Apart from the risk of shocks from geopolitical crises, the outlook for the economy looks a whole lot brighter than it has for a long time. Friday’s UK GDP figures are the latest in a steady stream of good news, but this doesn’t need to be the only thing to brighten your Monday morning: the UK has also just been ranked second in the latest Global Innovation Index (GII), part of a comprehensive report created by Cornell University, Insead, and the World Intellectual Property Office.
Our silver medal is part of a trend of improving GII results over the years. In 2011, we finished tenth, in 2012 fifth, and in 2013 third. We’ve leapfrogged Sweden and only have Switzerland in our sights. We have a lot to celebrate.
Of course, measuring innovation isn’t an easy task – defining it is hard; identifying it harder still; and quantifying it looks like a fool’s errand. Innovation measurements make questionable GDP figures look as accurate as a Swiss watch. Nevertheless, the GII is a combination of lots of data broadly measuring whether Britain is a good place to start and grow a business.
According to the GII, the UK has plenty going for it. We perform well at university ranking, investment, market sophistication, creative goods and services, and online creativity. Also, perhaps to the surprise of some business owners, we perform very well in the ability to obtain credit, where we are ranked first.
The 428-page report also shows where we are lagging other countries. The UK scores badly, placed at 60, in its general infrastructure, which is worked out by combining data on electricity output, logistics performance and gross capital formation (at which we sit at an abysmal 132). Whether your predilection is for deregulation so the private sector can invest, or you want the government to get more active, our lowly position on this metric is certainly a surprise.
Not everything in the GII seems relevant to measuring innovation. The percentage of government expenditure on education probably isn’t an important factor, while ecological sustainability certainly isn’t. Data on video uploads to YouTube (we come in fourth) and Wikipedia edits (we are at 11) are interesting, but I doubt either is particularly relevant to innovation.
Nevertheless, policymakers should absorb the report. This sort of analysis trumps the tired question of: “Why doesn’t the UK have a Silicon Valley?” Thankfully, this obsession has subsided as it becomes clear that our competitive advantage doesn’t necessarily mimic the West Coast of the US. Just consider our fintech, biotech and creative industries – even without a Google or Facebook we can succeed.
On the subject of Facebook, the UK is only ranked 102 in labour productivity. If we want to overtake Switzerland next year, perhaps we all need to ditch the social media and get down to business.
City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.