GLOBAL INNOVATION INDEX 2020 Who Will Finance Innovation? GLOBAL INNOVATION INDEX 2020 13TH EDITIONGLOBAL INNOVATION INDEX 2020 Who Will Finance Innovation? 13TH EDITION Soumitra Dutta, Bruno Lanvin, and Sacha Wunsch-Vincent EditorsThe Global Innovation Index 2020 ii The Global Innovation Index 2020: Who Will Finance Innovation? is the result of a collaboration between Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO) as co-publishers, and their Knowledge Partners. The report and any opinions expressed in this publication are the sole responsibility of the authors. They do not purport to reflect the opinions or views of WIPO Member States or the WIPO Secretariat. The terms “country”, “economy”, and “nation” as used in this report do not in all cases refer to a territorial entity that is a state as understood by international law and practice. The terms cover well-defined, geographically self-contained economic areas that may not be states but for which statistical data are maintained on a separate and independent basis. Any boundaries and names shown and the designations used on any visual maps do not imply official endorsement or acceptance by any of the co-publishers. The chapters provided by outside authors may deviate from UN terminology for countries and regions. Cornell University, INSEAD, and the World Intellectual Property Organization, 2020 This work is licensed under the Creative Commons Attribution Non- commercial No-Derivatives 3.0 IGO License. The user is allowed to reproduce, distribute, and publicly perform this publication without explicit permission, provided that the content is accompanied by an acknowledgment that Cornell University, INSEAD, and WIPO are the source. No part of this publication can be used for commercial purposes or adapted/translated/ modified without the prior permission of WIPO. To view a copy of the license, please visit creativecommons/ licenses/by-nc-nd/3.0/igo/. Please write to giiwipo.int to obtain permission. When content, such as an image, graphic, data, trademark, or logo, is attributed to a third party, the user is solely responsible for clearing the rights with the right holders. Suggested citation: Cornell University, INSEAD, and WIPO (2020). The Global Innovation Index 2020: Who Will Finance Innovation? Ithaca, Fontainebleau, and Geneva. ISSN 2263-3693 ISBN 978-2-38192-000-9 Printed and bound in Geneva, Switzerland, by the World Intellectual Property Organization (WIPO), and in New Delhi, India, by the Confederation of Indian Industry (CII). Cover design by WIPO Publications Division and LOWERCASE Inc. (Contents iii vii Preface: Releasing the Global Innovation Index 2020: Who Will Finance Innovation? By Soumitra Dutta, SC Johnson College of Business, Cornell University; Francis Gurry, World Intellectual Property Organization (WIPO); and Bruno Lanvin, INSEAD ix Foreword: Financing Innovation in India By Chandrajit Banerjee, Director General, Confederation of Indian Industry (CII) xi Foreword: Building Virtual Infrastructures for the Age of Experience By Bernard Charls, Chief Executive Officer and the Vice- Chairman of the Board of Directors of Dassault Systmes xiii Foreword: Challenges and Opportunities in Financing Innovation in Brazil By Robson Braga de Andrade, President of CNI, Director of SESI, and President of SENAIs National Council KEY FINDINGS xvi Key Findings 2020 GII 2020: MAIN FINDINGS AND RANKINGS xxxii Global Innovation Index 2020 rankings xxxix Contributors to the Report xlv Advisory Board to the Global Innovation Index 1 Chapter 1: The Global Innovation Index 2020 By Soumitra Dutta and Rafael Escalona Reynoso, SC Johnson College of Business, Cornell University; Bruno Lanvin, INSEAD; Sacha Wunsch-Vincent, Lorena Rivera Len, Antanina Garanasvili and Pamela Bayona, World Intellectual Property Organization (WIPO) CONTENTSThe Global Innovation Index 2020 iv GII 2020: WHO WILL FINANCE INNOVATION? 67 Introduction to the GII 2020 Theme Who Will Finance Innovation? By Francesca Guadagno, Independent Consultant, and Sacha Wunsch-Vincent, World Intellectual Property Organization (WIPO) 77 Chapter 2: Sources of Funding Innovation and Entrepreneurship By Peter Cornelius, AlpInvest Partners 89 Chapter 3: Sovereign Wealth Funds and Innovation Investing in an Era of Mounting Uncertainty By Jerome Engel, University of California, Berkeley; Victoria Barbary, International Forum of Sovereign Wealth Funds; Hamid Hamirani, Ministry of Finance Oman; Kathryn Saklatvala, bfinance 105 Chapter 4: Government Incentives for Entrepreneurship By Josh Lerner, Harvard Business School 113 Chapter 5: Financing “Tough Tech” Innovation By Ramana Nanda, Harvard Business School 121 Chapter 6: Shaping the Unknown with Virtual Universes the New Fuel for Innovation By Pascal Daloz, Patrick Johnson, and Sbastien Massart, Dassault Systmes; Pascal Le Masson and Benot Weil, Mines ParisTech, PSL Research University 127 Chapter 7: From Financial Growth to Generative Growth: