Global Innovation Index 2015: Ireland in top 10 due to tax strategies
Switzerland, the United Kingdom, Sweden, the Netherlands and the United States of America are the world’s five most innovative nations, according to the Global Innovation Index 2015, while China, Malaysia, Vietnam, India, Jordan, Kenya, and Uganda are among a group of countries outperforming their economic peers. Ireland moves up to 8th rank overtaking Denmark but some of the key criteria such as computer services exports have been distorted by tax avoidance strategies.
The UK ahead of the US, is also suspect with the former's low rate of R&D spending and poor record of commercialising inventions.
Compared with Denmark, there is a recognition of the Irish poor patenting record. However, Ireland gains by having higher FDI (foreign direct investment flows); High-tech exports; Communications, computer and information services exports; Creative goods exports; Wikipedia monthly edits; Innovation Output Sub-index; GDP per unit of energy use — however Denmark is close to self-sufficiency in energy and is a leading country for developing wind power technology.
Irish high tech exports in particular services exports are heavily distorted by the tax strategies of foreign multinationals — Google for example books about 40% of its global sales in Ireland.
Both the UK and Ireland have large foreign-owned sectors and for more information on the state of innovation in these markets, see here.
The GII 2015 looks at “Effective Innovation Policies for Development” and claims to show how new ways that emerging-economy policymakers can boost innovation and spur growth by building on local strengths and ensuring the development of a sound national innovation environment.
“Innovation holds far-reaching promise for spurring economic growth in countries at all stages of development. However, realizing this promise is not automatic,” said Francis Gurry, WIPO (World Intellectual Property Organisation) director general. He added: “Each nation must find the right mix of policies to mobilize the innate innovative and creative potential in their economies.”
The UK in second place and up from the 10th position in 2011, hosted the global launch of the eighth edition of the GII. Baroness Neville-Rolfe, minister for Intellectual Property and Parliamentary Under Secretary of State at the Department for Business, Innovation and Skills said Thursday: "The UK has an outstanding tradition in producing the very best in science and research: with less than 1% of the world's population we produce 16% of the top quality published research. This research excellence is a major factor in the UK maintaining its position at number two in the 2015 Global Innovation Index. The government is committed to making Britain the best place in Europe to innovate, patent new ideas and start and grow a business."
The GII, co-published by Cornell University, INSEAD and the World Intellectual Property Organization (WIPO), surveys 141 economies around the world.
As a whole, the group of top 25 performers — all high income economies — remains largely unchanged from past editions, illustrating that the leaders’ performance is hard to challenge for those that follow. Some exceptions are: the Czech Republic (24th) is in the top 25 and Ireland (8th) in the top 10 this year. Also, China (29th) and Malaysia (32nd) show a performance which is similar to the one of top 25 high-income countries, including in areas such as human capital development and research and development funding.
In terms of innovation quality — as measured by university performance, the reach of scholarly articles and the international dimension of patent applications — a few economies stand out. The US and the UK stay ahead of the pack, largely as a result of their world-class universities, closely followed by Japan, Germany and Switzerland. Top-scoring middle-income economies on innovation quality are China, Brazil and India, with China increasingly outpacing the others.
This year's Innovation Union report from the European Commission says that based on the average innovation performance, the Member States fall into four different performance groups:
1) Denmark, Finland, Germany and Sweden are “Innovation leaders" with innovation performance well above that of the EU average; 2) Austria, Belgium, France, Ireland, Luxembourg, Netherlands, Slovenia and the UK are “Innovation followers” with innovation performance above or close to that of the EU average; 3) The performance of Croatia, Cyprus, Czech Republic, Estonia, Greece, Hungary, Italy, Lithuania, Malta, Poland, Portugal, Slovakia and Spain is below that of the EU average. These countries are “Moderate innovators”; 4) Bulgaria, Latvia and Romania are “Modest innovators” with innovation performance well below that of the EU average.