The 30 Most Innovation-Friendly Countries
By Bruce Einhorn
Which countries provide the most innovation-friendly climates for companies? That's the question the Boston Consulting Group, working with the National Association of Manufacturers' Manufacturing Institute, set out to answer in its recent survey. BCG consultants, led by James P. Andrew, looked at both "inputs"—government policies supporting education, workforce quality, infrastructure, and trade—and "performance"—R&D results, business performance, employment growth, and other impacts of innovation.
At a time when countries around the world are struggling because of the global recession, it's all the more important for them to make themselves more attractive to potential investment from multinationals looking for environments that are innovation-friendly, says Andrew. "Countries aren't innovative, companies are," he says. "The choices that countries make can have a profound impact on the ability of companies to be innovative, to attract and retain people and other inputs that go into making innovation successful."
So which countries have the right mix of pro-innovation policies and superior results? Despite the recession—and talk of decline in American manufacturing—the U.S. does well, ranking in the top 10. It's not No. 1, though. To learn more about the 30 countries on BCG's list, and the grades that BCG's consultants gave them for overall ranking as well as inputs and performance, read on.
No. 1 – Singapore
Overall score: 2.45
Innovation inputs score: 2.74
Innovation performance score: 1.92
GDP (Purchasing Power Parity): $240 billion
Foreign Direct Investment: $142.4 billion
For decades, the Singapore government has aggressively courted foreign investment. The Southeast Asian island nation is a center for manufacturing, with strong petrochemicals, consumer electronics, and pharmaceutical industries, and the government has funded the growth of industrial parks focused on nurturing innovation in technology and biotech. Singapore's universities receive extensive support from the government, helping to make the country an attractive destination for multinationals seeking a well-educated workforce. Although Singapore has a population of just 4 million, the country makes it relatively easy for foreign talent to live and work there.
No. 2 – South Korea
Overall score: 2.26
Innovation inputs score: 1.75
Innovation performance score: 2.55
GDP (Purchasing Power Parity): $1.3 trillion
Foreign Direct Investment: $74.6 billion
South Korea, which has often promoted joint research and development between state think tanks and large conglomerates, and has emerged as a leading innovator for electronics and telecommunications products, is now trying to reposition the country as a leader in green technologies. As part of the campaign, the government is seeking what it calls "Green New Deal" projects worth some $35 billion by 2012, and aims to increase the country's R&D spending to 5% of its GDP by 2012, from 3.47% in 2007. President Lee Myung Bak has also given a top priority to streamlining regulations to help accelerate innovation.
No. 3 – Switzerland
Overall score: 2.23
Innovation inputs score: 1.51
Innovation performance score: 2.74
GDP (Purchasing Power Parity): $309.9 billion
Foreign Direct Investment: $621.7 billion
Switzerland is a world leader in pharmaceuticals, thanks to companies such as Novartis (NVS) and Roche (RO.DE). Home to Nestlé (NESR.DE), it's also a leader in food research. Traditionally at the forefront of financial innovation, banks like UBS (UBS) have been badly damaged by the financial crisis.
No. 4 – Iceland
Overall score: 2.17
Innovation inputs score: 2.00
Innovation performance score: 2.14
GDP (Purchasing Power Parity): $12.9 billion
Foreign Direct Investment: N/A
The global financial crisis has hammered Iceland. On Mar. 7, as part of a program to fight unemployment, the government announced plans to support an innovation center in Reykjavik. In addition to funding infrastructure projects like avalanche protection systems and revegetation efforts, the plan will also focus on "improving the competitive position of startups and innovative companies," the government information office said in a statement.
No. 5 – Ireland
Overall score: 1.88
Innovation inputs score: 1.59
Innovation performance score: 1.99
GDP (Purchasing Power Parity): $198.5 billion
Foreign Direct Investment: $149.1 billion
A low tax regime and a well-educated workforce have attracted Microsoft and other tech players to Ireland. Another factor helping Ireland move up the innovation ranking: The country's universities cooperate well with the private sector. The global financial crisis is taking its toll on the Emerald Isle, though: On Mar. 10, central bank governor John Hurley predicted Ireland's GDP would fall 6% this year and unemployment would hit 11%.
No. 6 – Hong Kong
Overall score: 1.88
Innovation inputs score: 1.61
Innovation performance score: 1.97
GDP (Purchasing Power Parity): $318.2 billion
Foreign Direct Investment: $1.1 trillion
One of the world's top financial centers, Hong Kong is a favorite for multinationals with operations in China and other parts of Asia. The city has a well-educated workforce and several top universities, although some business leaders fret about declining levels of English ability since Hong Kong's return to Chinese rule in 1997. Most of Hong Kong's labor-intensive factories have shifted operations across the border to mainland China, with Hong Kong now serving as a hub for logistics, design, and other services.
