Bloomberg recently released their list of the Most Innovative Economies for 2017, their annual list of the countries where pushing towards change is most encouraged. Ranked across seven factors (intensity, value-adding, productivity, density, efficiency, concentration, and activity) the Bloomberg list rewards economies where research and development, disruption, and investment in new ideas is encouraged, and penalizes those economies where overbearing regulation and interfering governments make innovation a struggle.
Look at the top end of the Bloomberg list:
- South Korea
- The Netherlands
- New Zealand
So, what do these countries have in common?
Well as Bloomberg explains, they tend to have regulatory environments that make opening a business easy and fast. They also tend to be amongst the richest countries on Earth, though the reason that they are rich is likely because of how open and innovative their economies are in the first place.
There are a bunch of countries where English is and official or de facto official language (the US, Israel, Ireland, the UK, Australia, New Zealand, and Canada) and the northern European states on the list prove that being in the cold can provoke some hot innovation. Sweden, Norway, Denmark, and Finland were all there in the top-20, while Iceland and the Baltic states (Latvia, Estonia, and Lithuania) all snuck into the overall top-40.
But there’s something else that the world’s most innovative economies have in common: their openness to startups.
The more open and encouraging of startups that an economy becomes, the more likely it will find itself ranked at the top of a list like Bloomberg’s.
When Virgin pulled together a list of the 25 best startup hubs in the world more than half were in one of Bloomberg’s Top 20 Most Innovative Economies. When City Hub listed the top twenty startup hubs globally, 17 of the 20 were in countries that made Bloomberg’s top twenty list. CNN listed the top ten places in the world to launch a startup and every one of those places was in Bloomberg’s top twenty – and all but one was in the top ten!
No surprise, you might think, that an innovative economy makes for a good breeding ground for startups but in some ways, it is a bit of a ’chicken or egg’ situation: are the startups driving the innovation, or is the innovation attracting the startups?
It’s a little bit of both.
Economies that make it easy for startups to launch, attract funding, hire talent, and get their product to market are also going to encourage innovation. The more innovative those economies become, the more likely that they’ll fuel further startup growth in the future. For modern economies, it is the ultimate virtuous circle.
But more than that, when the OECD measured open innovation in the world’s leading economies and – no surprise – the most innovative economies in the world are also the economies with the best performance on open innovation. Compare the Bloomberg list to the economies with the most open innovation from the OECD:
- New Zealand
- Czech Republic
6 of the 10 economies most committed to open innovation are also among the 20 most innovative economies in the world – and another six (US, Finland, Denmark, South Korea, Austria, and Switzerland) of the most innovative economies on Bloomberg’s list fill the next ten places on the OECD list, too. Put another way, most of the economies with the best performance in open innovation are also the most innovative economies overall.
There’s much debate in the US, France, and in Europe more generally about how to kick-start national economies and drive growth. There’s a lot of discussion about tax rates, tariffs, border adjustments, and infrastructure spending but perhaps where the focus should be is on innovation.
The more innovative the economy, the more that economy will grow.
And what’s more, the more an economy and the big businesses that drive that economy open themselves to startups and academia through open innovation, the more innovative the entire economy becomes.
What is common to all the innovative economies is that their leaders understood that encouraging passionate innovators who have the drive to pursue their ideas despite uncertainty for success will lead to outstanding growth.