In this year’s Bloomberg’s Innovation Index Korea was ranked 2nd, whilst Japan came in at 6th place. Given the fact that Korean firms have made inroads in the industries that Japanese companies used to dominate such as consumer electronics, communications hardware and automobiles it is probably no surprise that Korea was ranked ahead of Japan.
Image via Osen
However in a separate, more in-depth report compiled by INSEAD and the World Intellectual Property Organization, the Global Innovation Index ranks Korea at 21st place, yet still ahead of Japan at 25th.
Singapore was also ranked competitively at 7th place by Bloomberg and 3rd by INSEAD.
When discussing the innovation of countries in contrast to companies it is necessary to go beyond the overall rankings and scrutinize the criteria since innovation is difficult to quantify without subjective results.
Bloomberg’s study examines data from 96 countries or regions and ranks them based on a scale of 0 to 100% on seven factors:
1- R&D intensity (20%), 2- Productivity (20%), 3- High-tech density (20%), 4- Researcher concentration (20%), 5- Manufacturing capability (10%), 6- Tertiary efficiency (5%), 7- Patent activity (5%).
Image via seoulrythm.com
Based on these criteria Korea came out well on R&D intensity (5th), high-tech density (3rd), manufacturing capability (3rd) tertiary efficiency (4th) and was ranked number one for patent activity. Although productivity was ranked 32nd which is not surprising considering the extremely long working hours endured by most Koreans as it is hard to perform well when you are always exhausted.
Japan came in second place for patent activity, 4th for R&D intensity and 6th for researcher concentration but much lower on the other criteria compared to Korea.
INSEAD’s Global Innovation Index was compiled from 141 economies and analysed five input pillars that represent aspects of the economy which enable innovation: (1) Institutions, (2) Human capital and research, (3) Infrastructure, (4) Market sophistication, and (5) Business sophistication. In addition to two pillars which capture actual evidence of innovation outputs: (6) Knowledge and technology outputs and (7) Creative outputs.
One of the tools on the Global Innovation Index website allows you to compare the results of two countries. Bellow is a graph depicting a comparison of Japan and Korea based on the criteria I selected:
The chart above supports the rankings of the Bloomberg and INSEAD reports which shows that Korea is ahead of Japan on many competitive aspects of its economy. But does this really translate into overall innovation since so much of Korea’s economy is controlled by the Chaebol or mega-corporations such as Samsung, LG and Hyundai?
Of course these companies have been successful in developing products to sell in global markets in contrast to Japanese corporations which relied for too long on the strength of a shrinking domestic market and the competitiveness of the yen.
