World's 10 most innovative nations
World's 10 most innovative
Rediff Business Desk
Does the 21st century belong to
the Asian nations? Time only
will tell, but there is little doubt
that the world's only superpower
-- the United States of America --
is indeed in deep trouble.
Not only is the American economy shaky, its preeminent position in other fields too is
According to a report jointly compiled by The Boston Consulting Group, the
Washington-based National Association of Manufacturers, and The Manufacturing
Institute, the NAM's nonpartisan research affiliate, the US is no more the top destination
for innovation despite its world-renowned universities and venture capital funds.
Unfortunately India, too, has little to cheer about. While Silicon Valley boasts of
innumerable 'Indian start-ups', India itself ranks way below at 46 in a list of 110 most
China, ranked 27, also fails to make it to the top ten.
The study measured both innovation inputs and outputs. Innovation inputs included
government and fiscal policy, education policy and the innovation environment. Outputs
included patents, technology transfer, and other R&D results; business performance, such
as labour productivity and total shareholder returns; and the impact of innovation on
business migration and economic growth.
World's 10 most innovative nations
It has a highly developed and
successful free-market economy.
It enjoys a remarkably open and
stable prices, and a per capita
GDP higher than that of most
developed countries. Singapore
also is the world's most
Real GDP growth averaged 7 per
cent between 2004 and 2007, but
dropped to 1.2 per cent in 2008
as a result of the global financial
GDP (purchasing power parity):
GDP - real growth rate: 1.2%
Labour force: 2.96 million
Unemployment rate: 2.3%
Inflation rate (consumer prices): 4.3%
Industries: Electronics, chemicals, financial services, oil drilling equipment, petroleum
refining, rubber processing and rubber products, processed food and beverages, ship
repair, offshore platform construction and life sciences.
Exports: $235.8 billion
Imports: $219.5 billion
Reserves of foreign exchange and gold: $168.8 billion
Note: All figures in this and subsequesnt slides are that of 2008, unless otherwise mentioned.
Sources: CIA, The World Factbook; World Bank and IMF.
Image: People sit on the steps near the Merlion, in Singapore's financial district.
Photographs: Alywin Chew/Reuters
World's 10 most innovative nations
2. South Korea
In 2004, South Korea -- the world's second most innovative nation, according to the
study, joined the trillion-dollar club of world economies. In 2008, its GDP per capita was
roughly the same as that of the Czech Republic and New Zealand.
Korea was hit hard by the global financial turmoil that began in September 2008. Stock
prices fell by more than 40 per cent for the year and the value of the won (Korean
currency) fell by approximately 26 per cent.
GDP (purchasing power parity): $1.278 trillion
GDP - real growth rate: 2.5%
Labour force: 24.35 million
Unemployment rate: 3.2%
Inflation rate (consumer prices): 4.7%
Industries: Electronics, telecommunications, automobile production, chemicals,
shipbuilding, and steel.
Exports: $419 billion
Imports: $435 billion
Reserves of foreign exchange and gold: $201.2 billion
Image: People walk past a statue titled 'Seoul broods a golden egg' at the Seoul city hall
plaza in central Seoul, South Korea.
Photographs: Jo Yong-Hak/Reuters
It is a peaceful, prosperous, and stable modern market economy with low unemployment,
a highly skilled labor force, and a per capita GDP among the highest in the world. It is
also the third most innovative nation in the world.
Switzerland's largest banks suffered significant losses in 2008 and the country's largest
bank accepted a government rescue deal in late 2008.
The Swiss National Bank, beginning in October 2008, cut interest rates on several
consecutive occasions, effectively instituting a zero-rate policy in a bid to boost the
GDP (purchasing power parity): $309.9 billion
GDP - real growth rate: 1.9%
Labour force: 4.04 million
Unemployment rate: 3%
Inflation rate (consumer prices): 2.4%
Industries: Machinery, chemicals, watches, textiles, precision instruments, tourism,
banking, and insurance.
Exports: $172.7 billion
Imports: $212.8 billion
Reserves of foreign exchange and gold: $75.37 billion
Image: The city of Geneva, Switzerland.
