Understanding the challenges of Least Developed Countries towards improved innovation performance in the Global Innovation Index

Thursday, November 26, 2020

Least Developed Countries (LDCs) – as defined by the United Nations (UN) – are low-income countries confronting severe structural impediments to sustainable development, that are highly vulnerable to economic and environmental shocks and have low levels of human assets.


In 2013, for example, the UN cited that only 7 scientific and technical journal articles were published for every 1 million people in African LDCs. In comparison, in high-income OECD countries, about 1,100 scientific and technical journal articles were published for every 1 million people.


The reasons for these differences may be much more complex than they seem. What appears as a simple innovation problem due to low rates of investment in R&D instead often reflects much deeper barriers to accumulating other factors, including physical and human capital. As one health policy minister from a Pacific island country once lamented anecdotally, “How can we think of developing medical innovation technologies for our island when we only have two hours of electricity every day?” (ITU, 2019).


Thus in the case of developing [and particularly least developed] countries, the GII and the World Bank describe an innovation policy dilemma: innovation policy is both 1) much more complex due to the greater magnitude of market failures and missing complementary institutions and factors, while at the same time 2) made much weaker by government’s diminished capacity to effectively design, implement and coordinate its policy agenda.


The 21 LDCs in the GII 2020


In 2020, 21 of the 47 LDC economies are included in the GII rankings – 15 (71%) of which are notably located in Sub-Saharan Africa. Nine of the 21 LDC economies improved their rankings in 2020: the United Republic of Tanzania (ranked 88 in the GII 2020), Rwanda (91), Nepal (95), Malawi (111), the Lao People’s Democratic Republic (113), Madagascar (115), Zambia (122), Togo (125) and Myanmar (129). In contrast, eleven of the LDCs covered in the GII 2020 went down the ranks between 1 and 16 spots.


The interactive map in Figure 1 shows the rankings, GII strengths and weaknesses of each LDC in the GII in 2020.


Figure 1: Least developed countries in the GII 2020



The innovation gap : average LDC performance in the GII


However, while some positive individual LDC performances may stand out in terms of relative GII strengths, as expected based on the positive correlation of innovation and development, LDCs on average still need to improve much more in a range of areas when compared to both upper and lower middle-income economies in the GII.


The GII is built around seven pillars of innovation, with Pillars 1 through 5 comprising Innovation Inputs and Pillars 6 and 7 comprising Innovation Outputs. Compared to other income groups captured in the GII 2020, Figure 2 shows that the scores of LDC economies covered in the index broadly follow the global trend, scoring higher in the more fundamental Innovation Inputs of Pillar 1: Institutions, Pillar 4: Market Sophistication, and Pillar 3: Infrastructure, and lower in the more complex Innovation Outputs. In terms of overall GII 2020 scores, the highest ranked country Switzerland scores 66.1 (out of a perfect 100); the average economy scores approximately half of this at 33.87; while the average LDC scores one-third of this at 20.11.


When compared to lower middle-income economies as the nearest benchmarking group for “catchup” policy-making, LDCs trail behind the most in Pillar 2: Human capital & research, and the least in Pillar 1: Institutions. Finally, when compared to the global average of all 131 GII economies, the pillars that may be indicative of the largest “innovation gaps” are again Pillar 2: Human capital & research, Pillar 6: Knowledge & technology outputs and Pillar 7: Creative outputs, where LDCs score less than half the global average.


Figure 2: Average GII pillar scores for LDC-21 vs other income groups in the GII 2020

Source: Global Innovation Index Database, Cornell, INSEAD, and WIPO, 2020.


At the indicator level, Figure 3 shows key areas within each of the seven GII pillars where the performance of the LDCs as a group require greater attention. It sheds light on areas where LDCs are performing well, in addition to areas of weakness or where less data is available to adequately measure performance. This can facilitate more focused and informed policy interventions, with a view to reinforce positive performance and trigger appropriate remedial measures:


  • LDC relative strengths are those data points across all 80 GII indicators where LDCs have the highest scores on average;
  • LDC relative weaknesses are those data points across all 80 GII indicators where LDCs have the lowest scores on average;
  • Higher than GII average are the four indicators where LDCs score higher than the global average across all 131 ranked economies; and
  • Most missing data are the eight indicators where at least 60% of the 21 LDCs do not have available data for GII ranking computations.


Figure 3: SWOT analysis of LDC performance among GII indicators


Source: Global Innovation Index Database, Cornell, INSEAD, and WIPO, 2020. Note: Strengths and weaknesses are the highest (lowest) LDC-21 normalized scores.


Inclusivity in global indices


As with most global composite indices, the GII captures only data that is published, available, and complies with international statistical standards. As shown in Figure 3, the data quality and innovation data coverage puts LDCs at a distinct disadvantage. In 2020, two LDCs made it to the rankings thanks to improved data availability after several years of not featuring in the GII: the Lao People’s Democratic Republic and Myanmar. In contrast two LDCs, Bhutan and Burundi, were previously featured but are not included in the GII 2020 because of the lack of data.


Overcoming challenges and catching up, realistically


The innovation dilemma thus requires innovative thinking and an honest dialogue among stakeholders to determine realistic policy goals and appropriate data benchmarks for measuring innovation performance. This dialogue often starts by understanding the data gaps, identifying the local stakeholders in charge of collecting and submitting the innovation data to international organizations and understanding the meaning and ‘story’ behind the data. This dialogue often leads to a further understanding of the linkages between different stakeholders in the innovation ecosystem, the associated responsibilities of each, and the need for coordination in setting medium and long-term innovation policy agendas. This process is not easy for LDCs, particularly because the institutional infrastructure requires maturity for the design of agendas that are sustainable in the long-term.


Catching up will not be easy, but understanding and framing the obstacles and challenges is half the battle.


In this vein, the WIPO Division for Least-Developed Countries works with governments in 47 LDCs to assist them in adopting IP policies for institution-building and development. Find out more about their work here.


Pamela Bayona is Project Manager for the Global Innovation Index 2020 at WIPO and Lorena Rivera Leon is an Economist and Program Officer of the GII at the Department of Economics and Data Analytics at WIPO.

Cover photo credit: Mairel Theafila on Unsplash

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