When a concept becomes a trend two things happen. It starts to be used anytime and, on the other hand, its meaning loses relevance and importance.
This is what has happened with “innovation” and more specifically with “R&D investment”. It turned out to be worse when Media and Political messages integrated that idea as the real and only solution for everything, also linked to the “new production model”.
Let’s face it, the whole idea is quite appropriate. The equation R&D plus production model makes sense. But then again, the formula remains uncompleted, though.
It has become well accepted upon a wide number of experts, that the simple act of a country investing on R&D makes it an innovative country. Nevertheless, this radical point of view, it is quite wrong. Let’s take an example from the Global Innovation Index. In 2015 the country that spent more economic resources in R&D was Israel, although it is on the 22nd position.
Of course, this does not mean that R&D investment might be irrelevant to rise up to a higher position among innovative countries on the ranking. It just means that investment does not work in an isolated way, neither is the element nor the only variable that operates changes.
This Index is very reliable due not only to the prestigious organizations involved, but because the variables grouped in categories used to grant a position to countries is extremely revealing.
As it has been previously pointed out, innovation level is granted according to different factors, besides R&D investment. Issues such as the political system, institutions’ strength, economic and businesses climate and public policies are taken into consideration. It is also easy to understand that the volume invested on innovation will become more or less effective if it is driven to right destination, through the right paths, with transparency and control.
Let’s take a look to the following chart which shows measuring and analytics categories and the 70 indicators included within.
The key lies on the five columns on the left, which gather innovation inputs for the Global Innovation Index.
First column is about institutions. Within this main category, three subcategories are established: political ambience, regulatory environment and ways to establish businesses. Politics, with its public action component as well as legal and government oriented, becomes one of the most important indicators to mark innovative country’s evolution. A high degree of R&D investment could become useless with a suffocating regulatory system or with an unstable political situation.
Manpower and research
Within this second category there are education, postgraduate education and R&D as subcategories. The quality of any innovation investment will depend upon the capability of its manpower to benefit from this resource. If there is a lack in the number of PhD’s and researchers unable to turn resources into scientific and academic knowledge, investment would be absolutely pointless.
This category refers to general infrastructures (its own level of development), to the ones within information and technology systems and, also, to environmental and sustainability infrastructures. Balance and cooperation become fundamental in order to accomplish goals. It wouldn’t make any sense to grant public resources to specific fields in a country without infrastructures and facilities strong enough to use those given resources.
Credit, investment, trade and businesses competitors are gathered within this fourth category. An economy can be defined as dynamic when changes are generated through capital movements. There are also other issues to take into consideration such as investment strength within the financial system and high competition among enterprises as well as smooth paths for trade. Of course, innovation also requires economic and financial dynamism.
Within this category lie the following subcategories: level of education acquired by workers and links between innovation and knowledge growth. This is a key element because it tells that enterprises are able to turn knowledge into goods and services with high added value, through capable workers to add knowledge and produce value for the market.