make up 34.8% of total PCT filings.
Among the top 10 technologies, medical technology (+12.8%) optics (+12.7%) and digital communication (+10.7%) saw the fastest growth in 2016.
China was also the top filer for trademarks (TM) (6 million) and industrial design (ID) (872,800).
“In an interlinked, knowledge-based global economy, creators and innovators are increasingly relying on intellectual property to promote and protect their competitive edge around the world,” said WIPO Director General Francis Gurry. “China-based filers are behind much of the growth in international patent and trademark filings, making great strides in internationalizing their businesses as the country continues its journey from ‘Made in China’ to ‘Created in China’.”
China is the third country to file with PCT (18.5% share) behind US (24.3%) and Japan (19.4%).
“If this current trend continues, China will overtake the U.S. within two years as the largest user of the PCT System.” (WIPO)