No. 7 – Finland
Overall score: 1.87
Innovation inputs score: 1.76
Innovation performance score: 1.81
GDP (Purchasing Power Parity): $201.2 billion
Foreign Direct Investment: $121.9 billion
According to the European Union's survey released in January, Finland is an Innovation Leader, "with innovation performance well above that of the EU average and all other countries." The big booster to innovation in Finland is Nokia (NOK); the cell-phone giant is a major source of innovation and startups.
No. 8 – U.S.
Overall score: 1.80
Innovation inputs score: 1.28
Innovation performance score: 2.16
GDP (Purchasing Power Parity): $14.6 trillion
Foreign Direct Investment: $2.7 trillion
The recession has slammed the American economy, but the U.S. still is a world leader in all types of innovation. BusinessWeek's 2008 survey of the world's 50 most innovative companies had 31 American companies. Although many business executives are concerned about the quality of America's schools, U.S. universities continue to attract top talent from around the world. The global recession and visa difficulties, however, have led some foreign students to stay home.
No. 9 – Japan
Overall score: 1.79
Innovation inputs score: 1.16
Innovation performance score: 2.25
GDP (Purchasing Power Parity): $4.5 trillion
Foreign Direct Investment: $597 billion
Japan's export-based economy might be enduring a deep recession, but its leading companies continue to innovate in key technologies. This year, pioneering carmakers Toyota (TM) and Honda (HMC) are both rolling out new, more advanced hybrids. Mitsubishi Motors and Fuji Heavy Industries unit Subaru will become the world's first major automakers to sell electric vehicles. And with energy-efficient industries set to be beneficiaries of government stimulus spending, Japan's technology strengths in solar, nuclear, and other carbon dioxide emissions-reducing technologies continue to attract investment, despite the downturn.
No. 10 – Sweden
Overall score: 1.64
Innovation inputs score: 1.25
Innovation performance score: 1.88
GDP (Purchasing Power Parity): $358.4 billion
Foreign Direct Investment: $289.6 billion
Sweden has a strong engineering tradition that has made the country a leader in the automobile and telecom industries. Stockholm is a good incubator for startup companies. The European Union's 2008 survey of member nations put Sweden in the top tier of Innovation Leaders.
No. 11 – Denmark
Overall score: 1.60
Innovation inputs score: 1.55
Innovation performance score: 1.50
GDP (Purchasing Power Parity): $213.6 billion
Foreign Direct Investment: $163.2 billion
Like other Scandinavian countries, Denmark has a well-educated workforce that provides a solid foundation for innovation. The country has strong pharmaceutical and biotech industries. And it's a nice place to live: A 2006 survey of environment, education, health care, and other factors by Britain's University of Leicester concluded that Denmark was the world's happiest country. The January report by the European Union put Denmark among the EU's Innovation Leaders but also warned the country "is stagnating."
No. 12 – Netherlands
Overall score: 1.55
Innovation inputs score: 1.40
Innovation performance score: 1.55
GDP (Purchasing Power Parity): $687.5 billion
Foreign Direct Investment: $872.5 billion
The Netherlands is home to some of the world's most innovative companies, such as consumer electronics, lighting, and medical equipment giant Philips (PHG). In a recent report to the Dutch government, Philips chairman and CEO Gerard Kleisterlee warned the Netherlands is falling behind European rivals and called on the government to increase spending on new alternative energy and health-care projects.
No. 13 – Luxembourg
Overall score: 1.54
Innovation inputs score: 0.94
Innovation performance score: 2.00
GDP (Purchasing Power Parity): $41.4 billion
Foreign Direct Investment: N/A
Luxembourg can count on a well-educated populace, an important consideration for companies looking for an innovation-friendly environment. Luxembourg is a leader in the finance industry. In its survey of innovation released in January, the European Union put Luxembourg in its second category, Innovation Followers.
No. 14 – Canada
Overall score: 1.42
Innovation inputs score: 1.39
Innovation performance score: 1.32
GDP (Purchasing Power Parity): $1.3 trillion
Foreign Direct Investment: $547.2 billion
Canada is a leader in telecom innovation thanks to companies like Research In Motion (RIMM), the Waterloo (Ont.)-based company that makes the BlackBerry. RIM was No. 13 on BusinessWeek's list of most innovative companies last year. The collapse of the bubbles in oil and gas and other resources, though, is hurting the Canadian economy, which is now in recession.
