The Global Innovation Index 2012

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110 THE GLOBAL INNOVATION INDEX 2012 5: The Role of Coherent Linkages Over the past decade, GCC countries have developed non-oil sectors. The UAE has lowered its dependence on hydrocarbon exports and, to a lesser extent, on hydrocarbon income. Kuwait’s hydrocarbon export dependence has also dropped; Oman and Qatar too are less reliant on hydrocarbons for their official revenues. Nevertheless, oil and gas continue to dominate in the region. Over the period from 1990 to 1999, for example, with the exception of Bahrain, hydrocarbon revenue accounted for 80% of revenue and exports of goods and services in the GCC. In the following decade from 2000 to 2009, hydrocarbons accounted for close to 90% of revenue and 80% of exports, making the economies in the region more vulnerable to external shocks.1 There is ample room for growth and development of the private sector—the source of innovation in developed and emerging economies. In the past, private businesses faced challenges that did not position them to play this role. The government provided generous assistance—such as subsidized energy—to promote the private sector with an eye towards exports. An unintended consequence was that improvements in private-sector competitiveness and productivity stalled. Firms focused excessively on domestic demand. They faced limited domestic competition and no international competition. Recent changes are starting to address this legacy. In the meantime, however, the GCC continues to depend on imports for numerous economic activities. Among the sectors that rely on imported products are manufacturing, food, chemicals, and industrial solutions providers. Saudi Arabia, for example, is among the top 15 importers of pharmaceuticals worldwide. The UAE is in a similar position with transportation services.2 By taking the correct approach, the GCC economies can leverage their hydrocarbon endowment to invest in people and knowledge creation, and so secure a broader economic base. Such investments will enhance the competitiveness of nonoil sectors while reducing the need for imported expertise and materials. Demographics and the engagement of youth The population of the GCC in coming decades will continue to be predominantly young, in contrast to other high-income countries. By 2030, for example, 42 to 49% of Saudi Arabia’s population will be under the age of 30, down from a remarkable 57% today. By contrast, 55 to 60% of Japanese will be 50 and older.3 There is a need to harness the energy and creativity of this youthful population and direct it towards entrepreneurship and innovation. Without such initiatives, the economy will continue to be highly dependent on imports. In addition, the GCC will have to rely on an increasing number of skilled expatriates. Globalization The integration of the global economy will largely benefit those countries with innovative individuals, systems, and cultures, and with favourable conditions for business operations. These are the countries that will attract foreign investors and corporations. They will gain from investment inflows and corporate exposure in terms of economic capabilities and competitiveness. Foreign investment is particularly important. Multinational corporations’ investments have been instrumental in transferring business and technology expertise. Much inbound investment in the GCC is destined for the oil and gas sector. However, some governments are providing incentives to attract funds into other sectors. Such measures include exemption from customs duties and flexibility in foreign ownership of local ventures and property. The result has been a steep rise in foreign direct investment into such countries as Saudi Arabia. That investment is increasingly entering less traditional sectors such as telecommunications and finance. Strengthening innovation linkages in the Gulf Cooperation Council GCC countries realize that creating innovation-led economies means proceeding in an established sequence. The steps below mainly describe the successful approaches of the Republic of Korea; Singapore; and Taiwan, Province of China. Following these examples, as well as those from other developed economies, GCC states will journey through the following three major stages: 1. Economic growth primarily driven by the relative abundance and comparative advantage of financial or human capital. 2. Accumulation of factors of production (financial and human capital) that provide higher value-added in existing products and services. 3. Additions to the value chain stemming from new technologies and ideas that lead to growth in the production of innovative products and services. Some GCC countries already have begun this journey. They have opened technology and research clusters in recent years. These
Figure 1: Innovation policy framework Main framework components Innovation strategies Innovation drivers Innovation environment Source: Booz & Company analysis. facilities aim to bring together various stakeholders and facilities such as universities, private-sector institutions, multinational corporations, and the public sector. Their goal is to foster collaboration on research and to leverage knowledge of the local market. Today several promising clusters have either been completed or are under construction in the GCC. These include the King Abdullah Bin Abdulaziz Science Park in Saudi Arabia, the Centre of Excellence for Applied Research and Training (CERT) in the UAE, the Knowledge Oasis Muscat in Oman, and the Qatar Science & Technology Park. Regulations Operational support Financial capital Research and development Business areas Innovation sectors Entrepreneurship and enterprise model Orchestration The next critical step is to assemble the different parts of the innovation landscape so that they cohere in a synergistic, holistic partnership. The overall policy agenda is an essential element, because it links policies to their respective components. Equally essential is the establishment of supporting institutional models to link stakeholders at the institutional and operational levels. These linkages animate the ecosystem. They align cross-cutting policies and coordinate the efforts of all stakeholders, thereby driving the innovation process (see Figure 1). The innovation policy framework has three main components. Innovation types Human capital Physical capital First and foremost are the innovation strategies that are set within economic sectors and that drive creativity in specific business areas (the inner circle in Figure 1). These strategies are set in motion by an enterprise model led by entrepreneurs, national entities, or a combination of the two. Each sector has different requirements for innovation and requires a different institutional setup. Some sectors are driven by entrepreneurship and startups. Other sectors require investments to be made by established large companies or national champions. The focus in the region has been on fostering entrepreneurship, 111 THE GLOBAL INNOVATION INDEX 2012 5: The Role of Coherent Linkages
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The Global Innovation Index 2012 St
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The Global Innovation Index 2012: S
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iv THE GLOBAL INNOVATION INDEX 2012
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vi THE GLOBAL INNOVATION INDEX 2012
