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29 September 2022CopyrightCatherine Wycherley

Low productivity a drag on innovation, says global IP report

R&D hit $900bn in 2021 and VC investment “exploded” says study | “Deep Science” and “Digital Age” innovation promises to spur future productivity | World Intellectual Property Organization | Portulans Institute.

Productivity languished in 2021, despite a boom in research and development (R&D) and other innovation investment, according to the World Intellectual Property Organization’s (WIPO’s) 2022 Global Innovation Index (GII), published today.

IP filing rose during 2021, especially international trademark filings, which rose by 15%—an indicator of entrepreneurship, according to the GII report.

R&D expenditure totalled over $900 billion among the top global corporate spenders in 2021—a near 10% rise and higher than in 2019 before the pandemic—driven in particular by ICT hardware and electrical equipment, software and ICT services, pharmaceuticals and biotechnology, and construction and industrial metals.

Venture capital (VC) deals shot up by 46%, recording levels “comparable to the internet boom years of the late 1990s”.

But tightening monetary policies and the impact on risk capital point to a likely deceleration in VC in 2022, while current technological progress seems to be slowing down and technology penetration—apart from mobile broadband—remains medium-low, according to the report.

Meanwhile, productivity growth is at its lowest level ever, limiting the impact of innovation on living standards.

However, the 2022 GII takes a hopeful view of the future. Developments in what WIPO terms “Digital Age” and “Deep Science” innovation could spearhead a productivity revival fuelled by innovation, the report predicts.

Digital Age innovation, comprising supercomputing, AI and automation, is on the cusp of impacting productivity across all sectors and all sciences. And Deep Science, which is focused on biotechnology, nanotechnology, new materials and other scientific breakthroughs, is vital to health, food, environment and mobility.

The positive impacts of these, if realised, will nevertheless emerge over the long term, warns the report, especially in light of challenges regarding the adoption and diffusion of these technologies.

“This year’s GII finds that innovation is at a crossroads as we emerge from the pandemic,” said WIPO Director General Daren Tang.

“While innovation investments surged in 2020 and 2021, the outlook for 2022 is clouded not just by global uncertainties but continued underperformance in innovation-driven productivity. This is why we need to pay more attention to not just investing in innovation, but how it translates into economic and social impact. Quality and value will become as critical to success as quantity and scale.”

GII co-editor and Portulans Institute co-founder Bruno Lanvin added: “Productivity is at the core of what we want our societies and economies to be tomorrow, in particular if we want to combine higher levels of equality while using natural resources more sensibly.

“A true revolution is driving innovation today, guided by Digital Age and Deep Science waves. We have a collective responsibility to draw the lessons of recent crises to put this revolution on the right track, and gear it to the future we want.”

Top innovation economies

The report reveals that the world’s most innovative economies are Switzerland (for the 12th consecutive year), the US, Sweden, the UK and the Netherlands. Switzerland leads the world in global innovation inputs, particularly in patents by origin.

The US—which leads the world in global corporate R&D investors, VC investors, university quality, quality and impact of scientific publications and number of patents by origin, as well as other GII 2022 innovation indicators—rose to second place (up from third last year).

Turkey and India entered the top 40 GII ranking, and among the middle-income countries, Vietnam, Iran and the Philippines showcased the fastest innovation performance growth.

Soumitra Dutta, GII Cco-editor and Dean of the Saïd Business School at Oxford University said: “With their rise in terms of innovation performance in the shadow of shocks to global supply chains, Turkey and India are positively enriching the global innovation landscape, while Indonesia shows promising innovation potential. Other regional champions like Chile and Brazil in Latin America, and South Africa and Botswana in Sub-Saharan Africa, have improved their relative innovation performance.”

Read the full report here.

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