In the Global Innovation Index (GII) of 2013, India ranks an apologetic 66th position among 142 countries. (The index is brought out by Cornell University, INSEAD and the World Intellectual Property Organisation.) Several small countries such as Bosnia and Herzegovina, Jordan, Colombia, Armenia, Serbia, Mauritius, Barbados, Costa Rica, Moldavia and Saudi Arabia rank better.
Europe leads in the GII index with Switzerland taking the first place followed by 18 other European states in the top 30 GII ranking. Last week, I visited and met with a select group of companies in Denmark, Switzerland, Finland, Sweden and The Netherlands to study how these countries prosper in this difficult economic environment. CEOs of European companies – from multinationals to SMEs -- seemed very confident about meeting the technological and social challenges.
Increased R&D Spending
There is now a new impetus in Europe to strengthen its innovation capacity.
The EU states have increased its Research and Development (R&D) spending from 1.9 per cent of GDP (in 2002) to 3 per cent of GDP, with two-thirds of it coming from the private sector.
Within Europe, it is the small countries that have always felt the compelling reasons to think innovatively to overcome their own limitations. Sweden, Finland, Switzerland, Netherlands and Denmark have led the innovation wave in Europe. Indeed, small countries do not simply copy the strategies of big countries like Germany, United Kingdom and France. Instead, they leverage on their own strengths and find niches.
Quality education, innovation and nurturing talent are seen as key pillars in this effort. In Denmark, Finland and Norway it is the Prime Ministers who head the university education, research and innovation drive. These countries therefore, see fundamental R&D reforms as a key strategy for sustainable growth. Investment in R&D and education was an election issue during Denmark's recent elections.
Strong University-Industry Ties
There is also an ongoing interaction between universities and industry. Universities are provided with seed funds and incentives to transfer knowledge.
Strengthening the nexus between research and innovation seemed like a key focus of their governments to derive greater economic value from research. They call this process "valorisation". There is also a trend towards aligning research to the needs of the economy. Strong in basic pure research, Denmark and the Netherlands increasingly recognise that they need to focus more resources in strategic applied areas. The R&D Minister of The Netherlands confirmed that it is their ability to nurture and attract talent which provided the intellectual base and innovative capacity to fuel economic growth. Over the centuries, if Europe has grown into an economically prosperous society, it is no exaggeration to say that it is quality education, research, development and innovation that have been instrumental in this development.
Europe remains at the forefront, spawning not only plentiful inventions but also numerous Nobel Prize winners. To encourage and support the innovative, high growth companies that create wealth and prosperity is a huge amount of risk capital —- high technology fund, regional venture capital funds and early growth funding — available across Europe. Easy access to risk capital is also open for all European SMEs. European companies have been able to successfully do this. “Innovate or, die” is the slogan.
(The author is former Europe Director, CII, and lives in Cologne, Germany.)