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Thursday, July 04, 2013

Global Innovation Index- a critique

Global Innovation Index 2013 has been released. India's low ranking at 66 lower than Bosnia and Hezegovina is a puzzle. All troubled  EU states, Ireland, Portugal, Italy, Spain had much better ranking implying that economic hardships do not matter at least in innovation score. Jingoist in me prods to take pot shots at the massive document.
I notice several shortcomings with the indicators , weightage and data collected. Indicators like Press Freedom, cost of reduncy dismissal, ease of solving insolvency, wikipedia edits, YouTube uploads whatever their relationship to Innovation , will paint better picture of west. Indicators as percentage of GDP like electricity output , credit to private firms and those given for  population as denominator like ICT access for millions of people are skewed in favor of small, developed countries. Finally the data - ranking political stability for  India at 123, press freedom at 113 etc and  ignoring data on number of  graduates in science & engineering, researchers, patents, M&A all lead to questionable inferences.
Any comments???

1 comment:

Marv Patterson said...

In my view the GII has many shortcomings as an indicator of the innovation capacity of an economy. To keep this short I will only mention a few. Above all is the ambiguity reflected in the GII structure and methodology regarding what is meant by "innovation." The meaning of the word has evolved a great deal in recent times. The most useful definition these days, in my view, is "implementing ideas to create value." Innovation of this sort drives growth in GDP and, in a business, it drives growth in revenue and profit. The GII includes a few measures that relate to this definition, but many other factors that are far more numerous and all equally weighted do not serve this definition at all. The innovation output pillars in the GII, for instance, are far more focused on idea creation, with no consideration at all of the value or impact of new concepts that are created. The number of YouTube videos uploaded is one of many such examples. Number of papers published and patents filed are far more measures of "invention" that they are of "innovation."
The GII would be much more useful if it placed a higher weighting on the financial and human resources being invested in value creation, and on the impact of those investments, e.g. the number of dollars of new GDP created per dollar invested in innovation activity. Also important would be the rate of innovation, e.g. the time between the investment and its impact on GDP.
Other important areas of measurement would be the size and effectiveness of activities focused on discovering fruitful new opportunities in both markets and technology. Growth in GDP requires not only new opportunities, it requires growth in the capacity to innovate. This capacity depends on the tools, methods and human resources available for the implementation of new value. Measurement of the sources for and growth rates of these factors should be weighted heavily in the overall index.