A Renewal of Private Equity By Laure-Anne Parpaleix, Kevin Levillain, and Blanche Segrestin, Mines ParisTech, PSL Research University 133 Chapter 8: Filipinnovation: Financing Science for the People By Fortunato de la Pea, Department of Science and Technology, Philippines 143 Chapter 9: Financing Research, Development, and Innovation: the Case of the Czech Republic By Karel Havlek, Silvana Jirotkov, Tom Holinka, and Martin Hronza, Ministry of Industry and Trade, Czech Republic 149 Chapter 10: Financing Innovation in Brazil By Robson Braga de Andrade, National Confederation of IndustryBrazil (CNI) SPECIAL SECTION: CLUSTER RANKINGS 43 The Top 100 Science and Technology Clusters By Kyle Bergquist and Carsten Fink, World Intellectual Property Organization (WIPO) 61 Special Section: AppendixContents v APPENDICES 203 Appendix I: The Global Innovation Index Conceptual Framework 211 Appendix II: Economy Profiles Dassault Systmes, The 3DEXPERIENCE Company; and the National Confederation of Industry Brazil (CNI) for their support. We also thank the Competence Centre on Composite Indicators and Scoreboards of the Joint Research Centre at the European Commission. Likewise, we recognize the contributions of our Advisory Board members, who have been joined by two members this year: Ms. C. Akamanzi, CEO of the Rwanda Development Board (Rwanda) and Mr. H. Takenaka, Director, Center for Global Innovation Studies, T oyo University and former Minister (Japan). WeSoumitra Dutta and Bruno Lanvinshall, in a break from tradition, have the last word in this preface, so that we may underline and pay tribute to the vital role played by Francis Gurry in the remarkable success of the GII over the last 10 years. Thanks to his vision and leadership, WIPO has become the central pillar of the GII. Thank you, Francis, and as you complete your second six-year mandate at the helm of WIPO, we wish you the best of luck in your future endeavors! PREFACE RELEASING THE GLOBAL INNOVATION INDEX 2020: WHO WILL FINANCE INNOVATION? Soumitra Dutta Professor of Management and Former Founding Dean, SC Johnson College of Business, Cornell University; President, Portulans Institute Francis Gurry Director General, World Intellectual Property Organization (WIPO) Bruno Lanvin Executive Director for Global Indices, INSEAD; Director, Portulans Institute Emmanuel Berrod/WIPOThe Global Innovation Index 2020 viiiForeword ix India has embarked on a journey towards creating an enabling environment by putting in place an ecosystem that breeds innovation. The Government of India has launched several significant initiatives for propelling innovation, such as the Start-up India initiative, Accelerating Growth of New Indias Innovations (AGNIi), Atal Tinkering Labs, new intellectual property rights (IPR) policy, Smart City Mission, Uchchatar Avishkaar Y ojana, etc. All these initiatives, coupled with phenomenal research and innovation from the institutions, industry, and society, are cementing Indias position as an innovation and knowledge hub. However, the financial dimension plays a critical role in fructifying these innovation efforts. Various fiscal incentives are offered by the Government of Indias Department of Scientific and Industrial Research (DSIR) for R China, Viet Nam, India, and the Philippines are consistently on the rise This year, the geography of innovation is continuing to shift, as evidenced by the GII rankings. Over the years, China, Viet Nam, India, and the Philippines are the economies with the most significant progress in their GII innovation ranking over time. All four are now in the top 50. Switzerland, Sweden, and the U.S. lead the innovation rankings (Figure D and Figure 1.5 in Chapter 1), followed by the U.K. and the Netherlands. This year marks the first time a second Asian economythe Republic of Koreacracks the top 10, next to Singapore. The top-performing economies in the GII are still almost exclusively from the high-income group (Table A). China is the only exception, ranking 14th for the 2nd time in a row and remaining the only middle-income economy in the GII top 30. Malaysia (33rd) is the second-most innovative middle-income economy. India (48th) and the Philippines (50th) make it to the top 50 for the first time. India now ranks 3rd among the lower middle-income groupa new milestone (Figure D). The Philippines achieves its best rank everin 2014, it still ranked 100th. Viet Nam ranks 42nd for the second consecutive year it ranked 71st in 2014. In the lower middle-income group, Indonesia (85th) joins the top 10. The United Republic of Tanzania tops the low-income group (88th) (Figure D). 