Photographs: Denis Balibouse/Reuters
Iceland is the 4th most innovative nation. Its economy combines a capitalist structure and
free-market principles with an extensive welfare system, including generous housing
subsidies. Prior to the 2008 crisis, Iceland had achieved high growth, low unemployment,
and a remarkably even distribution of income.
The foreign exposure of Icelandic banks, whose loans and other assets totaled more than
10 times the country's GDP, became unsustainable. Iceland's three largest banks
collapsed in late 2008.
The country negotiated over $10 billion in loans from the IMF and other countries to
stabilize its currency and financial sector, and to guarantee foreign deposits in Icelandic
Iceland's coalition government collapsed in January 2009 following protests over
growing joblessness and losses to personal savings.
GDP (purchasing power parity): $12.15 billion
GDP - real growth rate: -3.5%
Labour force: 166,000
Unemployment rate: 1.6%
Inflation rate (consumer prices): 13.4%
Industries: Fish processing; aluminum smelting, ferrosilicon production; geothermal
power and tourism.
Exports: $6.846 billion
Imports: $6.543 billion
Reserves of foreign exchange and gold: $2.5 billion.
Image: An aerial picture shows part of Europe's biggest glacier Vatnajokull, in south-
Photographs: Stoyan Nenov/Reuters
Ireland, the fifth most innovative country, is a small, modern, trade-dependent economy.
GDP growth averaged 6 per cent in 1995-2007, but economic activity dropped sharply in
2008 and Ireland entered into a recession for the first time in more than a decade with the
onset of the world financial crisis.
Agriculture, once the most important sector, is now dwarfed by industry and services.
The Irish government has implemented a series of national economic programs designed
to curb price and wage inflation, invest in infrastructure, increase labour force skills, and
promote foreign investment.
Ireland joined in circulating the euro on January 1, 2002 along with 11 other European
GDP (purchasing power parity): $191.9 billion
GDP - real growth rate: -1.7%
Labour force: 2.27 million
Unemployment rate: 6.2%
Inflation rate (consumer prices): 4%
Industries: Steel, lead, zinc, silver, aluminum, barite, and gypsum mining processing;
food products, brewing, textiles, clothing; chemicals, pharmaceuticals; machinery, rail
transportation equipment; glass and crystal; software and tourism.
Exports: $128 billion
Imports: $91.27 billion
Reserves of foreign exchange and gold: $926.2 million.
Image: A 60-metre high Ferris stands close to Belfast's City Hall in Northern Ireland.
Photographs: Jonathan Saul/Reuters
6. Hong Kong
It has a free market economy highly dependent on international trade and finance, which
has left it heavily exposed to the global economic slowdown that began in 2008.
The territory has become increasingly integrated with mainland China over the past few
years through trade, tourism, and financial links. The mainland has long been Hong
Kong's largest trading partner, accounting for nearly 49 per cent of Hong Kong's exports
trade by value in 2008.
GDP growth averaged a strong 5 per cent from 1989 to 2007, but the global financial
crisis caused a sharp slowdown in the second half of 2008, pushing the territory into
recession. Hong Kong, the 6th most innovative nation, continues to link its currency
closely to the US dollar, maintaining an arrangement established in 1983.
GDP (purchasing power parity): $307.6 billion
GDP - real growth rate: 2.8%
Labour force: 3.67 million
Unemployment rate: 4.1%
Inflation rate (consumer prices): 2.1%
Industries: Textiles, clothing, tourism, banking, shipping, electronics, plastics, toys,
watches and clocks.
Exports: $362.1 billion
Imports: $387.9 billion
Reserves of foreign exchange and gold: $165.9 billion.
Image: Disney's cartoon characters perform with lion dancers at Hong Kong Disneyland.
Photographs: Paul Yeung/Reuters
It has a highly industrialised, largely free-market economy with per capita output roughly
that of the United Kingdom, France, Germany, and Italy.
Although Finland has been one of the best performing economies within the EU in recent
years and its banks and financial markets have avoided the worst of global financial
crisis, the world slowdown has hit export growth and domestic demand.
