The good news is that Ireland is still one of the 20 most innovative countries in the world; the bad news is that its grip in the rankings has slipped, as it fell back one place to 17th in an annual survey measuring innovation.
According to the 2017 Bloomberg Innovation Index, which scores economies using factors including research and development spending and the concentration of high-tech public companies, Ireland is the 17th most innovative country in the world. It scored particularly highly for “value added manufacturing” - rated second in the world, behind South Korea - and for productivity, where it placed sixth overall (compared with 21st for the UK). However, it fell down for R&D intensity (22nd); researcher concentration (22nd) and patent activity (31st).
Top of the rankings
Elsewhere, Nordic countries dominated the index. In the battle of ideas, Sweden climbed to No. 2 and Finland cracked into the top five. South Korea remained the big winner, topping the international charts in R&D intensity, value-added manufacturing and patent activity and with top-five rankings in high-tech density, higher education and researcher concentration. Scant progress in improving its productivity score - now No. 32 in the world - helps explain why South Korea’s lead narrowed in the past year.
Silver medal winner Sweden owes most of its rise to improvement in the manufacturing value-added metric, while Nordic neighbor Finland jumped two spots in large part because of the rise of high-tech firms in the country. Norway held its No. 14 spot from last year.
Fresh ideas tend to pay off big in Sweden, even as the current government is less business-friendly and has imposed labor taxes that could crimp business investment, said Magnus Henrekson, director of the Research Institute of Industrial Economics, a private foundation in Stockholm. Government financing particularly for small firms has made the difference in a country traditionally dominated by multi-national companies, said Asa Lindholm Dahlstrand, professor in innovation studies at the Centre for Innovation, Research and Competence in the Learning Economy at Lund University in Sweden. The emphasis on research and development - the country stayed at No. 5 for the RandD spending sub-category -has helped Sweden weather the continent’s economic storms of the past several years.
“There’s a lot of focus on RandD in Sweden. We’ve seen what’s happened in a lot of other countries where they didn’t do it,” said Dahlstrand. One more cautionary note for Sweden in the coming year: While a very weak krona amid easy monetary policy has helped the country’s exports fly off the shelves, Henrekson warns that that benefit won’t last forever. “It’s never good in the long term to be able to make profits too easily just because your currency is under-valued,” he said.
Biggest loser
The biggest loser in this year’s index was Russia, plunging 14 spots to No. 26, almost five times the size of the next-largest drop in the rankings. Battered by sanctions and the after-effects of a couple years of subdued energy prices, Russia’s solid scores last year in manufacturing and productivity were destroyed in this year’s tally.
Japan, where the yen is still struggling to recover from an almost two-year slide, dropped the most of any economy in the top 25, moving to No. 7 from No. 4 as they lost their best-in-world distinction for patent activity. Croatia also slipped three spots, to No. 41 from No. 38. The US fell one spot to No. 9, while Israel moved up one notch to No. 10. China held its title as the strongest-ranked emerging market, at No. 21, as it improved its tertiary education score while its high-tech concentration wavered.
(Additional reporting Bloomberg)