No. 15 – Britain
Overall score: 1.42
Innovation inputs score: 1.33
Innovation performance score: 1.37
GDP (Purchasing Power Parity): $2.3 trillion
Foreign Direct Investment: $1.8 trillion
Britain has the freest market in Western Europe. The European Union's 2008 survey of innovation among member countries put Britain in the top tier. British companies are major innovators in the service sector, and Britain's world-class universities have helped make local companies leaders in biotech and pharmaceutical industries.
No. 16 – Israel
Overall score: 1.36
Innovation inputs score: 1.26
Innovation performance score: 1.35
GDP (Purchasing Power Parity): $205.7 billion
Foreign Direct Investment: $51.9 billion
Israel has one of the world's most dynamic high-tech industries and is a hub for venture capital. Entrepreneur Shai Agassi is making Israel a test bed for his Project Better Place's plan to launch electric cars. However, many Israelis worry the country's school system is falling behind and threatening the country's status as an innovation leader.
No. 17 – Austria
Overall score: 1.15
Innovation inputs score: 1.38
Innovation performance score: 0.81
GDP (Purchasing Power Parity): $325 billion
Foreign Direct Investment: $275.2 billion
Austrian companies boast great expertise in sophisticated manufacturing, especially related to the auto industry. The country's high education standards also provide Austria with a solid foundation for companies looking for an innovation-friendly environment.
No. 18 – Norway
Overall score: 1.14
Innovation inputs score: 1.48
Innovation performance score: 0.70
GDP (Purchasing Power Parity): $481.1 billion
Foreign Direct Investment: $142.3 billion
Norwegian company Think has an aggressive plan to roll out electric cars, with plans to launch in the U.S. next year. The company suffered through a cash crunch last year and had to halt production temporarily, but in January, Think announced it had received $5.7 million in new funding from a group of lenders that included Ener1 Group (HEV), which supplies Think with its lithium-ion batteries. "The financing is intended to allow Think to focus its efforts towards the next stages of the restructuring process," Think said in a press statement, "which include raising permanent equity capital and returning to volume production."
No. 19 – Germany
Overall score: 1.12
Innovation inputs score: 1.05
Innovation performance score: 1.09
GDP (Purchasing Power Parity): $2.8 trillion
Foreign Direct Investment: $1.4 trillion
In its January report on innovation among member countries, the European Union put Germany in the top category, Innovation Leaders, along with Britain, Finland, Denmark, and Sweden. "Of these countries," the EU wrote, "Germany is improving its position fastest." Three German companies were among the top 50 in last year's BusinessWeek ranking of the world's most innovative companies: BMW (BMWG.DE) at 14, Audi (NSUG.DE) at 29, and Siemens (SI) at 38
No. 20 – France
Overall score: 1.12
Innovation inputs score: 1.17
Innovation performance score: 0.96
GDP (Purchasing Power Parity): $2.1 trillion
Foreign Direct Investment: $1.9 trillion
France was the only one of the Big Three European economies not to make the EU's top tier of "Innovation Leaders." While Britain and Germany got that top status, the EU put France in the second category, Innovation Followers. There were also no French companies in the 2008 BusinessWeek ranking of the world's most innovative companies.
No. 21 – Malaysia
Overall score: 1.12
Innovation inputs score: 1.01
Innovation performance score: 1.12
GDP (Purchasing Power Parity): $397.5 billion
Foreign Direct Investment: $50.1 billion
Like many export-dependent Asian countries, Malaysia has been hit hard by the global recession. On Mar. 10, the Malaysian government announced a new $16.2 billion stimulus package that will include $1.35 billion for infrastructure projects that could help the country's manufacturers become more innovative. The projects include the expansion of airports in Kuala Lumpur and Penang, and a high-speed Internet network.
No. 22 – Australia
Overall score: 1.02
Innovation inputs score: 0.89
Innovation performance score: 1.05
GDP (Purchasing Power Parity): $824.9 billion
Foreign Direct Investment: $301.1 billion
Australia's economy is dominated by big resources companies like BHP Billiton (BHP), but it also is home to technology leaders like Cochlear (COH.AX), the Sydney company that is the world's No. 1 producer of cochlear implants, sophisticated devices that allow deaf people to hear. However, Australia is a laggard among OECD countries when it comes to research collaboration between businesses and universities, and the government is vowing to boost funding to prevent Australia from falling further behind.
No. 23 – Estonia
Overall score: 0.94
Innovation inputs score: 1.5
Innovation performance score: 0.29
GDP (Purchasing Power Parity): $28.6 billion
Foreign Direct Investment: $6.7 billion
Like Cyprus, Estonia is in the European Union's group of Moderate Innovators, with levels of innovation below the EU average. The original home of Skype, the Baltic nation has been hit hard by the global recession: On Feb. 13, the government announced GDP growth for the final quarter of 2008 had plunged 9.4% compared with the previous year.
