The Changing Face of Innovation

• Author: Sacha Wunsch-Vincent
• Position: Senior Economic Officer, Economics & Statistics Division, WIPO
• Pages: 18-21

2012 / 1p–18 / Innovation Trends

THE CHANGING

FACE OF INNOVATION

Innovation is a central driver of economic growth and development and genera-

tor of better jobs. It ena bles rms to compete in the global mar ketplace and to

nd solutions to technological and economic challenges. Following the launch

of the World Intellectual Property Report by WIP O in November 2011, WIPO

Magazine is launching a new series to explore emerging innovation trends

from an economic perspective. This rst article explores the changing face

of innovation and the evolving use of intellectual property (IP) in navigating

the innovation landscape.

SHIFTING GEOGRAPHY OF INNOVATION

Throughout history, the face of innovation – the “wh o”, the “how” and the “what for”

– has continuously chang ed. Understanding these chan ges is important to ensure

a favorable policy environment.

Studies estimate that in high-inc ome countries, innovation – the act of creating new

products or processes – ac counts for as much as 80 percent of eco nomy-wide

growth in productivit y. At the rm level, those that innovate outperform their non-

innovating peers and drive e conomic growth.

Data relating to research and developme nt (R&D) and investment patterns offer

some interesting insights into emerging innovation trends. Although high-income

countries continue to dominate global spending on R&D, the technological gap

between richer an d poorer countries is narrowing and i nnovation is becoming in-

creasingly international.

Between 1993 and 2009, global R&D expen diture almost doubled in real terms.

Since this same period a lso saw marked growth of the global econo my, the share

of global gross domestic prod uct (GDP) devoted to R&D increased more modestly

– from 1.7 percent in 1993 to 1.9 perc ent in 2009.

R&D data also reveal that the ratio of GDP spe nding on R&D in high-income coun-

tries – around 2.5 percent – is more than dou ble that of middle-income economies

and accounts for some 70 percent of globa l R&D spending. It also shows that low-

and middle-income ec onomies increased their share of global R&D expen diture by

13percent between 1993 and 2009. China acc ounts for more than 10 percent of

this increase, making it the wor ld’s second largest R&D s pender in 2009, overtaking

Japan for the rst time.

R&D spending, however, is only part of the story. The innovation pe rformance of

economies depen ds on broader investment in knowledge, beyond fo rmal R&D

spending, including, in particular, investment in education and the introduction of

new equipment.

by Sacha Wunsch-Vincent,

Senior Economic Ocer,

Economics & Sta tistics Divisi on, WIPO