Most Innovative Countries in 2023

What This Means For Investors

Technological advancements and adoption are typically robust indicators of a nation’s potential for long-term financial growth and success. Advanced technology can signify a multitude of benefits, such as a local workforce equipped with superior tools and equipment, a developed and mature infrastructure to facilitate business operations, and an inclination among local authorities and the public to embrace new technologies.

Imagine for instance that you’re a global smartphone brand that’s looking to set up either a new headquarters or research lab in a foreign region. Would you prefer a modern country that has policies which support researching and developing new technological innovations or one that primarily extracts and exports a single natural resource which is still stuck in the 80’s? The answer is probably quite obvious.

Measuring Innovation

Innovation, however, can be an elusive concept. So, how do we quantify and rank a country’s innovative capabilities? The World Intellectual Property Organization’s Global Innovation Index utilizes a framework of seven pillars and 80 indicators to assess the innovative strengths of a country, as illustrated in the table below:

Leaders of Innovation

Given these criteria, it is unsurprising that Switzerland has been recognized as the world’s most innovative country, maintaining this status since 2011. Switzerland’s enduring position atop the Global Innovation Index can be ascribed to its exemplary business policies and stringent patent application processes. The country is also acclaimed for its premier research institutions and highly skilled workforce, both of which are pivotal in driving innovation forward.

Sweden claims the second rank, which is attributed to its advanced business landscape, substantial knowledge-intensive employment, and an impressive number of researchers per capita, nearly paralleling Switzerland. Contrarily, the United States, with its considerable global presence, occupies the third place in 2023 — a ranking that may come as a surprise to some who would expect it to be higher.

The United States, with a population and land area substantially larger than both Sweden and Switzerland, is at the forefront in terms of venture capital received, global corporate R&D investments, and the overall valuation of unicorn companies. Remarkably, as of April 2023, the U.S. is home to 54% of the global total of 1,206 unicorns, underscoring its pivotal role in the international marketplace.


Asia’s Innovation Powerhouses

Turning our attention closer to home, Singapore stands proudly at fifth in the rankings, representing one of just two Asian countries within the top ten, with South Korea occupying the tenth slot. Singapore’s esteemed position can be credited to its status as both a financial centre and a hub of innovation in the region, reinforced by robust governmental policies, a high volume of venture capital investments, and a stable business environment. Furthermore, Singapore is distinguished by the highest venture funding per capita globally.

Yet, it is crucial to recognize that the most innovative countries of 2023 are not synonymous with the richest economies. For instance, nations like Switzerland and Sweden, while being hubs of innovation, have populations that are merely a fraction of those in larger countries such as China, ranked 12th, and India, at 40th. These populous nations hold vast potential for large-scale export and manufacturing operations.

With the technology and research sectors under heightened surveillance by global brands and investors, it is prudent to keep a watchful eye on countries leading the charge in innovation, as they may be the birthplace of the next revolutionary development.

Malaysia ranks an impressive 36th out of 132 economies in innovation, reflecting its commitment to progress despite challenges. For those keen on the latest in business, sustainability, and investment in Malaysia, PEGH is an essential resource. Join us for insightful exploration into innovation.

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