European economies Switzerland, Sweden, Britain dominate ranks of most innovative countries, study finds

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European economies dominated the ranks of the world's most innovative countries, but China was fast climbing the ladder, according to a joint study by Cornell University, Insead and the World Intellectual Property Organization (WIPO).

Switzerland kept its No.1 ranking as the most innovative economy, followed by Sweden and the United Kingdom, in the annual Global Innovation Index (GII).

The U.S. took the fourth position, while Finland and Singapore were fifth and sixth respectively. China became the first middle-income economy to join the top 25 of the GII, which has been historically dominated by developed economies.

Source: World Intellectual Property Organization
Global Innovation Index 2016: Top 25 Rankings

The GII gauged economies based on factors including infrastructure, market and business sophistication, creative output and research.

Keeping up the pace of innovation was a key concern as sluggish global growth and productivity means finding new drivers should be a priority, the report said.

"Investing in innovation is critical to raising long-term economic growth," said Francis Gurry, director general at the WIPO.

"In this current economic climate, uncovering new sources of growth and leveraging the opportunities raised by global innovation are priorities for all stakeholders," he added.

This year's study found that global innovation was on the rise due to increased cross-border flows of knowledge and talent.

"The relative contraction of international trade and investment flows does give even more strategic importance to the two sides of global innovation: on one hand, more emerging countries are becoming successful innovators, and on the other hand, an increasing share of innovation benefits stem from cross-border cooperation," said Bruno Lavin, executive director for global indices at Insead.

Why innovation is key to China's growth

However, the "innovation divide" between developed and developing countries has persisted, the report noted.

Before 2009, research and development (R&D) expenditure grew at an annual pace of about 7 percent, the report said. But by 2014, global R&D spending grew only by 4 percent, as emerging economies, particularly China, slowed their investments and governments in higher-income economies tightened their spending, the report said.

The GII report studied 128 country profiles, which represent 92.8 percent of the global population and 97.9 percent of global gross domestic product (GDP).

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