Who Will Finance Innovation? Global Innovation Index 2020 Launches
Launched globally and virtually yesterday, the 2020 Global Innovation Index centers around one of this year’s most critical questions: who will finance innovation? This edition sheds light on the state of innovation financing by offering an exploration of the evolution of entrepreneurial and other innovators’ financing mechanisms. The report also comments on the remaining challenges for funding innovation, particularly in the context of the economic slowdown due to the COVID-19 crisis. Portulans Institute celebrates the release of this year’s index and looks forward to hosting the USA Launch on 15 September (register here), in partnership with the Information Technology and Innovation Foundation.
Prof. Soumitra Dutta, Portulans Co-founder and President, discusses the GII 2020 Ranking.
According to the 2020 GII rankings, for the 9th consecutive year Switzerland tops the ranking, followed by Sweden, U.S., U.K and Netherlands. The Republic of Korea joins the top 10 for the first time and follows Singapore (9th). The top 10 is dominated by high-income countries. The geography of innovation continues to shift, the GII 2020 shows. Over the years, India, China, the Philippines, and VietNam are the economies with the most significant progress in their GII innovation ranking over time. All four are now in the top 50.
2020 Science and technology hotspots
For the last four years, the GII has also published a ranking of the world’s top 100 science and technology hotspots. In 2020, Tokyo-Yokohama is the top-performing hotspot again, followed by Shenzhen-Hong Kong-Guangzhou, Seoul, Beijing, and San Jose-San Francisco. The U.S. continues to host the largest number of hotspots (25), followed by China (17), Germany (10), and Japan (5). The top 100 clusters are located in 26 economies, of which six – Brazil, China, India, Iran, Turkey, and the Russian Federation – are middle-income economies.
GII 2020 Top Countries
Why is 2020 such a watershed year for innovation?
When speaking about innovation in times of crisis, we often confront the assumption that global crisis conditions will slow down or even stunt innovation.
Following the 2008/2009 financial crisis, we actually witnessed the rate of innovation outpacing the GDP growth rate of global economies. Innovative ideas, initiatives, and ventures were not negatively impacted by that crisis: on the contrary, the private sector exploited the moment and capitalized on the possibilities that emerging technologies offer.
We have to now wait and see if innovation investments slow down in the post-COVID-19 years or whether the public and private sector come together and continue to push the frontiers of innovation. Over the last months, we have already witnessed a fast pace of innovations in remote learning and working. Governments and companies have also put significant new investments in healthcare research to find new vaccines.
Bruno Lanvin, Portulans Co-Founder and Director, discusses the impact of COVID on Innovation during the 2020 GII Launch.
Key Findings from the Global Innovation Index 2020
Moving from containment to recovery, COVID-19 will impact innovation. In the last few months, the COVID-19 crisis has catalyzed changes to the way we live, work, and learn that we never thought were feasible. We are connecting with each other in ways that are unprecedentedly innovative: and this is just the start.
As we transition from containing the crisis to recovering from it, policymakers worldwide must make innovation a top priority in economic stimulus efforts. Once the pandemic crisis is contained, “it is crucial that support for innovation becomes broader and that it is conducted in a countercyclical way”, meaning that as spending on innovation by businesses decreases, governments must work to counteract this with expenditure boosts.
Venture capitalist deals are in decline, but there is hope. Venture capital spending will likely take longer to bounce back than R&D spending, particularly given that it was already on the decline before the pandemic. The critical venture capital “hot spots” (UK, US, Singapore, India, China, Israel, Hong Kong, India, Luxembourg) will likely experience strong rebounds. As the GII 2020 report indicates, innovation finance has been redirected towards health, robotics, online education, big data, and e-commerce: sectors that have undergone radical change due to the COVID-19 crisis.
The landscape of global innovation is changing, fast. Although the GII’s top-performing economies are still high-income countries (Switzerland, Sweden and the US are in the top-three), Vietnam, China, India and the Philippines are rising in the rankings, and as of 2020, they are the economies with the most “significant progress” over time. In certain indicators, high-income economies are outranked by developing economies: for instance, Botswana and Mozambique rank first globally for Education and Investment respectively. In spite of this, “regional divides persist, yet some economies harbor significant innovation potential”: the GII 2020 recognizes said potential, even in regions with highly heterogeneous innovation performance.