By Bruce Einhorn
Which countries provide the most innovation-friendly climates for companies? That's the question the Boston Consulting Group, working with the National Association of Manufacturers' Manufacturing Institute, set out to answer in its recent survey. BCG consultants, led by James P. Andrew, looked at both "inputs"—government policies supporting education, workforce quality, infrastructure, and trade—and "performance"—R&D results, business performance, employment growth, and other impacts of innovation.
At a time when countries around the world are struggling because of the global recession, it's all the more important for them to make themselves more attractive to potential investment from multinationals looking for environments that are innovation-friendly, says Andrew. "Countries aren't innovative, companies are," he says. "The choices that countries make can have a profound impact on the ability of companies to be innovative, to attract and retain people and other inputs that go into making innovation successful."
So which countries have the right mix of pro-innovation policies and superior results? Despite the recession—and talk of decline in American manufacturing—the U.S. does well, ranking in the top 10. It's not No. 1, though. To learn more about the 30 countries on BCG's list, and the grades that BCG's consultants gave them for overall ranking as well as inputs and performance, read on.
No. 1 – Singapore
Overall score: 2.45
Innovation inputs score: 2.74
Innovation performance score: 1.92
GDP (Purchasing Power Parity): $240 billion
Foreign Direct Investment: $142.4 billion
For decades, the Singapore government has aggressively courted foreign investment. The Southeast Asian island nation is a center for manufacturing, with strong petrochemicals, consumer electronics, and pharmaceutical industries, and the government has funded the growth of industrial parks focused on nurturing innovation in technology and biotech. Singapore's universities receive extensive support from the government, helping to make the country an attractive destination for multinationals seeking a well-educated workforce. Although Singapore has a population of just 4 million, the country makes it relatively easy for foreign talent to live and work there.
No. 2 – South Korea
Overall score: 2.26
Innovation inputs score: 1.75
Innovation performance score: 2.55
GDP (Purchasing Power Parity): $1.3 trillion
Foreign Direct Investment: $74.6 billion
South Korea, which has often promoted joint research and development between state think tanks and large conglomerates, and has emerged as a leading innovator for electronics and telecommunications products, is now trying to reposition the country as a leader in green technologies. As part of the campaign, the government is seeking what it calls "Green New Deal" projects worth some $35 billion by 2012, and aims to increase the country's R&D spending to 5% of its GDP by 2012, from 3.47% in 2007. President Lee Myung Bak has also given a top priority to streamlining regulations to help accelerate innovation.
No. 3 – Switzerland
Overall score: 2.23
Innovation inputs score: 1.51
Innovation performance score: 2.74
GDP (Purchasing Power Parity): $309.9 billion
Foreign Direct Investment: $621.7 billion
Switzerland is a world leader in pharmaceuticals, thanks to companies such as Novartis (NVS) and Roche (RO.DE). Home to Nestlé (NESR.DE), it's also a leader in food research. Traditionally at the forefront of financial innovation, banks like UBS (UBS) have been badly damaged by the financial crisis.
No. 4 – Iceland
Overall score: 2.17
Innovation inputs score: 2.00
Innovation performance score: 2.14
GDP (Purchasing Power Parity): $12.9 billion
Foreign Direct Investment: N/A
The global financial crisis has hammered Iceland. On Mar. 7, as part of a program to fight unemployment, the government announced plans to support an innovation center in Reykjavik. In addition to funding infrastructure projects like avalanche protection systems and revegetation efforts, the plan will also focus on "improving the competitive position of startups and innovative companies," the government information office said in a statement.
No. 5 – Ireland
Overall score: 1.88
Innovation inputs score: 1.59
Innovation performance score: 1.99
GDP (Purchasing Power Parity): $198.5 billion
Foreign Direct Investment: $149.1 billion
A low tax regime and a well-educated workforce have attracted Microsoft and other tech players to Ireland. Another factor helping Ireland move up the innovation ranking: The country's universities cooperate well with the private sector. The global financial crisis is taking its toll on the Emerald Isle, though: On Mar. 10, central bank governor John Hurley predicted Ireland's GDP would fall 6% this year and unemployment would hit 11%.
