Something Old, Something New

What countries are the most innovative?

Source: Morguefile

It’s not an easy question. In addition to counting the number of patent applications, you need to examine the number of peer-reviewed articles, how widely that research is disseminated, new business formation, royalty and license fees, export revenues, even video uploads onto the internet. Innovation is important. Not only is it a key driver of economic success, but it also can improve our quality of life. In Africa, for example, access to clean water allows children to attend school, rather than spending up to 8 hours per day fetching water for their families.

An academic group ranked the innovation performance of 141 countries based on 79 indicators. The most innovative economies are not surprising: Switzerland, the UK, Sweden, Holland, and the US top the list. They’re wealthy, they invest a lot into research and development, and they protect intellectual property.

But there are some surprises as well. Although Vietnam is relatively poor, it punches well above its economic weight. It imports and exports a lot of high-tech and creative goods for a developing nation. On the other side, Qatar scores fairly poorly, for an oil-rich nation—about the same as Vietnam. They don’t invest as much in education, nor do they have much of a high-tech sector.

Source: The Economist

Efficient innovators are more effective at generating new ideas, given their investment in education and infrastructure. It’s notable how large China looms—given the size of its economy and its population. Clearly, their leaders have made creativity and research a national priority.

As many countries wrestle with the recent fall in oil and other commodity prices, it’s worth remembering: wealth isn’t extracted from the ground, it’s created by people. The ultimate economic resource is the human mind.

Douglas R. Tengdin, CFA

Chief Investment Officer

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