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Aleix Hildebrandt López 16.05.2019
switzerland innovative

Why is Switzerland the most innovative country in the world?

Innovation is a central element to create and add value at all levels in the economy as well as a key factor in the economic strategy for companies that aim to expand the horizons of knowledge and process automation. It lies at the core of any solution to the challenges our world is facing nowadays – whether it involves the development of ground-breaking technology that can help us stretch the limits of what is possible or new business models that make our world more efficient and interconnected.

The degree of innovative development of every country around the globe is measured by the World Intellectual Property Organization (WIPO) and reported annually in the Global Innovation Index (GII). It is worth noting that in 2018 China broke into the world's top 20 most-innovative countries and Switzerland retained its number-one position in the ranking for eight years in a row. The conditions that have made it possible for this 8.2-million inhabitant country to be in such a remarkable position are worthy of analysis and therefore, it seems relevant to dig deeper into the basic innovation model behind the Global Innovation Index.

As GII co-author Soumitra Dutta asserts, innovation has been traditionally measured by means of a relatively narrow set of science and technology metrics such as the number of researchers, publications and patents per country. Nowadays those indicators are still valid, but innovation has become noticeably broadly-based on society. For a country to succeed in innovation, it needs to excel in its institutional framework, specific education, right kind of investments along with being successful in creating innovation outputs that go beyond the typical science and technology, such as individual creativity and innovation. All the necessary innovation elements are strongly interrelated like links in a chain and none of them can be weak if high performance is to be achieved. Although China and the United States often overshadow small countries in absolute innovation performance, the analysis of the relationship between the fundamental pillars of innovation reveals that Switzerland has the strongest innovation structure in the world despite not being the first in absolute numbers in scientific publications, researchers, and patents. Thus, the GII reflects the current situation of every country in terms of a correlation of strengths that foster the existence of a vibrant innovative ecosystem.  

In order to better understand how innovation is measured and gain insight into the performance of the Alpine country, a related point to consider is the two subindexes making up the GII, namely, the Innovation Input Sub-Index, consisting of five pillars, and the Innovation Output-Subindex, consisting of two pillars.

On the one hand, the Innovation Input Sub-Index takes into account the economic elements that enable innovative activity across five pillars, that is, institutions, human capital and research, infrastructure, business and market sophistication. Switzerland ranks the second in this metric, only outperformed by Singapore, due to its political stability, highly skilled human capital, leading institutions in research, development and innovation, infrastructure facilities and competitive market. The set of more than 50 indicators that make up the Sub-Index, reveal a capacity to generate high quality inputs for the Swiss economy.

On the other hand, the results of innovative activities within the economy are measured in Innovation Output Sub-Index by means of /in terms of knowledge and technology, and creative outputs. Switzerland tops the list for both pillars. This fact highlights the ability of innovative outputs to impact the economy, which would be unlikely without high-quality innovation. In this sense, Switzerland only lags behind Japan in the innovation quality ranking. Since 2017 the Helvetic country has been among the highest-scoring high-income economies in patent families thanks to the quality of its top three univer­sities—the Swiss Federal Institute of Technology (ETH Zurich), École polytechnique fédérale de Lausanne (EPFL), and the University of Zurich. Similarly, the quality of its scientific publications has remained relatively stable over the last five years.

In conclusion, it can be argued that the appropriate levels for a set of factors considered by the WIPO’s GII, such as institutional stability, fiscal incentives, mature infrastructure and high educational level create an ideal institutional, economic and social framework for technological and economic development, which translates, among others, into innovation that reinvents, rethinks, and reimagines the future.

Author: Aleix Hildebrandt López, Data Analyst at PEAX AG