No. 6 – Hong Kong
Overall score: 1.88
Innovation inputs score: 1.61
Innovation performance score: 1.97
GDP (Purchasing Power Parity): $318.2 billion
Foreign Direct Investment: $1.1 trillion
One of the world's top financial centers, Hong Kong is a favorite for multinationals with operations in China and other parts of Asia. The city has a well-educated workforce and several top universities, although some business leaders fret about declining levels of English ability since Hong Kong's return to Chinese rule in 1997. Most of Hong Kong's labor-intensive factories have shifted operations across the border to mainland China, with Hong Kong now serving as a hub for logistics, design, and other services.
No. 7 – Finland
Overall score: 1.87
Innovation inputs score: 1.76
Innovation performance score: 1.81
GDP (Purchasing Power Parity): $201.2 billion
Foreign Direct Investment: $121.9 billion
According to the European Union's survey released in January, Finland is an Innovation Leader, "with innovation performance well above that of the EU average and all other countries." The big booster to innovation in Finland is Nokia (NOK); the cell-phone giant is a major source of innovation and startups.
No. 8 – U.S.
Overall score: 1.80
Innovation inputs score: 1.28
Innovation performance score: 2.16
GDP (Purchasing Power Parity): $14.6 trillion
Foreign Direct Investment: $2.7 trillion
The recession has slammed the American economy, but the U.S. still is a world leader in all types of innovation. BusinessWeek's 2008 survey of the world's 50 most innovative companies had 31 American companies. Although many business executives are concerned about the quality of America's schools, U.S. universities continue to attract top talent from around the world. The global recession and visa difficulties, however, have led some foreign students to stay home.
No. 9 – Japan
Overall score: 1.79
Innovation inputs score: 1.16
Innovation performance score: 2.25
GDP (Purchasing Power Parity): $4.5 trillion
Foreign Direct Investment: $597 billion
Japan's export-based economy might be enduring a deep recession, but its leading companies continue to innovate in key technologies. This year, pioneering carmakers Toyota (TM) and Honda (HMC) are both rolling out new, more advanced hybrids. Mitsubishi Motors and Fuji Heavy Industries unit Subaru will become the world's first major automakers to sell electric vehicles. And with energy-efficient industries set to be beneficiaries of government stimulus spending, Japan's technology strengths in solar, nuclear, and other carbon dioxide emissions-reducing technologies continue to attract investment, despite the downturn.
No. 10 – Sweden
Overall score: 1.64
Innovation inputs score: 1.25
Innovation performance score: 1.88
GDP (Purchasing Power Parity): $358.4 billion
Foreign Direct Investment: $289.6 billion
Sweden has a strong engineering tradition that has made the country a leader in the automobile and telecom industries. Stockholm is a good incubator for startup companies. The European Union's 2008 survey of member nations put Sweden in the top tier of Innovation Leaders.
No. 11 – Denmark
Overall score: 1.60
Innovation inputs score: 1.55
Innovation performance score: 1.50
GDP (Purchasing Power Parity): $213.6 billion
Foreign Direct Investment: $163.2 billion
Like other Scandinavian countries, Denmark has a well-educated workforce that provides a solid foundation for innovation. The country has strong pharmaceutical and biotech industries. And it's a nice place to live: A 2006 survey of environment, education, health care, and other factors by Britain's University of Leicester concluded that Denmark was the world's happiest country. The January report by the European Union put Denmark among the EU's Innovation Leaders but also warned the country "is stagnating."
No. 12 – Netherlands
Overall score: 1.55
Innovation inputs score: 1.40
Innovation performance score: 1.55
GDP (Purchasing Power Parity): $687.5 billion
Foreign Direct Investment: $872.5 billion
The Netherlands is home to some of the world's most innovative companies, such as consumer electronics, lighting, and medical equipment giant Philips (PHG). In a recent report to the Dutch government, Philips chairman and CEO Gerard Kleisterlee warned the Netherlands is falling behind European rivals and called on the government to increase spending on new alternative energy and health-care projects.
No. 13 – Luxembourg
Overall score: 1.54
Innovation inputs score: 0.94
Innovation performance score: 2.00
GDP (Purchasing Power Parity): $41.4 billion
Foreign Direct Investment: N/A
Luxembourg can count on a well-educated populace, an important consideration for companies looking for an innovation-friendly environment. Luxembourg is a leader in the finance industry. In its survey of innovation released in January, the European Union put Luxembourg in its second category, Innovation Followers.
No. 14 – Canada
Overall score: 1.42
Innovation inputs score: 1.39
Innovation performance score: 1.32
GDP (Purchasing Power Parity): $1.3 trillion
Foreign Direct Investment: $547.2 billion
Canada is a leader in telecom innovation thanks to companies like Research In Motion (RIMM), the Waterloo (Ont.)-based company that makes the BlackBerry. RIM was No. 13 on BusinessWeek's list of most innovative companies last year. The collapse of the bubbles in oil and gas and other resources, though, is hurting the Canadian economy, which is now in recession.
