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INDONESIA WAS RANKED 85 OF 142 COUNTRIES IN INNOVATION

Innovation is key in driving economic growth and prosperity, as it encourages the creation of new industries, companies, jobs and also improves efficiency, quality of products and services. In an increasingly global market landscape, the proficient innovators are indeed the ones in position to seize the global opportunities.

In order to provide innovation benchmarking across countries on innovation and facilitate public-private dialogue, the Global Innovation Index (GII) was created. GII is co-published by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO, a specialized agency of the United Nations).

In the latest GII 2013 report, Indonesia is ranked 85th out of 142 countries. This is an increase of 15 spot from 2012 ranking, which put Indonesia among top ten countries with the highest jump in rankings with Uganda (+28) and Costa Rica (+21) placed in top two.

The top 10 economies on the GII 2013 are Switzerland, Sweden, United Kingdom, Netherlands, United States of America, Finland, Hong Kong (China), Singapore, Denmark, and Ireland.

The report also shows that Indonesia has a lot of room for improvement in institutions environment (political, regulatory, and business environment) and business sophistication (particularly in the knowledge-intensive human capital and businesses).

GEPI is fully committed in these improvement efforts with concrete programs. Recent programs include the Social Innovation Camp that aims to instill the culture of innovating, particularly in products and services that solve social issues, and ANGIN program that accelerates innovative businesses through funding, mentoring, and other supports.

Deeper Analysis

GII considers the innovation inputs and outputs in computing the ranks. Innovation inputs are key elements required to drive innovations: institutions (political, business, regulatory environment), human capital and research, infrastructure, market sophistication, and business sophistication. Innovation outputs are the outcome of innovation activities:  knowledge and technology outputs and creative outputs.

Innovation efficiency ratio is calculated as the innovation output scores over innovation input scores. In other words, the ratio measures how efficient a country is converting the elements into outputs.

Indonesia’s innovation efficiency ratio is among the highest in the world in 2013. However, in terms of innovation inputs, Indonesia has a lot of room for improvements, especially in institutions (ranked 138th, bottom five in global ranking) and business sophistication (ranked 112th out of 142 countries). Indonesia has indeed been putting increasing efforts in diversifying towards innovation-intensive sectors, and this effort has need to be boosted with even greater urgency. Indonesia has to be aware of the well-documented phenomenon: ‘resource curse’ or ‘paradox of plenty’ in which countries with natural endowments tend to focus on resource-extracting activities and hinder innovation that might put these countries on slower growth path.

The innovation transition graph is provided below. There is a clear relationship between the innovation (represented by GII score) and GDP per capita. Indonesia is on the verge to join the “leaners” group. At this stage, strategic and concerted improvements in institutional frameworks, tertiary education, infrastructure, business sophistication are required.

GII scores and GDP per capita in PPP$ (bubbles sized by population). Source: GII report 2013

Reference: http://www.gepindonesia.org/2013/07/07/indonesia-ranked-85th-out-of-142-countries-in-the-global-innovation-race/