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Tuesday, March 5, 2013

Global innovation rankings: Is Russia 14th, 51st or 85th?

This op-ed by Adrien Henni, co-founder and chief editor of East-West Digital News, the first international resource on Russian digital industries, and a member of Marchmont's Advisory Board, was first published on the EWDN website.

A few weeks ago, Bloomberg issued a “Global Innovation Index” which ranked Russia as the world’s 14th most innovative nation – just between Norway (13th) and Belgium (15th) and well ahead of China (29th) and even Israel (32nd).

Here is how Russia ranked in Bloomberg’s determining factors:

R&D intensity: 29th
Productivity: 41st
High-tech density: 2nd
Researcher concentration: 24th
Manufacturing capability: 38th
Tertiary efficiency: 2nd
Patent activity: 8th

Just months before, however, the country had been ranked 51st on INSEAD’s Global Innovation Index (GII) and stood 85th on the Global Competitive Index of the World Economic Forum for criteria related to “innovation capacity” – in a discouraging fall from 57th place in the previous edition (2010–2011).

True, these three rankings are based on completely different methodologies; and no one should expect converging results when comparing apples and oranges from different continents using different measuring instruments. With all due respect to the seriousness of the researchers and analysts behind these rankings, then, one should think it twice before drawing conclusions from any of them.

My personal opinion, stemming from a 25-year relationship with this country, is that Russia is not among the world’s most innovative nations. By such key parameters as Internet penetration (a bit more than 50%) or R&D investment as a proportion of national income (around 1%), Russia lags far behind the international leaders – and its technological retardation becomes obvious outside its largest cities.

The country’s economy remains fundamentally oriented towards exploiting natural resources and importing technology, while its industry still needs modernization
These views are shared by the Russian authorities themselves. The government’s efforts to spur innovation in the country over the past few years have been praiseworthy, though not always efficient – which is likely to remain the case as long as decisive efforts are not undertaken to assert the rule of law, root out corruption and make the country more attractive to its most enterprising and creative citizens.

From “emerging” to “established”

Yet what Bloomberg’s optimistic 14th place for Russia tells us is that the country of Sputnik and Yandex is progressing at an unbelievable pace. Suffice it to look at the booming Moscow innovation scene. Only a few years ago, the city had just one business incubator, HSE Inc., founded in 2006 by students at the Higher School of Economics. Since then a plethora of incubators, accelerators and tech centers of all kinds have sprung up in Moscow, many of them integrating themselves with international innovation networks.

And while the local venture scene looked almost like a desert a mere three years ago, with hardly more than a couple dozen really active funds, domestic and foreign investors have now made an impressive pile of money available to Russian startups. State support has become a tangible reality too, from high profile nationwide projects to local initiatives in Moscow, Tatarstan, Novosibirsk and many other places.

But Russia is just one hot spot among many on the new global innovation map. The rise of innovative technologies, companies and even entire high tech industries in emerging countries now appears to be a major and irreversible trend of globalization.

The practice of innovation that was originally spawned in Silicon Valley and some other privileged areas in a few Western and Asian countries is now quickly spreading internationally, creating a global playing field from Berlin to Shanghai to Moscow to Rio de Janeiro, while more and more startups and funds tend to operate globally.

The rising status of countries beyond the G7 axis has just been quantified in a report by Thomson Reuters, encompassing data on R&D spending, human capital, research publications and patent filings. These are the key indicators of the sustained, diversified research innovation base enjoyed by many of the G7 knowledge economies, the news agency noted.

And this is how Brazil, Russia, India, China, South Korea and several other nations are now moving from “emerging” to “established.”