Germany has been named by the World Economic Forum as the world’s most innovative economy with a score of 87.5 out of 100 in the Innovation capability pillar – one of the 12 drivers of a country’s productivity. The European country was helped in part by the speed it’s developing new technologies like driverless cars.
It outperformed the US, the world’s most competitive economy, which came second for innovation (86.5), with Switzerland in third place (82.1).
According to The Global Competitiveness Report, the speed at which countries can adopt new ideas, methods and products will give them a competitive edge as the Fourth Industrial Revolution continues apace.
Why is innovation so important
With traditional pathways to growth and success in flux, it’s no longer enough to rely on cost-cutting and efficiency, according to the Forum’s report.
Instead, those countries which can go from idea generation to the successful commercialization of a product the most quickly, within a fertile ‘innovation ecosystem’ of various factors, will have the greatest productivity.
This innovation ecosystem is measured by five sub-pillars namely Commercialization, Interaction and diversity, Administrative requirements, Research and development, and Entrepreneurial culture. But other factors determine a country’s ability to innovate, including ICT adoption, quality of education and intensity of competition.
Innovation capability had the lowest median score across all 12 pillars, at just 36 – showing how most countries are struggling to get all the factors in place.
Generally, high-income economies scored more highly on the key five sub-pillars, showing their innovation ecosystems are more developed.
The two ‘super-innovators’ Germany and the US stood out from other innovators such as Korea and Japan for the ‘softer’ drivers of innovation, coming under the Entrepreneurial culture and Interaction and diversity sub-pillars.
But no economy was a ‘perfect innovator’ and all have further to go to overcome the challenges and harness the opportunities presented by the Fourth Industrial Revolution.
What makes Germany a super innovator?
Germany’s position as the world’s top innovator is due in part to the sheer number of ideas it comes up with – many in the automobile industry, where it’s focusing on digitally-networked mobility, driverless vehicles and electric mobility.
In the Forum’s index, the country that invented the MP3 player and fuel cell ranked 5th for patent applications, with 295.32 per million population.
The index also found that a high degree of buyer sophistication (66.1) meant companies were being constantly challenged to innovate, while innovators benefited from a vibrant business sector to bring innovations to market (81.6, 2nd place).
To achieve this, it spends 2.9% of GDP on research and development (R&D) – in 10th place.
While some governments responded to the global economic crisis by cutting spending on R&D, Germany actually increased funding for small and medium-sized enterprises and e-mobility projects.ons, scoring 100 for each.