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Foreword The Coherence Premium in I
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cONTrIBuTOrS Contributors to the Re
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Rankings
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Global Innovation Index rankings (c
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cHApTEr 1 The Global Innovation Ind
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The GII helps to create an environm
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4. The Innovation Efficiency Index
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Table 1: Global Innovation Index ra
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Table 2: Innovation Input Sub-Index
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Table 3: Innovation Output Sub-Inde
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Box 1: A spotlight on the United St
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Figure 2: Innovation Output Sub-Ind
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Malta is ranked 16th in the GII 201
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Figure 3: Global Innovation Index v
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Table 5a: Innovation Efficiency Ind
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Figure 4: GII scores v. GDP per cap
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Table 5c: Innovation Efficiency Ind
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Figure 5: Average scores for select
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performances on key indicators and
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pillars, however, place it among th
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eflect the situation of the countri
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PPP$ 3,354.8 Viet Nam has a very go
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6. Northern America continues to be
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Freeman, C., and L. Soete. 2007.
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44 THE GLOBAL INNOVATION INDEX 2012
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Google’s anti-SOPA page, resultin
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cHApTEr 11 We Are All Content Creat
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Table 1: Models of creative industr
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than any single major recording lab
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Pélissié du Rausas, M., J. Manyik
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Country/Economy Profiles I
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THE GLOBAL INNOVATION INDEX 2012 II
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Index of Data Tables 1 Institutions
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1.1.1 Political stability and absen
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1.1.3 Press freedom Press freedom i
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1.2.2 Rule of law Rule of law index
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1.3.1 Ease of starting a business E
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1.3.3 Ease of paying taxes Ease of
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2.1.2 Public expenditure on educati
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2.1.4 Assessment in reading, mathem
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2.2.1 Tertiary enrolment School enr
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2.2.3 Tertiary inbound mobility Ter
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2.3.1 Researchers Researchers, head
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2.3.3 Quality of scientific researc
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3.1.2 ICT use ICT use index* | 2010
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3.1.4 Online e-participation E-part
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3.2.2 Electricity consumption Elect
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3.2.4 Gross capital formation Gross
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3.3.2 Environmental performance Env
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4.1.1 Ease of getting credit Ease o
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4.1.3 Microfinance institutions’
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4.2.2 Market capitalization Market
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4.2.4 Venture capital deals Venture
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4.3.2 Market access for non-agricul
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4.3.4 Exports of goods and services
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5.1.1 Employment in knowledge-inten
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5.1.3 GERD performed by business en
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5.1.5 GMAT mean score Weighted mean
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5.2.1 University/industry research
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5.2.3 GERD financed by abroad GERD:
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5.2.5 Share of patents with foreign
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5.3.2 High-tech imports High-tech n
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5.3.4 Foreign direct investment net
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6.1.2 Patent Cooperation Treaty app
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6.1.4 Scientific and technical jour
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6.2.2 New business density New busi
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6.2.4 ISO 9001 quality certificates
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6.3.2 High-tech exports High-tech n
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6.3.4 Foreign direct investment net
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7.1.2 Madrid Agreement trademark re
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7.1.4 ICT and organizational models
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7.2.2 National feature films produc
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7.2.4 Creative goods exports Creati
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7.3.1 Generic top-level domains (gT
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7.3.3 Wikipedia monthly edits Wikip
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Sources and Definitions III
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412 1 Institutions THE GLOBAL INNOV
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414 2 Human capital and research TH
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416 3 Infrastructure (continued) TH
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418 4 Market sophistication THE GLO
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420 5 Business sophistication (cont
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422 6 Knowledge and technology outp
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424 7 Creative outputs (continued)
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Technical Notes IV
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About the Authors V
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