Thursday, July 25, 2019

Five things to note about GII2019

The Global Innovation Index 2019, which rank countries according to innovation investment and output was released on 24 Jul 2019. We present five things to note about GII:

1. Malaysia maintained rank 35th in GII and 2nd among upper middle income countries

Malaysia leads in high tech exports (34.1% of total trade) and creative goods exports (9.8% of total trade). Malaysia needs to improve PISA score (412.7); and patent (1.2 /bn PPP$ GDP), trademark (20.9 /bn PPP$ GDP) and industrial design (0.6 /bn PPP$ GDP) application by origin. Top patent applicants are government institutions instead of private companies. Only 1.2 patent applications are filed over 1 billion PPP$ GDP.

2. China improved three spots to 14th in GII and still 1st among upper middle income countries

China has good marks in high tech exports (27.9% of total trade), creative goods exports (11.9% of total trade); and patent (53.7 /bn PPP$ GDP), trademark (238.7 /bn PPP$ GDP) and industrial design (26.3 /bn PPP$ GDP) application by origin. China private companies recognize high investment and output in intangible assets. Top patent applicants are Huawei, ZTE and BOE.

3. Vietnam improved three spots to 42 in GII and higher output than Malaysia

Vietnam has been outperforming peers for the 9th consecutive year. Vietnam (37th) has higher innovation output rank compared to Malaysia (39th) even though Malaysia has higher investment in innovation. Vietnam has improvements in human capital and research, market sophistication and knowledge, expenditure on education, high tech imports and trademark (85.3 /bn PPP$ GDP) applications of origin.

4. Switzerland, Sweden and USA lead the GII

Global government expenditures in R&D (GERD) grew by 5% while business R&D expenditures grey by 6.7%. The world is investing in R&D and producing innovation. Private companies lead patent applications.

5. Medical technology is the most frequent patenting field - present in 19 clusters

According to GII, the convergence of digital and biological technologies is disrupting healthcare and increasing the importance of data integration and management across the healthcare ecosystem. Innovation in the field of health now massively evolves around big data, the internet of things and artificial intelligence, entailing huge power shifts within and away from the health sector.

Our analysis:
Malaysia rank no. 1 in high tech exports. We need government and private companies to recognize the importance of innovation investment and output. Malaysia has low intangible asset output over GDP. The government needs to ask why private companies are not proportionally reinvesting income in producing intangible assets. We have high number of graduates in science (rank 8th in GII). What can the government do to give confidence to private companies to invest in innovation? Can government linked companies lead the way? Can government appoint the right person to lead the way? Can Malaysia stay competitive in innovation?

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