Tuesday, August 6, 2013

Nepal 128th innovative nation (out of 142)

According to the latest Global Innovation Index 2013, Nepal has ranked 128 out of 142 countries. In GII 2012, Nepal ranked 113 out of 142 countries. This year’s GII used 84 indicators, including the quality of top universities, availability of microfinance, venture capital deals, to gauge both innovation capabilities and measurable results.

The GII 2013 is calculated as the simple average of two sub-indices. The innovation input sub-index gauges elements of the national economy which embody innovative activities grouped in five pillars: (1) Institutions, (2) Human capital and research, (3) Infrastructure, (4) Market sophistication, and (5) Business sophistication. The innovation output sub-index captures actual evidence of innovation results, divided in two pillars: (6) Knowledge and technology outputs and (7) Creative outputs.

Nepal’s ranking (out of 142 countries) in the sub-indices and the pillars within them are listed below:

  • Innovation input sub-index (129)
    1. Institutions (125)
    2. Human capital and research (130)
    3. Infrastructure (122)
    4. Market sophistication (123)
    5. Business sophistication (97)
  • Innovation output sub-index (123)
    1. Knowledge and technology outputs (127)
    2. Creative outputs (106)
  • Innovation efficiency ratio [Output sub-index by input sub-index] (77)

Now, why is innovation important for a struggling economy like Nepal? It is because to remain competitive (both in factor and product markets), Nepal has to innovate, which would mean finding new ways of doing business to enhance productivity and efficiency. It has been argued that innovation leads to a virtuous circle, i.e. once a critical threshold is reached, investment entices investment, talent entices talent, and innovation generates more innovation. This way the economy can remain competitive, create employment opportunities with high paying jobs, and attract a steady flow of new investments. The decline of exports and increasingly higher imports replacing domestic production have been a glaring feature of the lack of innovation in Nepali economy.

The urgent need is to focus on the enables for making the economy competitive, i.e. stable institutions (including political stability), adequate accumulation of human capital, adequate supply of infrastructure, and more investments in R&D both in public and private sectors.

Excerpts from the GII 2013 report below:

Switzerland and Sweden’s performance reflects the fact that both countries are leaders in all components (pillars) of the GII, consistently ranking in the top 25. The United Kingdom has a well-balanced innovation performance (ranking 4th in both input and output), in spite of a relatively low level of growth in labor productivity. The United States continues to benefit from its strong education base (especially in terms of top-rank universities), and has seen strong increases in software spending and employment in knowledge-intensive services. The US was last in the GII top 5 in 2009, when it was number one.

Through several of its analytical chapters, the 2013 edition of GII explores how innovation has benefitted from ‘local specifics’ in different parts of the world. One key message is that too many innovation strategies have been focused on trying to replicate previous successes elsewhere, like Silicon Valley in California. However, fostering local innovation requires strategies that should be deeply rooted in local comparative advantages, history and culture. They should be combined with a global approach to reach out to foreign markets, and attract overseas talent.

The creation of an environment that could unleash the potential for innovation for all in a sustainable manner is the way to unlocking the true, tangible potential of value creation; it will lay the groundwork for societal change and develop a framework for cohesive synergies through collaboration.