Building innovation nations

Creating “innovation nations” has been a new focus for several countries worldwide, and is an important means of increasing national wealth and that of their citizens. But how is innovation measured? And what can we in the Caribbean do to develop our own innovation nations?

A growing catchphrase is recent years, in addition to “knowledge-based economy” and “Information Society”, has been “innovation nation”. The term speaks to a growing focus on creativity, and harnessing that creativity, but ultimately, it is about improving productivity, fostering competitiveness, and meeting the challenges of today’s society and world.

How is innovation measured?

There are a number of innovation scales that are being referenced worldwide, but the factors used to measure innovation vary widely. For many assessments, the most important indicator tends to be the number of patents. However, this measure can sometimes be misleading when, in societies such as the Caribbean, there is not necessarily the resources or culture of steadfastly protecting one’s intellectual property (IP), but creative solutions are being implemented regularly to address a broad range of problems. For example, the organisation, GOOD, which recently presented its findings on innovation, used the following four criteria:

• success – the ratio of patent applications to patent grants over three years
• global reach – the percentage of patent portfolios recognised and protected by major patent authorities
• influence – the long-term impact of inventions, as reflected by how patents are cited within the industry
• volume – the number of new techniques or inventions created.

The outcome, as reflected in the infographic below, is not surprising.  It comprises developed countries only, with the US as the leading innovative nation.

On the other hand, the Global Innovation Index (GII) produced by INSEAD, an internationally renowned university based in Switzerland, provides one of the more comprehensive assessments of national innovation. The 2011 iteration of the GII consisted of two sub-indices – Innovation Input Indicator and Innovation Output Indicator ­– which in turn comprised seven pillars in total (Table 1).

The indicators measured by INSEAD appear to be a more far-reaching examination of innovation and its contributing factors. The Innovation Input Index measures the extent to which an enabling and coherent environment has been established to foster creativity. Conversely, the Innovation Output Index investigates and ultimately measures the ways in which that creativity might be manifested across the society. Interestingly, the study not only recognises traditional avenues to record innovation, such as through patents and published research, but also considers creativity that might not readily be captured by conventional means.

How does the Caribbean stack up?

Only three Caribbean countries were included in the 2011 GII exercise: Guyana, Jamaica and Trinidad and Tobago. Unlike other assessments where Guyana tends to trail other countries in the region, in this one, it is considered by INSEAD the most innovative country in the English-speaking Caribbean. It is ranked  61^st out of 125 countries, having risen 62 places since the 2010 exercise.  On the other hand, Jamaica was ranked 70^th in 2010, but has slipped 22 places to 92 as at 2011. Similarly, Trinidad and Tobago, which was ranked 55^th in 2010, has dropped 17 places to 72.

Upon closer review of the scores across each sub-indicator, Guyana’s scores were more or less consistent across each of the seven pillars. In Jamaica’s case, however, the study noted significant deficiencies under infrastructure, market sophistication, scientific outputs and creative outputs. Similarly, Trinidad and Tobago scored its lowest points under the infrastructure and creative outputs pillars.

What can Caribbean countries do to foster innovation?

The INSEAD framework for measuring indicators is highly instructive in identifying factors that countries ought to consider when promoting innovation. Many Caribbean countries are eager to foster creativity among their citizens, and generally take the position that the best way to achieve this is via knowledge transfer that occurs through foreign investors. While this approach can yield results, it is critical for countries to create a more enabling environment that addresses and improves the underlying foundation. Matters that ought to be considered include:

• Education. Particularly tertiary education, which can be expensive and, to varying degrees, limited across the region. More importantly, the Caribbean suffers from considerable brain drain, where our best minds leave the region to seek their fortune in more developed countries, which provide greater opportunities.
• Cost of doing business. Although many countries in the region have addressed matters related to the “ease of dong business”, e.g. time frame required to register a business, many businesses frequently struggle with high energy costs, limited and expensive commercial space, costly telecoms resources, etc. These factors are critical considerations to investors – both foreign and domestic – who must develop viable business cases upon which to base their investment decisions. Hence the cost of doing business affects the extent to which Caribbean countries are considered seriously as locations for investment.
• Access to financing. This factor is one frequently lamented by local investors and entrepreneurs, in particular, for whom the primary avenue for financing in the region is commercial banks. However, these institutions tend to be highly risk-averse, and offer loans at high interest rates. Moreover, for businesses requiring loan, especially start-ups, banks can demand that they be over-collateralised, i.e. requiring collateral and guarantees well over the value of the loan. All of these considerations are deterrents to businesses and prospective business owners, and do not foster innovation, for which at the core, there is always an element of risk.
• IP protection. Although Caribbean countries might be signatories to key international agreements and protocols on IP, and may even have local agencies that deal with such matters, many of their citizens do not use the facilities that are available. For many, they do not know what the process entails, the degree of protection offered, and why protecting local creativity is so important. More can be done on this front.

In summary, we in the Caribbean are highly creative people, but perhaps due to our colonial history, there is still a mind-set that products and services originating in more industrialised countries are better. However, on the flip-side, those countries have recognised our innovative spirit, and have modelled many of their own initiatives on what we have done, either individually, or at the national, sub-regional (e.g. the OECS), or regional (e.g. CARICOM) levels.

Although we might wish to believe copyrighting and IP protection are becoming less important, developed countries are still implementing legislation, such as the Stop Online Piracy Act (SOPA), PROTECT IP Act (PIPA) and even international agreements such as Anti-Counterfeiting Trade Act (ACTA), to strengthen their enforcement ability. Hence, IP has become even more critical in today’s world, since it is widely regarded as a key contributor to wealth creation, to which we all aspire.

_____________