No. 15 – Britain
Overall score: 1.42
Innovation inputs score: 1.33
Innovation performance score: 1.37
GDP (Purchasing Power Parity): $2.3 trillion
Foreign Direct Investment: $1.8 trillion
Britain has the freest market in Western Europe. The European Union's 2008 survey of innovation among member countries put Britain in the top tier. British companies are major innovators in the service sector, and Britain's world-class universities have helped make local companies leaders in biotech and pharmaceutical industries.
No. 16 – Israel
Overall score: 1.36
Innovation inputs score: 1.26
Innovation performance score: 1.35
GDP (Purchasing Power Parity): $205.7 billion
Foreign Direct Investment: $51.9 billion
Israel has one of the world's most dynamic high-tech industries and is a hub for venture capital. Entrepreneur Shai Agassi is making Israel a test bed for his Project Better Place's plan to launch electric cars. However, many Israelis worry the country's school system is falling behind and threatening the country's status as an innovation leader.
No. 17 – Austria
Overall score: 1.15
Innovation inputs score: 1.38
Innovation performance score: 0.81
GDP (Purchasing Power Parity): $325 billion
Foreign Direct Investment: $275.2 billion
Austrian companies boast great expertise in sophisticated manufacturing, especially related to the auto industry. The country's high education standards also provide Austria with a solid foundation for companies looking for an innovation-friendly environment.
No. 18 – Norway
Overall score: 1.14
Innovation inputs score: 1.48
Innovation performance score: 0.70
GDP (Purchasing Power Parity): $481.1 billion
Foreign Direct Investment: $142.3 billion
Norwegian company Think has an aggressive plan to roll out electric cars, with plans to launch in the U.S. next year. The company suffered through a cash crunch last year and had to halt production temporarily, but in January, Think announced it had received $5.7 million in new funding from a group of lenders that included Ener1 Group (HEV), which supplies Think with its lithium-ion batteries. "The financing is intended to allow Think to focus its efforts towards the next stages of the restructuring process," Think said in a press statement, "which include raising permanent equity capital and returning to volume production."
No. 19 – Germany
Overall score: 1.12
Innovation inputs score: 1.05
Innovation performance score: 1.09
GDP (Purchasing Power Parity): $2.8 trillion
Foreign Direct Investment: $1.4 trillion
In its January report on innovation among member countries, the European Union put Germany in the top category, Innovation Leaders, along with Britain, Finland, Denmark, and Sweden. "Of these countries," the EU wrote, "Germany is improving its position fastest." Three German companies were among the top 50 in last year's BusinessWeek ranking of the world's most innovative companies: BMW (BMWG.DE) at 14, Audi (NSUG.DE) at 29, and Siemens (SI) at 38
No. 20 – France
Overall score: 1.12
Innovation inputs score: 1.17
Innovation performance score: 0.96
GDP (Purchasing Power Parity): $2.1 trillion
Foreign Direct Investment: $1.9 trillion
France was the only one of the Big Three European economies not to make the EU's top tier of "Innovation Leaders." While Britain and Germany got that top status, the EU put France in the second category, Innovation Followers. There were also no French companies in the 2008 BusinessWeek ranking of the world's most innovative companies.
No. 21 – Malaysia
Overall score: 1.12
Innovation inputs score: 1.01
Innovation performance score: 1.12
GDP (Purchasing Power Parity): $397.5 billion
Foreign Direct Investment: $50.1 billion
Like many export-dependent Asian countries, Malaysia has been hit hard by the global recession. On Mar. 10, the Malaysian government announced a new $16.2 billion stimulus package that will include $1.35 billion for infrastructure projects that could help the country's manufacturers become more innovative. The projects include the expansion of airports in Kuala Lumpur and Penang, and a high-speed Internet network.
No. 22 – Australia
Overall score: 1.02
Innovation inputs score: 0.89
Innovation performance score: 1.05
GDP (Purchasing Power Parity): $824.9 billion
Foreign Direct Investment: $301.1 billion
Australia's economy is dominated by big resources companies like BHP Billiton (BHP), but it also is home to technology leaders like Cochlear (COH.AX), the Sydney company that is the world's No. 1 producer of cochlear implants, sophisticated devices that allow deaf people to hear. However, Australia is a laggard among OECD countries when it comes to research collaboration between businesses and universities, and the government is vowing to boost funding to prevent Australia from falling further behind.
