After a six-year streak at the top, South Korea was unseated from its best-in-world spot by Germany — but only just. Japan and New Zealand were among those losing ground in innovation against global peers, while Vietnam showed a big gain.
Singapore’s rise against global peers was underpinned by stronger showings in productivity and patent activity, while the city state also retained a world-beating ranking in tertiary efficiency. For the latter category, Bloomberg’s rankings take into account factors such as graduation rates of first-degree earners and the share of the labor force that’s made up of new science and engineering graduates.
Singapore’s high standing in the index speaks to its long-term focus on adapting to an aging population, as well as a tighter labor market that’s allowed for productivity gains, said David Mann, chief economist for Standard Chartered Plc in Singapore.
“You can’t just try for a little while,” he said of policy makers struggling to innovate their economies. And for Singapore, “we see more in the pipeline with even more use of automation in multiple industries. There’s a lot that’s on the way in that regard — and being willing to experiment” in industries including finance, he said.
The annual Bloomberg Innovation Index, in its eighth year, analyzes dozens of criteria using seven metrics, including research and development spending, manufacturing capability and concentration of high-tech public companies. The Index was released just before the annual World Economic Forum in Davos, Switzerland, where innovation will be a key theme of meetings Jan 21-24.
Regionally, the top 20 is similar to last year’s results. Five Asia-Pacific economies are represented, lagging 13 for Europe. The US and Israel make up the balance.
The world’s biggest economies had opposite fortunes, with the US dropping one level to No. 9 and China improving by one spot to No. 15. The US was ranked No. 1 when the Innovation Index debuted in 2013.
The news wasn’t great for advanced economies in the Asia-Pacific, either, with Japan dropping three spots and Australia falling one. New Zealand’s five-spot decline was the biggest slide of any economy ranked in this year’s Innovation Index, mainly due to a drop in productivity and value-added manufacturing.
Malaysia and Hong Kong each fell one spot, to No. 27 and No. 39. Thailand held its position at No. 40, as India did at No. 54.
On the other end of the spectrum, Vietnam tied Singapore for the most-improved title in the region, climbing three spots to No. 57 after it first qualified for a ranking last year.
The Southeast Asian frontier market was hailed an “e-commerce leader” for trimming regulations and improving cross-border trade in a Jan 17 blog post by Rebecca Sta Maria, executive director of the Asia-Pacific Economic Cooperation Secretariat, ahead of the Index release.
“What also works are reforms that focus on education, skills, infrastructure, and social security, and address barriers that prevent women, small businesses, and traditionally marginalized groups from fully participating in the digital economy,” she wrote.
The 2020 ranking process began with more than 200 economies. Each was scored on a 0-100 scale based on seven equally weighted categories. Nations that didn’t report data for at least six categories were eliminated, trimming the total list to 105. Bloomberg publishes the top 60 economies.