Report Assesses Innovation Capacity of 55 Countries

A new report assessing the innovation capacity of 55 countries ranks the U.S. in the highest tier possible for five of the seven core policy areas identified by the authors. The U.S. rankings fall slightly in the areas of science and R&D policies and high-skill immigration. Only Canada and Singapore placed in the upper tier on all seven indicators. The report highlights effective policies countries are using to build their innovation capacity and offers recommendations for improving performance. Countries are ranked as upper tier, upper-mid tier, lower-mid tier, or lower tier on seven indices with those ranks calculated by a country's performance on a set of sub-indicators relevant to each core policy area. The seven indices include: Open and non-discriminatory market access and foreign direct investment; Science and R&D policies that spur innovation; Openness to domestic competition and new firm entry; Effective intellectual property rights protection policies; Digital policies enabling the robust deployment of ICT platforms; Open and transparent government procurement policies; and, Openness to high-skill immigration. To assess science and R&D policies, the authors use five indicators including R&D tax incentives, defense and non-defense government R&D expenditures, higher education R&D performance, and industry cluster development activities. Thirteen of the 55 countries ranked in the upper tier for this category, including Australia, Canada, Denmark, France, and Spain. Australia, France and Spain have, by far, the most generous R&D tax incentive regimes, the report finds. The U.S. ranked in the upper-mid tier alongside Brazil, China, Japan, United Kingdom, and Russia, among others. In terms of non-defense R&D expenditure as a share of GDP, Iceland leads, spending the equivalent of 1.02 percent of its GDP on non-defense R&D. The U.S. is far behind on this measure at 0.31 percent. The U.S. ranks highest in government R&D expenditure on defense as a share of GDP with 0.44 percent. To better coordinate innovation policies, countries should implement a National Innovation Foundation, the authors conclude. Good examples from the last decade are seen in Australia, Austria, Chinese Taipei, Demark, Finland, Japan, the Netherlands, Portugal, Singapore, South Korea, Sweden, and the United Kingdom. Countries were measured on three indicators to assess the effectiveness of immigration policies in attracting high-skill foreign investment. These include: high-skill immigrants as a share of population; selection rates of high-skill immigrants; and the ratio of selection rates of high-skilled immigrants to that of low-skilled immigrants. Again, the U.S. ranked in the upper mid-tier. Upper tier countries are Canada, Chinese Taipei, Hong Kong, Israel, and Singapore. Using examples from the U.S., the authors point to several studies showing that foreign talent has helped launch successful startup companies and create jobs in the high-tech sector. However, many countries tend to use either a points-based or an employer-led selection system, which the authors find flawed in some regard. Recognizing these flaws, a number of countries have begun to move toward a hybrid high-skill immigration system combining approaches from both systems. The Global Innovation Policy Index by the Information Technology and Innovation Foundation and the Kauffman Foundation is available at: http://www2.itif.org/2012-global-innovation-policy-index.pdf.