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ICYMI innovation policy update: UK drops a place in Global Innovation Index

This week, I discuss: the latest Global Innovation Index; the recent government promise to cover EU research funding; and the HEFCE report on higher education and knowledge exchange.

Global Innovation Index 2016: how the UK compared

In the latest Global Innovation Index (regularly referred to by Jo Johnson in the recent inquiry into the future of Innovate UK) the UK has dropped a place down to third, although it should be noted our ranking was 11th as recently as 2011.

The Global Innovation Index (GII), now in its ninth year and regarded as a key reference in global innovation measurement, is a ranking of national economies’ innovation capabilities. The aim of this ranking is to assist in formation of policies to promote economic growth, improved productivity, and tackle unemployment. In 2016 the index covered 128 economies, corresponding to 92.8% of the world’s population and 97.9% of global GDP.

The overall GII score is given by the scores of two sub-indices—the Innovation Input Sub-Index and the Innovation Output Sub-Index—each of which is built around ‘pillars’ measuring key indicators of innovative capacity.

The UK ranked in the top 10 economies on all pillars with two exceptions: Institutions and Business sophistication. While the UK continues to score well for innovation quality due to the output of its high quality universities, performance remains poor in other areas of education; ranking 31st on expenditure on education; 47th on government expenditure per secondary pupil; and 71st on pupil-teacher ratio. To avoid this poor secondary performance later impacting on university output, it is key these issues are addressed soon, particularly in light of the potential impact of Brexit on university research collaborations and recruitment.

Image - Global Innovation Index 2016: Who is leading innovation?

There continue to be concerns regarding working age populations among OECD countries, particularly Japan. The UK is actually one of the few nations expected to see some growth, largely due to a higher birth rate among the migrant population. However, this is likely to drop if previously proposed caps on migration are established. Alongside the issue of the ageing population is the lack of STEM graduates, with a decline in the number of graduates qualified for available positions in these fields.

Concerns have been raised over the ‘innovation divide’ between developed and developing countries; China’s entry into the top 25 of the index this year is the first time a developing country has reached this point. Professor Edler of MIoIR discusses the need to develop globally-focussed, demand-side innovation policies to address this issue for emerging countries, as traditional innovation policy focussing on supply rather than demand favours economically developed countries.

“Innovation generated on the basis of demand measures is much more likely to satisfy local needs and enable learning across societies”

Professor Jakob Edler

Another interesting topic related to global innovation is discussed in the report by Kirsten Bound of Nesta; the challenges for countries of shifting from science diplomacy to innovation diplomacy.

Although Kirsten notes that ‘innovation diplomacy’ is not a widely recognised or deployed term, she suggests it can be framed as encompassing publicly funded support for the following four types of activities:

  • Exerting soft power and influence through the attractiveness (to talent, ideas, and investment) of a nation, region, or cluster as an innovation hub

  • Developing early-stage international partnerships between businesses, or between businesses and universities, for future national economic growth

  • Creating the framework conditions (e.g. intellectual property regimes, migration rules) for regional and global innovation partnerships to flourish

  • Encouraging collaborations between public, private, and non-governmental actors to address global grand challenges from health pandemics to climate change

While most innovation diplomacy initiatives are designed for the mutual benefit of the partner countries, some analysts have warned of a growing trend in “innovation mercantilism”, in which countries exploit international collaborations and trade scenarios to boost domestic innovation capacity— for example, through forced technology transfer or discriminatory public procurement.

Measuring the effectiveness of innovation diplomacy is challenging, due to the effects rarely being direct or immediate. Instead, it is more useful to consider how improvements can be made to the measurement framework and consider whether the right data are being collected in order to draw conclusions on the efficacy of the initiatives in question

“Standard metrics such as joint publications and joint patents are only one part of the story of judging the impact of  collaboration… What is required is to see how relationships are blossoming early on, in real time, using innovative sources of data such as web scraping, social media, and collaboration platforms”

Kirsten Bound, Nesta


Horizon 2020 funding guaranteed

Since the result of the referendum there have been widely voiced concerns over the potential loss of EU finance for research, agriculture and structural development funds for poorer regions. In response, Philip Hammond has released a statement outlining government intention to cover the financial support until 2020, estimated to be around £6 billion a year. In the case of research funding, this stretched to include finance beyond 2020 for any applications that are approved before then.

This move is likely to have been partly motivated by the fears voiced that British researchers were facing discrimination in applying for Horizon 2020 funding, and were being left off applications. The assurance was made to ensure “stability and certainty in the period leading up to our departure from the EU”, according to the Chancellor.

A significant contributor to European science projects, the UK has secured approximately €2 billion of total Horizon 2020 funding to date. This corresponds with a share of 15.5%, making it second out of all participating countries. However, this may not be as costly a promise as it first appears; according to reports, EU officials believe negotiations are unlikely to conclude until 2019, meaning that the government may only have to cover this shortfall in funding for one year.

Scientists for EU greeted the news cautiously, describing it as a “useful statement” but a “confirmation of the bare essentials, but nothing more”, as no extra funding beyond that which is currently allocated has been promised for science. Academics have also pointed out that EU programmes for research have benefits that go beyond funding, including international collaboration opportunities and mobility for researchers.

Others, such as The Telegraph, have speculated this may be an indication that the government are preparing to leave the single market, with EU representatives having previously asserted that access to the market is impossible without also accepting freedom of movement and paying EU contributions.

UK Higher Education knowledge exchange worth £4.2bn in 2014-15

The Higher Education – Business and Community Interaction (HE-BCI) survey, released last week, gathers data on knowledge exchange (KE) in the UK between businesses and the 161 Higher Education Institutions (HEIs), such as collaborative research and consultancy. The data is collected by the Higher Education Statistics Agency (HESA).

Promisingly, the report states that the total value of knowledge exchange interaction between UK universities and their partners has increased by to £4.2 billion in 2014-15 (from £3.9 billion in 2013-14), a rise of approximately 6%.

Companies created from intellectual property developed in UK universities showed improvements in survival rate, staffing and turnover. While this is obviously highly encouraging, it is unlikely to have a long-term impact on innovation, with research showing that a very small percentage of successful innovative companies are formed from university spinouts.

“These interactions have impacts that benefit the UK beyond immediate innovation and productivity gains. They instil a more entrepreneurial culture in staff and students and generate new avenues for research.”

David Sweeney, HEFCE Director for Research, Education and Knowledge Exchange

The total of value of HEI contract research with SMEs is increasing proportionally faster than for larger businesses, but there has been a small reduction in level of consultancy value with SMEs, compared to a minor increase for larger businesses. The vast majority of consultancy work is still with public and third-sector partners.

Higher Education – Business and Community Interaction survey 2014-15: Figure 3d

There has been a small increase in European Regional Development Fund awarding, although this is less than the decrease seen in European Structural Fund income. 2016 has also seen a rise of 18.2% in other local and regional regeneration funds. However, this improvement is fairly uneven - one institution is responsible for approximately a third of the income reported under this indicator.

The numbers of active spin-offs and start-ups have increased slightly, while the turnover and levels of investment into these firms have increased by a higher rate, which suggests that the early stage commercial success of these young firms has improved.

Andy Stevenson is an intern in the Innovation Policy team at Nesta. You can follow him on Twitter here: @StevensonAndy4

[Image: https://pixabay.com/en/globe-earth-old-globe-940369/]


Andy Stevenson

Andy Stevenson

Andy Stevenson

Research Intern

Andy was an Intern in the Policy and Research team. He helped the team in produce research on how innovation contributes to UK economic growth and keeps abreast of the key policy debat…

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