The Bloomberg Innovation Index is an annual ranking of countries based on their performance in various innovation indicators, such as research and development, patent activity, high-tech density, tertiary education, productivity and value-added manufacturing. The index aims to capture the capacity of countries to innovate and compete in the global market.
The benefits of having a high ranking in the index are obvious: more innovation leads to more economic growth, competitiveness, social welfare, and environmental sustainability. But what are the drawbacks of having a low ranking in the index? How does it affect the countries that lag behind in innovation?
There are several disadvantages of having a low ranking in the Bloomberg Innovation Index, such as:
- Lower economic growth: Innovation is a key driver of economic growth, as it creates new products, services and markets, improves efficiency and productivity, and enhances quality and competitiveness. Countries that rank low in the index tend to have lower GDP per capita, GDP growth rates and GDP per hour worked than countries that rank high. For example, according to the 2021 edition of the index, South Korea ranked first with a GDP per capita of $31,846 and a GDP growth rate of 1.9%, while Nigeria ranked last with a GDP per capita of $2,229 and a GDP growth rate of -1.9%.
- Lower competitiveness: Innovation is also a key factor of competitiveness, as it enables countries to create and maintain a competitive advantage in the global market. Countries that rank low in the index tend to have lower export performance, market share and lower attractiveness for foreign direct investment than countries that rank high. For example, according to the 2021 edition of the index, Singapore ranked second with an export-to-GDP ratio of 176% and a market share of 3.6%, while Algeria ranked 59th with an export-to-GDP ratio of 16% and a market share of 0.1%.
- Lower social welfare: Innovation is also a key contributor to social welfare, as it improves health, education, living standards and quality of life for the population. Countries that rank low in the index tend to have a lower life expectancy, lower literacy rates, lower human development index and lower happiness scores than countries that rank high in the index. For example, according to the 2021 edition of the index, Switzerland ranked third with a life expectancy of 83.6 years and a happiness score of 7.5 out of 10, while Yemen ranked 58th with a life expectancy of 66.1 years and a happiness score of 3.6 out of 10.
- Lower environmental sustainability: Innovation is also a key factor for environmental sustainability, as it helps countries to reduce their environmental impact, mitigate climate change and adapt to its effects. Countries that rank low in the index tend to have higher carbon dioxide emissions per capita, higher ecological footprint per capita and lower environmental performance index than countries that rank high. For example, according to the 2021 edition of the index, Sweden ranked fourth with a carbon dioxide emission per capita of 4.5 tons and an environmental performance index of 82.6 out of 100, while Iraq ranked 57th with a carbon dioxide emission per capita of 19.8 tons and an environmental performance index of 40.7 out of 100.
In conclusion, having a low ranking in the Bloomberg Innovation Index has many negative consequences for countries that lack innovation capacity. It hampers their economic growth, competitiveness, social welfare and environmental sustainability. Therefore, these countries need to invest more in innovation policies and strategies that can help them improve their performance in the index and catch up with the leading innovators.