A man carrying an umbrella walks along the Jubilee Bridge in front of the city skyline in Singapore. (Photographer: Nicky Loh/Bloomberg)

World's Top Innovation Economies Aren't Getting Money's Worth

(Bloomberg) -- Among the world’s top innovating economies, quite a few aren’t getting enough bang for their buck.

That’s the lesson from the latest annual Global Innovation Index release, which measures the most innovative economies and then, separately, calculates an “Innovation Efficiency Ratio.”

Among the top-10 innovators, Switzerland, Germany, Sweden and the Netherlands were the only countries that also ranked in the top-10 for innovation efficiency. The contrast is especially stark for Singapore, which came in at 5 for innovation but 63 for efficiency. On the other hand, Luxembourg is enjoying far more output relative to its input, at No. 2 for efficiency, but No. 15 innovation.

World's Top Innovation Economies Aren't Getting Money's Worth

Published annually by Cornell University, INSEAD business school and the World Intellectual Property Organization, the report tallies scores among 126 economies. The efficiency measure is calculated by dividing an economy’s “outputs,” such as patent applications and increases in labor productivity, by “inputs” that include research and development spending and financial market openness. The broader gauge averages input and output scores.

While most economies have a linear relationship between input and output, China “strongly over-performs,” according to the report. China also stood out as the only economy in the top-30 innovators, at No. 17, that isn’t classified as high-income by the World Bank.

Other economies can celebrate rankings that at least show they’re punching above their weight. South Africa, Tunisia and Colombia were “innovation achievers” for the first time this year, having performed at least 10 percent above peers in their income group. Vietnam, India, Rwanda, Thailand and Bulgaria were among those that repeated in the report’s group of 20 “achievers.”

These out-performing countries have more structured institutional frameworks and “foster a higher integration with international markets,” according to the report.

©2018 Bloomberg L.P.