It's Confirmed: Innovation Plays a Key Role in Competitiveness

By September 16, 2011

The quality of a country's institutions, infrastructure and human capital are among the criteria used to assess its productivity. But long term, the most fundamental criterion is the national capacity to innovate.

Which country is rated the most competitive in the world? Switzerland, says the World Economic Forum, which has just published a ranking list for national competitiveness. Singaporecomes in second, followed by Sweden, Finlandand the United States. Franceshows up in eighteenth place. To arrive at this ranking, the WEF drew up a schema based on twelve pillars. Unsurprisingly, one of these is innovation  - and it is in fact an essential factor. According to the WEF’s latest Global Competiveness Report, while a country’s productivity clearly depends on the quality of its institutions, infrastructure and human capital, plus its ability to bring macroeconomic instability under control, in the long term the decisive factor will be innovation.

Interaction between the twelve pillars is key to long-term competitiveness

It is clear that the interaction between the various competitiveness criteria is what best enables a country to stand out. The report stresses that it would be difficult to attain a high degree of innovative ability without a pool of human capital which is both well-educated and experienced, or without the necessary R&D funding. The WEF warns that while developing countries may be able to increase their productivity in the short term by adopting existing technologies and gradually improving some of their economic sectors, this approach will not suffice for those countries that have already reached an advanced level of development. The report stresses the need to develop innovative products and processes in order to remain – or become – competitive. This kind of evolution requires a favourable environment, supported by both the public and private sectors.

Investing in R&D

The report points up the need for sufficient investment in Research and Development, especially in the private sector. Having well-regarded research institutes, fostering collaboration between universities and industry, ensuring Intellectual Property protection and free competition in your country – all of which enable companies to conduct their own research without being forced to use or copy patents from overseas – are also essential criteria. Longer term, it will be the countries which focus on innovation that will adapt more easily to rapid changes in the world economy and be able to address any specific weaknesses better than their rivals.  If we take into account solely the Innovation ranking from the WEF report, we see that Switzerlandstill comes out on top, followed by Sweden. Here Franceclimbs one rung above her overall ranking, finishing in seventeenth place.


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