4: Stellar innovation performance found in developing economies Beyond GII top-level rankings, innovation performance reveals itself in a few other ways, highlighting that some top innovation performance takes place in emerging markets too. First, the GII 2020 assesses which economies consistently hold the top global spots on particular GII innovation facets, such as VC, R Israel, Luxembourg, and China tie for 3rd place; Cyprus ranks 4th; and Singapore, Denmark, Japan, and Switzerland tie for 5th place (Figure E). Some top spots on selected innovation indicators are not held by high-income economies. In South East Asia, for example, Thailand is 1st in business R this is rare. Even among the top 35, many economies have pillars in which they lag. For instance, Australia, Norway, and the United Arab Emirates (UAE) rank lower in Knowledge and technology outputs; and Israel and China are weaker in Infrastructure. The reverse is also true: several economies outside the top ranks are among the top performers in specific innovation pillars. For example, Indias high ranks in Knowledge and technology outputs and Market sophistication far exceed its other GII rankings. Third, the “GII Bubble Chart” continues to be the GIIs most conspicuous means to identify innovation outperformance relative to an economys level of development (Table B and Figure 1.6 in Chapter 1). Regionally, Africa shines on this count. Out of the 25 economies identified as outperformers, 8 are from Sub-Saharan Africa. India, Kenya, Moldova, and Viet Nam hold the record of being innovation achievers for 10 consecutive years (Table 1.3 in Chapter 1).The Global Innovation Index 2020 xxiv O2020. Thmh gywfmpmk ;pp pp V. Luxbu yu D J z 1 my T v b Op p 7 5 3 6 9 6 8 6 8 8 5 3 4 3 7 5 1 6 4 6 3 3 6 6 4 1 1Key Findings xxv China Armenia South Africa Georgia North Macedonia Thailand Serbia Jamaica Costa Rica Bulgaria Montenegro Brazil Colombia Malaysia Jordan Mexico Bosnia and Herzegovina Iran (Islamic Republic of) Peru Albania Belarus Mauritius Romania Lebanon Ecuador Azerbaijan Turkey Argentina Paraguay Russian Federation Sri Lanka Guatemala Namibia Botswana Dominican Republic (the) Algeria Kazakhstan Viet Nam Ukraine India Philippines Republic of Moldova Mongolia Tunisia Kenya Morocco Kyrgyzstan Senegal Indonesia El Salvador Zimbabwe Uzbekistan Honduras Cabo Verde Cambodia Cte dIvoire Pakistan Ghana Egypt Cameroon Bolivia (Plurinational State of) Bangladesh Zambia Nigeria Lao Peoples Democratic Republic Myanmar Malawi Rwanda United Republic of Tanzania Niger Madagascar Mozambique Nepal Burkina Faso Tajikistan Uganda Togo Mali Ethiopia Guinea Benin Yemen Switzerland Sweden United States of America United Kingdom Netherlands Denmark Finland Singapore Germany Republic of Korea Hong Kong, China France Israel Ireland Japan Canada Luxembourg Austria Norway Iceland Belgium Australia Czech Republic Estonia New Zealand Portugal Italy Cyprus Spain Malta Latvia Hungary Slovenia Croatia Poland Greece Chile Slovakia Lithuania Uruguay United Arab Emirates Panama Saudi Arabia Qatar Brunei Darussalam Trinidad and Tobago Bahrain Kuwait Oman Source: Global Innovation Index Database, Cornell, INSEAD, and WIPO, 2020. TABLE B Innovation performance at different income levels, 2020 Low-income group Lower middle-income group Upper middle-income group High-income group Above expectations for level of development In line with level of development All other economiesThe Global Innovation Index 2020 xxvi 5: Regional divides persist, yet some economies harbor significant innovation potential Despite some innovation “catch-up”, regional divides exist with respect to national innovation performance: Northern America and Europe lead, followed by South East Asia, East Asia and Oceania, and more distantly by Northern Africa and Western Asia, Latin America and the Caribbean, Central and Southern Asia, and Sub-Saharan Africa, respectively. Latin America and the Caribbean continues to be a region with significant imbalances (Figure 1.12 in Chapter 1). The region is characterized by its low investments in R LM = lower-middle income; UM = upper-middle income; and HI = high income. Regions are based on the United Nations Classification: EUR = Europe; NAC = Northern America; LCN = Latin America and the Caribbean; CSA = Central and Southern Asia; SEAO = South East Asia, East Asia, and Oceania; NAWA = Northern Africa and Western Asia; SSF = Sub-Saharan AfricaThe Global Innovation Index 2020 xxxiv Innovation Input Sub-Index 2020 rankings Singapore 70.20 1 HI 1 SEAO 1 Switzerland 69.42 2 HI 2 EUR 1 Sweden 69.19 3 HI 3 EUR 2 United States of America 68.84 4 HI 4 NAC 1 Denmark 66.77 5 HI 5 EUR 3 United Kingdom 65.97 6 HI 6 EUR 4 Hong Kong, China 65.79 7 HI 7 SEAO 2 Finland 65.57 8 HI 8 EUR 5 Canada 64.84 9 HI 9 NAC 2 Republic of Korea 64.83 10 HI 10 SEAO 3 Netherlands 64.45 11 HI 11 EUR 6 Japan 63.59 12 HI 12 SEAO 4 Australia 62.86 13 HI 13 SEAO 5 Germany 62.71 14 HI 14 EUR 7 Norway 62.67 15 HI 15 EUR 8 France 61.43 16 HI 16 EUR 9 Israel 61.36 17 HI 17 NAWA 1 Austria 61.15 18 HI 18 EUR 10 New Zealand 60.95 19 HI 19 SEAO 6 Ireland 59.72 20 HI 20 EUR 11 Belgium 59.62 21 HI 21 EUR 12 United Arab Emirates 58.29 22 HI 22 NAWA 2 Iceland 57.27 23 HI 23 EUR 13 Luxembourg 57.23 24 HI 24 EUR 14 Estonia 56.11 25 HI 25 EUR 15 China