No. 23 – Estonia
Overall score: 0.94
Innovation inputs score: 1.5
Innovation performance score: 0.29
GDP (Purchasing Power Parity): $28.6 billion
Foreign Direct Investment: $6.7 billion
Like Cyprus, Estonia is in the European Union's group of Moderate Innovators, with levels of innovation below the EU average. The original home of Skype, the Baltic nation has been hit hard by the global recession: On Feb. 13, the government announced GDP growth for the final quarter of 2008 had plunged 9.4% compared with the previous year.
No. 24 – Spain
Overall score: 0.93
Innovation inputs score: 0.83
Innovation performance score: 0.95
GDP (Purchasing Power Parity): $1.4 trillion
Foreign Direct Investment: $738.5 billion
Like neighboring Portugal, Spain aims to be a leader in the rollout of green technology for autos. Last month, the Spanish government announced a $5.3 billion rescue package for the country's automakers, a plan that includes spending to promote the development of hybrid and electric cars. The Spanish government has set a target of 1 million electric cars by 2014.
No. 25 – Belgium
Overall score: 0.86
Innovation inputs score: 0.85
Innovation performance score: 0.79
GDP (Purchasing Power Parity): $398.7 billion
Foreign Direct Investment: $581.9 billion
According to the European Union's innovation scoreboard for 2008, Belgium ranks among the second tier of EU member countries. Along with France, the Netherlands, Austria, Ireland, and Luxembourg, Belgium is, in EU parlance, an "Innovation Follower" that is above the EU average.
No. 26 – New Zealand
Overall score: 0.77
Innovation inputs score: 0.79
Innovation performance score: 0.69
GDP (Purchasing Power Parity): $118.9 billion
Foreign Direct Investment: N/A
The innovation coming from New Zealand's film industry goes beyond The Lord of the Rings. On Mar. 10, the New Zealand Institute of Screen Innovation signed an agreement with South Korea's Electronics & Telecommunications Research Institute and the Daesung Group to work together on digital content. Environmentally minded New Zealanders are also focusing on innovations in clean energy. For instance, GNS Science, a government-owned research organization, on Mar. 10 signed a tentative agreement with the South Korean Institute of Geoscience & Mineral Resources to cooperate on the development of gas hydrates and geothermal energy.
No. 27 – China
Overall score: 0.73
Innovation inputs score: 0.07
Innovation performance score: 1.32
GDP (Purchasing Power Parity): $7.8 trillion
Foreign Direct Investment: $139.3 billion
Long before the global recession started hurting China's export machine, President Hu Jintao and the Chinese leadership were trying to encourage local and foreign companies operating factories in China to become more innovative. The effort has paid off for some Chinese companies: Telecom equipment maker Huawei Technologies, for instance, is a world leader in new patent applications; and ZTE, another Chinese telecom manufacturer, has quietly become the world's sixth-largest producer of cell phones and is now expanding its offering of high-end smartphones.
No. 28 – Cyprus
Overall score: 0.63
Innovation inputs score: 0.64
Innovation performance score: 0.56
GDP (Purchasing Power Parity): $23.1 billion
Foreign Direct Investment: $6.4 billion
Boston Consulting Group's analysts aren't the only ones giving high marks to this island country in the Mediterranean. Despite a political stalemate that has divided the country between the official government in Nicosia and Turkish separatists in the north for over 30 years, Cyprus is making progress: The European Union, in a report that came out in January, grouped Cyprus with Estonia, the Czech Republic, Slovenia, Spain, Portugal, Greece, and Italy as "Moderate Innovators" and said "the trend in Cyprus' innovation performance is well above the average."
No. 29 – Portugal
Overall score: 0.60
Innovation inputs score: 0.92
Innovation performance score: 0.22
GDP (Purchasing Power Parity): $245 billion
Foreign Direct Investment: $69.2 billion
The Portuguese government is positioning the country to be a leader in the development of electric cars. On Mar. 6, Portugal signed a preliminary agreement with Nissan (NSANY) for the Japanese automaker to study opening a factory producing advanced lithium-ion batteries. If the deal goes through, Portugal would be the only country outside Japan where Nissan produces such batteries. By 2011, Portugal plans to have 1,300 stations nationwide for drivers to recharge their electric cars.
No. 30 – Qatar
Overall score: 0.52
Innovation inputs score: 0.86
Innovation performance score: 0.13
GDP (Purchasing Power Parity): $83.3 billion
Foreign Direct Investment: $9.1 billion
Like many Gulf countries, Qatar is hurting because of the fall in oil and gas prices. But the country is pushing ahead with plans to foster innovation. On Mar. 16, it will open a new science and technology park, which has received $800 million in investment from the Qatar Foundation and includes as tenants Microsoft (MSFT), General Electric (GE) and ExxonMobil (XOM). In September, Qatar will host the inaugural World Innovation Summit for Education, a three-day meeting designed to stimulate discussion on how to make schools more innovation-friendly.
