GENEVA - A new World Intellectual Property Organization (WIPO) report probes the intersection of human innovation, economic diversification and industrial policy and finds that the key to sustainable growth for countries is to focus policymaking on developing local innovation capabilities, according to the official website of WIPO.
The biennial World Intellectual Property Report (WIPR) “Making Innovation Policy Work for Development” documents a recent resurgence in industrial policy-making, including in many developing and least developed countries, aimed at ensuring a wide and growing economic structure base - and the innovation, creativity, and technology required to achieve it.
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The WIPR establishes a novel methodology that maps 20 years of innovation capabilities across 150-plus WIPO member states, pinpointing how different countries have boosted their economic diversification in areas of technology, science, and exports. Through this, the WIPR results help governments design their policies in a highly dynamic economic and political environment.
“We hope this report will guide policymakers across the world on how to leverage innovation for improved productivity, competitiveness, and development amid global economic shifts, geopolitical tensions, and digital acceleration. Our report shows that countries that leverage on local strengths, build diverse innovation ecosystems, and develop deep capabilities are in a better place to win the innovation race.” said WIPO Director General Daren Tang, adding, “We hope that policymakers will find the data and insights in this report useful and interesting as they build durable innovation ecosystems that brings real growth over decades.
To help guide policymakers, the report documented:
• Power of local capabilities: Countries often use their existing innovation capabilities as a springboard for diversification. Innovation capabilities based on scientific, technological and production know-how in a particular country or region can be measured by studying the data on scientific publications, patent applications and international trade respectively. For example:
• Economic Specialization and Diversification: Analysis of nearly 40 million patent filings, over 70 million scientific papers and economic activity worth more than 300 trillion dollars in goods and services exports, reveals that innovative outcomes are highly concentrated. Over the past 20 years, for example, the top eight countries account for 50 percent of exports, 60 percent of scientific publications and 80 percent of international patenting.
• But change is occurring: China, India and the Republic of Korea saw big increases in their technological diversification over the period. China jumped from being specialized in only 16% to 94% of all technological capabilities, the Republic of Korea's technological capabilities went from 40% to 83%, and India saw its technological capabilities double from 9% to 21%.
• Innovation Complexity: Innovation complexity is the knowledge in an economy as expressed in the diversity and sophistication of the science, technologies, and products it generates. Complex capabilities are rare and only diversified innovation ecosystems can make use of them. Of the three types of innovation capabilities, technological capabilities are the most complex and also more likely to generate higher growth.
Case Studies Spotlight
The WIPR focuses on three case studies across eight countries to reveal insights on how innovators and policymakers leveraged and enhanced existing industrial capabilities to create the advanced and sophisticated motorcycles, videogames and agricultural technologies of today.
Motorcycles Industry - full throttle on innovation
The documented evolution of the motorcycle industry is a key example of human innovation and economic diversification, which economists and policymakers can use to spur sustainable, long-term growth across the globe.
The experiences of Italy, Japan and India show how historical ties with closely related sectors - including bicycles, automobiles, and aviation – have allowed them to carve out their own unique specialized trajectories within the same innovative and complex industry.
For instance, Italian motorcycles excel in high-performance and groundbreaking design thanks to vibrant know-how in racing and top of the line craftsmanship; the big four Japanese motorcycles companies (Honda, Yamaha, Kawasaki, Suzuki) dominate the global market by exploiting Japan’s complex innovation capabilities on advanced technologies, product reliability, and sophisticated supply-chain logistics (keiretsu) ; and Indian motorcycle companies have emerged as a key global industry player catapulted by India’s capabilities on cost efficient production, particularly prioritizing fuel-efficient engines.
The motorcycle case study provides evidence of strategic implementation of industrial policies, such as those that enhanced the rise of national champions in Japan or faster adoption of electric two- and three-wheelers in India.
Today, the motorcycle industry is in a new and disruptive transformational journey driven by changing consumer preferences, a heightened focus on sustainability and technological shifts. Electrification, artificial intelligence, and enhanced connectivity technologies are revolutionizing the industry.
Agricultural Leveraging Technologies
The agricultural sector is undergoing a spectacular technological transformation as shown by the 239% increase of patent-protected agriculture inventions in the last decade. New scientific breakthroughs in genetic engineering and the adoption of frontier robotic and digital technologies are increasing the innovation sophistication of one of the oldest economic activities.
The increase in innovation complexity in the agricultural sector is happening around the world. For instance, scientists in Kenya have leveraged their plant breeding capabilities to create a pest-resistant maize variety successfully being used across the African continent. In Brazil, sugarcane and sugar production capabilities were the standpoint for Brazil's global leadership of ethanol-related technologies helping consumers find sustainable fossil-fuel alternatives.
The Rise of the Global Videogame Industry
The video game case study showcases how seemingly unrelated existing capabilities can be used to create an innovative and sophisticated new industry.
The video game industry is a breeding ground for new businesses, with around 45% of game developers being newly founded companies. This dynamic environment fosters competition and innovation, contributing to the industry's rapid growth.
In addition, the report finds that around 15% of new video games launched each year are based on existing intellectual property (excluding sequels).
The development of the global video game industry has seen regional hubs navigating unique challenges and capitalizing on local strengths. The four video game industry hubs discussed in the chapter demonstrate how local expertise, cultural capital and interconnected industries collectively have influenced the industry's evolution and offer strategic insights for policymakers.
World IP Report 2024: A Guide for Policy Makers
The report provides a new policy toolkit that can help countries replicate these success stories. By identifying over 600 technological, scientific and production capabilities spread around the world, the new framework allow decision takers to design smart policies based on empirical evidence.
Policy makers can see where, when and how to target their innovation policies, either by nurturing their strengths, or by leveraging them to attain new and exciting scientific, technological and production opportunities.