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WASHINGTON — Finland ranks 1st in how its domestic policies support worldwide innovation, according to an analysis released today by the Information Technology and Innovation Foundation (ITIF), a global technology policy think tank. The findings come in a new report assessing 56 countries—which together comprise close to 90 percent of the world’s economy—on the extent to which, on a per-capita basis, their economic and trade policies contribute to and detract from innovation globally.

 “Robust innovation is essential for economic growth and progress,” said co-author Stephen Ezell, ITIF’s vice president for global innovation. “As countries increasingly vie for leadership in the innovation economy, they can implement policies that try to benefit only themselves but harm the production of innovation in the rest of the world. Or they can implement ‘win-win’ policies that bolster their own innovation capacity while also generating positive spillovers for the entire global economy. For innovation to flourish around the world, we need a system that is doing much more of the latter.”

 

While previous research has ranked countries based on innovation capabilities or outcomes, this report is the first to assess the impact of countries’ policies on the broader innovation system. The authors examined 14 factors that not only support innovation domestically but have positive spillover effects globally, such as supportive tax systems and investment in R&D and human capital, and another 13 factors that have negative spillover effects, such as forced localisation and weak intellectual property protection. Finland’s 1st-place overall ranking reflected a combination of policies that the report found to be 3rd best in their positive contribution to the global innovation ecosystem and also the least damaging.

 The report also found a strong correlation between countries’ contributions to global innovation and their levels of domestic innovation success, meaning that doing well domestically on innovation policy can also mean doing well for the world.

 “While policymakers are primarily focused on the interests of their own citizens, they usually overlook the fact that adopting policies that also happen to be good for the global innovation ecosystem will compound the benefits for their citizens,” said Robert D. Atkinson, ITIF’s president and a co-author of the report. “’Innovation altruism’ really does pay.”

 The report argues nations should undertake a series of policies to improve their impacts on worldwide innovation:

 First, ITIF urges policymakers, economists, and pundits to treat innovation as important as trade for optimizing global growth.

 Second, the report calls on the global development and trade community to establish a framework that better distinguishes between policies that are beneficial for the world’s innovation ecosystem and those that are detrimental. Moreover, policymakers need to push back more strongly against the misguided, but popular, perspective that developed nation innovation comes at the expense of developing nation economies and that because of that, the world needs a strategy for redistributing innovation, rather than growing it.

 Finally, ITIF argues leading nations should establish a Global Science and Innovation Foundation to fund scientific and engineering research on key global challenges, particularly through collaborative international research.

 “The world is significantly under-producing innovation that is needed to tackle global challenges, including boosting productivity, improving health, and protecting the environment,” Atkinson said. “Policymakers need to better understand and more aggressively push back when countries try to advance their own interests at the expense of global innovation. The world’s leaders need to articulate a more robust vision of commonly shared prosperity based on substantial increases in worldwide productivity and more innovative products and services.”

Read the executive summary.

Read the report.

The Information Technology and Innovation Foundation (ITIF) is a nonprofit, nonpartisan research and educational institute focusing on the intersection of technological innovation and public policy. Recognized as one of the world’s leading science and technology think tanks, ITIF’s mission is to formulate and promote policy solutions that accelerate innovation and boost productivity to spur growth, opportunity, and progress. Learn more at www.itif.org.

 

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