I hope you have all enjoyed a restful summer and are looking forward to a productive fall. My own fall semester started early as I had to start teaching in the Cornell EMBA programs in end July. However, June and July were good summer months for me in which I had both the chance to spend some time with family (my elderly parents came from India and joined me, my wife and her family in Spain and our Boston based daughter also joined us for some time in Europe) and also engage with some key professional activities. Notably, I was invited to participate in the World Economic Forum’s (WEF’s) Annual Meeting of the New Champions which was held in early July in Dalian, China. Also, I was pleased to be part of a high profile launch of the Global Innovation Index in New Delhi on 24th July. I will use this blog to share some of my reflections from these two professional engagements.
Returning to China after a gap of some months is always interesting as the country seems to continue to change at a fast pace. I had taken part in several prior editions of the WEF’s Annual Summits in China and it is interesting to see how the WEF China Summit has now become focused exclusively on technology and innovation. This is not surprising per se as China’s rise in the technology domain is now recognized by many.
As an example of this rise of China in technology, Tsinghua University in Beijing could well become the top-ranked science university in the world, having produced more of the top 1% most highly-cited papers in mathematics and computing, as well as a greater share of the 10% most highly-cited papers in STEM than any other university in the world (see Figure 1).
While many analysts had come to terms with China moving beyond its traditional position as a low-cost producer, few had taken stock of how far the country had come in the frontiers of science and technology (S&T) research. Figure 2 depicts how since 2017 China has overtaken the U.S. in three key innovation metrics: scientific researchers, patents and scientific publications.
China’s rapid progress is most visible in its companies’ success. Their global achievements would not have been possible without a disciplined effort to acquire new technology and a significant investment towards home-grown innovation. Today, leading Chinese firms such as Haier and Huawei produce consumer goods that demonstrate the technological progress underway, while the battle for future technological dominance intensifies.
I had gone to the WEF’s China Summit expecting to encounter some major discussions of the ongoing trade-war between China and the USA. I was surprised to witness little of this. It is not that Chinese colleagues were not concerned about the trade war; but rather that they had accepted the fact that the trade war existed and was really a proxy for the battle for global leadership as China rises economically and militarily. Most Chinese colleagues I spoke with expected this tension for global leadership to continue regardless of any future trade agreement that may be signed between the USA and China. The China-USA trade war and the surrounding battle for global leadership seemed to be something that Chinese leaders have already accounted for as they plan for the country’s future.
What surprised me was the Chinese leaders seemed to be extremely concerned by Brexit and the uncertainty that it creates for the global economy. There was real concern that a mis-managed Brexit would trigger a recession in Europe and that may in turn also tip the global economy into a recession or a phase of very low growth. Given how events have progressed in the UK over the last 8 weeks, I think that the Chinese concerns from early July were not misplaced. Even today, the outcome of Brexit looks murky and confused and few are able to reliably predict the fallout of a no-deal Brexit.
Returning to the theme of technology and innovation, many Chinese executives also pointed out to me that the US sanctions were against a small handful of Chinese technology giants which were all born in Shenzen and based within a few kilometers of each other. The joke was that it was not really a USA vs China trade war but more of a USA vs Shenzen trade war. This highlighted the absolutely remarkable progress made in Shenzen and the Greater Bay Area in the field of technology. Firms from this region dominate the world in some key technologies for the future: 5G, mobile, Internet of Things and AI. Although I had gone to Shenzen some years ago, I made the resolve to include it in my next trip to China.
I visited India, my home country in end July for the global launch of the Global Innovation Index (GII). I had founded the GII back in 2007 when I was a professor at INSEAD and I was very pleased to see the global launch happen in India (it was the first global launch of the GII in a developing country). The GII, (more details can be found on: www.globalinnovationindex.org) is today published by Geneva-based World Intellectual Property Organization in cooperation with Cornell University and INSEAD. The GII is widely recognized as the most comprehensive measure of a country’s innovation capability. The ranking provides detailed metrics for more than 120 countries each year, representing more than 90% of the world’s population and more than 96% of the world’s GDP (in current U.S. dollars).
The results of the 2019 GII rankings confirms the rise of China in technology and innovation. From a rank of 34th in 2012, China has risen to the 14th overall position in 2019. This is absolutely remarkable progress for China, a upper middle-income economy. India has also made good progress over the last years but lags behind China in many ways. India ranks 52nd overall in the GII in 2019, gaining five positions since 2018. India scores high in some key innovation metrics such as graduates in science and engineering (7th in the world) and ICT services exports (as % of total trade) where it ranks 1st globally. While India has made good progress in some innovation metrics, there are many dimensions on which it needs to accelerate progress. Perhaps I will write about some of the innovation achievements and challenges for India in one of my future blogs for GBSN.
The 2019 GII rankings highlighted that Switzerland is the world’s most-innovative country followed by Sweden, the United States of America (U.S.), the Netherlands and the United Kingdom (U.K.). It also identified regional leaders India, South Africa, Chile, Israel and Singapore, with China, Viet Nam and Rwanda topping their income groups.
While the Global Innovation Index ranks economies according to their innovation capacity and performance, it also provides valuable insights into the dynamics of global innovation. For example, the GII shows how innovation is now prospering in selective African countries (see my GBSN blog of December 2018). The GII helps to highlight economies that excel in innovation and those that are more successful in translating investments in innovation inputs into innovation outputs. Lessons from these innovation leaders provide useful guidance on innovation policy for others. I am very pleased that today the GII research is used by many dozens of countries around the world to assess and guide their innovation policies.
Soumitra Dutta is a Professor of Management at Cornell University and the Chair of the Board of Directors for GBSN. Previously he was the Founding Dean of the SC Johnson College of Business at Cornell and Chair of AACSB Intl. He also co-chairs the Global Future Council on innovation ecosystems for the World Economic Forum.