GDP (purchasing power parity): $195.2 billion
GDP - real growth rate: 1.5%
Labour force: 2.53 million
Unemployment rate: 6.4%
Inflation rate (consumer prices): 4.1%
Industries: Metals and metal products, electronics, machinery and scientific instruments,
shipbuilding, pulp and paper, foodstuffs, chemicals, textiles and clothing.
Exports: $104.3 billion
Imports: $93.28 billion
Reserves of foreign exchange and gold: $9.3 billion.
Image: People dressed as elves post mark letters with the stamp from Santa Claus' Post
Office on the Arctic Circle near Rovaniemi, northern Finland.
Photographs: Kacper Pempel/Reuters
8. United States of America
The US has the largest and most technologically powerful economy in the world, with a
per capita GDP of $48,000.
Long-term problems include inadequate investment in economic infrastructure, rapidly
rising medical and pension costs of an aging population, sizable trade and budget deficits,
and stagnation of family income in the lower economic groups.
The global economic downturn, the sub-prime mortgage crisis, investment bank failures,
falling home prices, and tight credit pushed the United States into a recession by
To help stabilise financial markets, the US Congress established a $700 billion Troubled
Asset Relief Program in October 2008. The government used some of these funds to
purchase equity in US banks and other industrial corporations.
In January 2009 the US Congress passed and President Barack Obama signed a Bill
providing an additional $787 billion fiscal stimulus - two-thirds on additional spending
and one-third on tax cuts - to create jobs and to help the economy recover.
GDP (purchasing power parity): $14.29 trillion
GDP - real growth rate: 1.3%
Labour force: 155.2 million
Unemployment rate: 7.2%
Inflation rate (consumer prices): 4.2%
Industries: Leading industrial power in the world, highly diversified and technologically
advanced; petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals,
electronics, food processing, consumer goods, lumber and mining
Exports: $1.377 trillion
Imports: $2.19 trillion
Reserves of foreign exchange and gold: $70.57 billion (December, 31 2007)
Image: Fireworks explode over the United States Capitol dome and Washington
Monument on Independence Day.
Photographs: Hyungwon Kang/Reuters
In the years following World War II, government-industry cooperation, a strong work
ethic, mastery of high technology, and a comparatively small defense allocation (1 per
cent of GDP) helped Japan advance with extraordinary speed to the rank of second most
technologically powerful economy in the world after the US.
Today, measured on a purchasing power parity (PPP) basis, Japan is the third-largest
economy in the world after the US and China.
Japan's huge government debt, which totals 170 per cent of GDP, and the aging of the
population are two major long-run problems.
GDP (purchasing power parity): $4.348 trillion
GDP - real growth rate: -0.4%
Labour force: 66.15 million
Unemployment rate: 4.2%
Inflation rate (consumer prices): 1.8%
Industries: Among world's largest and technologically advanced producers of motor
vehicles, electronic equipment, machine tools, steel and nonferrous metals, ships,
chemicals, textiles and processed foods.
Exports: $776.8 billion
Imports: $696.2 billion
Reserves of foreign exchange and gold: $954.1 billion
Image: A geisha performs at the Kaburenjo theatre in the Miyagawa district of Kyoto,
Photographs: Michael Caronna/Reuters
It has a modern distribution system, excellent internal and external communications, and
a skilled labour force. It is the 10th most innovative country, according to the study.
Despite strong finances and underlying fundamentals, the Swedish economy slid into
recession in the third quarter of 2008 and growth continued downward in the fourth as
deteriorating global conditions reduced export demand and consumption.
On February 3, 2009, the Swedish government announced a $6 billon rescue package for
the banking sector.
GDP (purchasing power parity): $348.6 billion
GDP - real growth rate: 0.7%
Labour force: 4.9 million
Unemployment rate: 6.4%
Inflation rate (consumer prices): 1.6%
Industries: Iron and steel, precision equipment (bearings, radio and telephone parts,
armaments), wood pulp and paper products, processed foods and motor vehicles.
Exports: $185.1 billion
Imports: $166.6 billion
Reserves of foreign exchange and gold: $31.04 billion.
Image: The 54-story tall Turning Torso tower in Malmo, Sweden
Photographs: Johan Nilsson/Reuters