Overall score: 0.93
Innovation inputs score: 0.83
Innovation performance score: 0.95
GDP (Purchasing Power Parity): $1.4 trillion
Foreign Direct Investment: $738.5 billion
Like neighboring Portugal, Spain aims to be a leader in the rollout of green technology for autos. Last month, the Spanish government announced a $5.3 billion rescue package for the country's automakers, a plan that includes spending to promote the development of hybrid and electric cars. The Spanish government has set a target of 1 million electric cars by 2014.
No. 25 – Belgium
Overall score: 0.86
Innovation inputs score: 0.85
Innovation performance score: 0.79
GDP (Purchasing Power Parity): $398.7 billion
Foreign Direct Investment: $581.9 billion
According to the European Union's innovation scoreboard for 2008, Belgium ranks among the second tier of EU member countries. Along with France, the Netherlands, Austria, Ireland, and Luxembourg, Belgium is, in EU parlance, an "Innovation Follower" that is above the EU average.
No. 26 – New Zealand
Overall score: 0.77
Innovation inputs score: 0.79
Innovation performance score: 0.69
GDP (Purchasing Power Parity): $118.9 billion
Foreign Direct Investment: N/A
The innovation coming from New Zealand's film industry goes beyond The Lord of the Rings. On Mar. 10, the New Zealand Institute of Screen Innovation signed an agreement with South Korea's Electronics & Telecommunications Research Institute and the Daesung Group to work together on digital content. Environmentally minded New Zealanders are also focusing on innovations in clean energy. For instance, GNS Science, a government-owned research organization, on Mar. 10 signed a tentative agreement with the South Korean Institute of Geoscience & Mineral Resources to cooperate on the development of gas hydrates and geothermal energy.
No. 27 – China
Overall score: 0.73
Innovation inputs score: 0.07
Innovation performance score: 1.32
GDP (Purchasing Power Parity): $7.8 trillion
Foreign Direct Investment: $139.3 billion
Long before the global recession started hurting China's export machine, President Hu Jintao and the Chinese leadership were trying to encourage local and foreign companies operating factories in China to become more innovative. The effort has paid off for some Chinese companies: Telecom equipment maker Huawei Technologies, for instance, is a world leader in new patent applications; and ZTE, another Chinese telecom manufacturer, has quietly become the world's sixth-largest producer of cell phones and is now expanding its offering of high-end smartphones.
No. 28 – Cyprus
Overall score: 0.63
Innovation inputs score: 0.64
Innovation performance score: 0.56
GDP (Purchasing Power Parity): $23.1 billion
Foreign Direct Investment: $6.4 billion
Boston Consulting Group's analysts aren't the only ones giving high marks to this island country in the Mediterranean. Despite a political stalemate that has divided the country between the official government in Nicosia and Turkish separatists in the north for over 30 years, Cyprus is making progress: The European Union, in a report that came out in January, grouped Cyprus with Estonia, the Czech Republic, Slovenia, Spain, Portugal, Greece, and Italy as "Moderate Innovators" and said "the trend in Cyprus' innovation performance is well above the average."
No. 29 – Portugal
Overall score: 0.60
Innovation inputs score: 0.92
Innovation performance score: 0.22
GDP (Purchasing Power Parity): $245 billion
Foreign Direct Investment: $69.2 billion
The Portuguese government is positioning the country to be a leader in the development of electric cars. On Mar. 6, Portugal signed a preliminary agreement with Nissan (NSANY) for the Japanese automaker to study opening a factory producing advanced lithium-ion batteries. If the deal goes through, Portugal would be the only country outside Japan where Nissan produces such batteries. By 2011, Portugal plans to have 1,300 stations nationwide for drivers to recharge their electric cars.
No. 30 – Qatar
Overall score: 0.52
Innovation inputs score: 0.86
Innovation performance score: 0.13
GDP (Purchasing Power Parity): $83.3 billion
Foreign Direct Investment: $9.1 billion
Like many Gulf countries, Qatar is hurting because of the fall in oil and gas prices. But the country is pushing ahead with plans to foster innovation. On Mar. 16, it will open a new science and technology park, which has received $800 million in investment from the Qatar Foundation and includes as tenants Microsoft (MSFT), General Electric (GE) and ExxonMobil (XOM). In September, Qatar will host the inaugural World Innovation Summit for Education, a three-day meeting designed to stimulate discussion on how to make schools more innovation-friendly.
