MUMBAI -
Asia tops the world's Innovation Output Index,
according to a new Economist Intelligence Unit
study published this month. More than 480 senior
executives surveyed worldwide say Japan has
emerged as the world's most innovative nation with
regard to business practices and output.
Switzerland, the United States and Sweden follow.
India has been ranked 58th, one place over
China among 82 economies, the ranking based on
their level of innovation during
2002-06. India has been
ranked only below the US among countries
possessing the best conditions for innovation.
"Although India uses English more widely
and has slightly stronger [intellectual property]
protection, China's pluses tend to outweigh
India's pluses," Nigel Halloway, who directed the
Economist study worldwide from his New York
office, informed Asia Times Online. "But it is
equally important to note that both countries are
likely to rise in the rankings over the next five
years."
The study says China spends US$136
billion in research and development (R&D),
compared with Japan's $130 billion. Given the fact
that thinking out of the box will give the
critical corporate edge in 21st-century economies,
Innovation Quotient will be the IQ that matters.
The study defines innovation as "the application
of knowledge in a novel way, primarily for
economic benefit".
As a yardstick, the
study used the number of patents a country
generates per million people as the best measure
of innovation. Japan scored higher than the US
with a higher patent number.
Asia Times
Online asked Halloway for an overview of how Asian
countries fared compared with the rest of the
world in the innovation stakes. "Asian economies
are widely dispersed in our rankings. Japan comes
top in the world," he responded.
"There
are only three in the top 15 with the rest,
including India and China, spread out in the lower
two-thirds of the league table. Over the next five
years, the picture is similarly mixed, with some
Asian countries climbing up the ranking [including
Taiwan, Singapore, India and China] and others
falling [such as South Korea and the
Philippines]."
In contrast, the survey
showed that India ranks second only to the US as
the best place in which to innovate, because
"India has significant cost advantages, a large
number of engineering and science graduates and a
sizable domestic market", according to Halloway.
Roger W Farnsworth, director of the
Executive Thought Leadership of Cisco, the company
that commissioned the study, said: "It is becoming
quite clear that in order to remain competitive,
innovation must become a priority at both the
national and business level. Understanding the
contributors to, and enablers of, innovation is
critical to success in today's interactions-based
economy."
The report, one of three studies
conducted for Cisco, describes how an
"interactions" economy develops, one that sees all
stakeholders and participants go cross the
boundary of mere buying, selling and dealing to
benefiting from sharing information. The other two
research projects study how collaboration and
personalization influence this interactions
economy.
In the next five years, though,
India will surrender its lead over China as a more
innovative country, promises the study. However, a
new generation of India's business tribe are
confident that the South Asian country can be a
global leader in innovation rather than merely
being a major market for innovation.
"Indians are naturally creative and
intellectual," said Anand V Chhatpar, chief
executive officer of BrainReactions LLC, and named
by BusinessWeek magazine as among the top five
entrepreneurs in the US under the age of 25. "Our
heritage is rich with diverse thoughts, ideas and
prominent scientists. Our culture has taught us
tolerance and positivity in the face of
adversity."
The Economist Intelligence
Unit study also noted how innovation benefits both
national economic growth and corporate
performance. "The evidence of such benefits is
stronger at the microeconomic than at the
macroeconomic level," the study said.
The
study survey panel mentioned a range of factors
that make a country innovative, with leading
reasons being technical skills of the workforce
(92% of respondents) and quality of
information-technology/telecommunications
infrastructure (also 92%).
The top four
innovative economies will cling to their places
during 2007-11, but China will move up to 54th
position, overtaking India in innovation ability.
India will also rise, says the study, but not as
high as China, and will be positioned 56th in
2011.
China's more advanced commercial
infrastructure, speedier modernization and lower
salaries, which have lured more than 300
multinationals to the country to open research
centers, give it the edge over India, says the
business information unit of the Economist Group.
For instance, Chinese scientists take home
salaries that are only about 20% of what Western
scientists pocket, according to the study.
Consultancy Hewitt Associates has reported that
the average salary rise in India runs at 14%
annually, compared with about 8% in China.
China also enjoys a bigger human-resource
bank than India, with China's university-student
population more than quadrupling within a decade.
Sixteen million students, with 352,000 new
engineers a year and 1.76 million by 2011, are
expected to drive the Chinese innovation machinery
rapidly forward.
India and China are
favorite targets for R&D spending, according
to another BusinessWeek-Boston Consulting Group
(BCG) survey on the world's most innovative
companies. Forty-four percent of business
executives said that the top destinations for
increasing their R&D investment were India and
China, while 48% said Western Europe.
Managers in this BCG survey favored the US
and Canada for idea generation, a lesser
percentage plumped for Europe, while India and
China are darlings for product development.
"Heightened global competition is forcing
governments and companies to find new ways to
increase productivity, and this is creating
renewed interest in the need to innovate," says
the Economist Intelligence Unit study, while
acknowledging that there is no single, best method
to do so.
The countries at the top of the
ranking differ in size, with some, such as India,
valuing rote learning, while others emphasize
spontaneity. The leading innovative countries are
unanimous that government policies must encourage
innovation, along with education systems that
churn out larger numbers of scientists and
engineers. Banishing the rote-learning examination
misery and rescuing school kids from carrying
overloaded schoolbags could be a nice area to
start.
The fact that Asia topped the
worldwide innovation quotient surprised those who
carried out the survey.
"I expected the US
to come top, but it is easy to confuse the
environment for innovation, with the innovation
performance as measured by patents granted," noted
Halloway. "America's environment is much better
than Japan's, but despite this, Japan's innovation
'machine' - its world-beating export-oriented
companies - produces more patents than does the
US.
"It shows that creating a world-class
environment for innovation is only half the
battle; you need the people and the tenacity to be
able to commercialize new ideas."
(Copyright 2007 Asia Times Online Ltd. All
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