• The Global Innovation Index ranks Switzerland as the world's most innovative economy.
  • The index looks at a variety of factors, including R&D, ICT, and knowledge and technology outputs.
  • The World Economic Forum's Global Competitiveness Report also looks at how innovative the world's economies are.

The World Intellectual Property Organization's (WIPO) latest Global Innovation Index ranks 131 economies on their innovation performance.

Top of the pile? Switzerland, which also took top spot last year. Indeed, it's the 10th consecutive year it's come first.

Sweden takes second, with the United States in third.

What does Switzerland do so well?

Switzerland scores well across the index's seven areas and is particularly strong in areas such as high R&D expenditure and for having an innovative business sector.

It also ranks highly in its quality of innovation - second only to the United States. This is thanks to the "high-quality of its universities and scientific publications," but also the efforts to goes to to "internationalize its inventions".

innovation Switzerland knowledge R&D infrastructure business patents
A strong performer across multiple categories.
Image: Global Innovation Index 2020

How do you measure innovation?

The index is based on two sub-indices - the Innovation Input Sub-Index and the Innovation Output Sub-Index. The former looks at the elements of national economies that go into enabling innovative activities - such as research and development - while the latter looks at the results of these activities, for example creative goods and services.

An average of these two is then taken to give the overall score, with each given equal weighting. You can see a breakdown of these sub-indices below.

innovation Switzerland knowledge R&D infrastructure business patents
The path to innovation.
Image: Global Innovation Index 2020

WIPO is not the only organization to measure innovation. The World Economic Forum's Global Competitiveness Report also looks at economies' innovation capability.

Germany topped that in the 2019 edition of the report, with the US in second place and Switzerland third.

What is competitiveness?

What is economic competitiveness? The World Economic Forum, which has been measuring countries' competitiveness since 1979, defines it as: “the set of institutions, policies and factors that determine the level of productivity of a country." Other definitions exist, but all generally include the word “productivity".

The Global Competitiveness Report is a tool to help governments, the private sector, and civil society work together to boost productivity and generate prosperity. Comparative analysis between countries allows leaders to gauge areas that need strengthening and build a coordinated response. It also helps identify best practices around the world.

The Global Competitive Index forms the basis of the report. It measures performance according to 114 indicators that influence a nation’s productivity. The latest edition covered 141 economies, accounting for over 98% of the world’s GDP.

Countries’ scores are based primarily on quantitative findings from internationally recognized agencies such as the International Monetary Fund and World Health Organization, with the addition of qualitative assessments from economic and social specialists and senior corporate executives.

With different methodologies and approaches, direct comparisons are difficult - but across the top 10, the two are closely matched.

innovation Switzerland knowledge R&D infrastructure business patents
World leaders.
Image: Global Innovation Index 2020

What about the impact of COVID-19?

The Global Innovation Index's authors warn that the COVID-19 crisis "hit the innovation landscape at a time when innovation was flourishing".

They ask, with the global economic impact and hit on growth, will the determination remain to foster innovation?

In particular, the report asks 'who will finance innovation?' With emergency relief measures not directly targeted at financing innovation - with the exception of health - the report calls for support for innovation to broaden out, once the pandemic is under control.

"It is crucial that support for innovation becomes more broad and that it is conducted in a countercyclical way — i.e., as business innovation expenditures slump, governments strive to counteract that effect with their own expenditure boosts to innovation, even in the face of higher public debt."