According to the study, the most innovative countries in the world are the ones “who contribute to the general advancement of mankind’s wellbeing.”
How do you measure that? By looking at the conditions that could foster such activity, such as:
- A strong entrepreneurial climate.
- Low costs to starting a business.
- Public perception of a good entrepreneurial environment.
- A country’s ability to commercialize innovation.
- IT and telecom infrastructure (ICT) that enables productive commercial endeavors.
So what did they find? Here are the top 10 innovative countries:
- Denmark. High levels of innovation (it’s No. 2 in Legatum’s Prosperity Index), with the seventh-best R&D levels. ICT comprises 5 percent of total goods exports, and business startup costs are the lowest in the world. Best yet, Denmark has the second lowest level of inequality in economic development.
- Sweden. This country ranks sixth for royalty receipts and spends more than all but one nation on R&D, at 3.1 percent of GDP. ICT exports make up 9.5 percent of total goods exports, and business start-up costs are the sixth lowest of any country. Equality’s big, too: Sweden ranks fourth here.
- United States of America. It’s not just an American Dream: spending on R&D is about 2.2 percent of GDP, and income from royalty receipts (we’re talking about intellectual property here) is tops, totaling almost $92 billion. One downside: there’s a bit of backlash in perception, thanks to recent “over-regulation” by “all levels of government.”
- Finland. This nation ranks among the top 10 in R&D expenditure levels in proportion to GDP, and ranks 11th for ICT goods, which comprise 16.5 percent of total goods exports. Royalty receipts tallied $1.5 billion in the last recorded year, the 10th highest. Plus, Finland claims low startup costs and a great perception by the public that the country is open for business.
- Britain. The United Kingdom claims the third highest royalty receipts in the world, at $13.9 billion per year, and places in the top 20 for both its R&D expenditure and ICT exports. The U.K. has the seventh lowest startup costs in the world, and is among the top 20 for equality.
- Norway. This country topped Legatum’s Prosperity Index. It has reasonably low startup costs, the 18th lowest, and has royalty receipts that total $642 million. It’s R&D expenditure is 1.7 percent, comparatively high. Above all, perception is key: 93 percent of Norwegians believe hard work will pay off later.
- Ireland. The Emerald Isle is among the top 20 nations in terms of royalty receipts, R&D expenditure and ICT exports. Plus, startup costs for a business are the third lowest in the world.
- Singapore. Entrepreneurship is high here, with royalty receipts totaling close to $840 million — that’s 15th in the world. Positive perception is through the roof, and extremely low business startup costs — less than 1 percent of GNI per capita — make perception a reality.
- Iceland. Iceland invests 2.8 percent of its GDP in R&D, the fifth highest in the world. Plus, equality and public perception are high, creating a welcoming environment for startups.
- Canada. Canada’s high rate of R&D spending and its significant royalty receipts indicate a favorable environment for entrepreneurial activity, as does the nation’s lean toward equality. Plus, business startup costs are just 0.4 percent of GNI per capita — the fourth lowest in the world.
An interesting list for sure, and one that will surely stir debate.
(To be clear, the above list is the work of RealClearWorld — Legatum’s prosperity index lists the top 10 in the following order: Norway, Denmark, Finland, Australia, New Zealand, Sweden, Canada, Switzerland, Netherlands, United States.)
Legatum says its data was based on 110 countries and 89 different variables in eight major groups: economy, entrepreneurship/opportunity, governance, education, health, safety/security, personal freedom and social capital.
A few interesting insights from Legatum on its rankings, in its own words:
- Entrepreneurship and opportunity correlate more closely to a nation’s overall prosperity than any other factor.
- It pays to be a democracy.
- Changes in the “social fabric” of a country can lead to big changes in national prosperity.
- Prosperity is about balance.
- Material wealth cannot be explained only by economic factors, and happiness cannot be explained only by subjective emotions.
- Choice and opportunity matter more to happiness than making a lot of money quickly.
- Two Europes are emerging.
- Improved governance is emerging as a key driver of prosperity in Sub-Saharan Africa.
- It’s hard to be prosperous as a large country.
- Economic growth is not enough for the BRICs.
You can read the complete report here.
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