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中国科学技术发展战略研究院National Innovation

Index Report 2013

Chinese Academy of Science and Technology for Development

·北京·

2013国家创新指数报告-英文版1111.indd 1 14-11-6 上午11:49

中国科学技术发展战略研究院



National Innovation Index Report 2013

Editorial Committee

Presidents: Wang Yuan, Ye Yujiang

Vice Presidents: Hu Zhijian, Wu Xiang

Coordinators: Song Weiguo, Liu Shumei

Authors: Xuan Zhaohui, Shi Qingyan, Liu Huifeng,

Zhu Yingchun, Li Xiuquan, Song Weiguo,

He Ping, Chen Yu, Ying Ying, Lin Tao,

Xu Guangyao


中国科学技术发展战略研究院Foreword

To enhance the capability of independent innovation and build an innovative

country is the goal identified in the National Medium- and Long-Term Program

for Science and Technology Development (2006-2020) (MLP). In order to

monitor and evaluate the progress in building an innovative country, Chinese

Academy of Science and Technology for Development (CASTED) has been

studying the national innovation index since 2006. With the assistance and

support of the leaders of the Ministry of Science and Technology, the relevant

government departments, public service institutions and the experts and

scholars of scientific research agencies, we have published three National

Innovation Index Reports in 2011, 2012 and 2013 respectively. The National

Innovation Index Report 2013 is the fourth report in this series, being published

in 2014.

According to the requirement of the No.6 document of the CPC Central

Committee on “building the national innovation survey system and strengthening

the monitoring and evaluation of the progress in the development of the national

innovation system”, the Ministry of Science and Technology is accelerating the

building of the national innovation survey system, of which the statistical survey

of innovation activities and the monitoring and evaluation of innovation capability

are the two major components. The monitoring and evaluation of innovation


中国科学技术发展战略研究院capability refers to the comprehensive analysis, comparison and measurement

of the innovation capability of countries, regions, enterprises and other actors

of innovation activities through the development of an indicator system. In

accordance with the new requirement of building the national innovation

survey system, the National Innovation Index Report 2013 has adjusted and

improved the evaluation indicator system and analysis in order to present an

objective picture of the innovation capability of China and its various regions

and enterprises as well as its gap with world leaders with indicator-based

description and data analysis.

The National Innovation Index Report 2013 has developed the indicator

system of the national innovation index with reference to both domestic and

international theories and methods concerning national competitiveness and

innovation evaluation, which consists of five aspects: innovation resources,

knowledge creation, enterprise innovation, innovation performance, and

innovation environment. The indicator system used in this report is the same

as in the past, i.e. the national innovation index is made up of five primary

indicators and thirty secondary indicators. However, the selection of secondary

indicators is slightly adjusted in this new report, with more relative indicators and

fewer scale-related indicators, in order to better reflect the quality and efficiency

of innovation, while seeking a balance between indicator definition and data

accessibility. There are altogether seven indicators adjusted this time. First, three

indicators, namely “number of internet users per 100 persons”, “value added of

hi-technology industries” and “export volume of hi-technology products”, have

been deleted, and three new indicators, namely, “number of patents in force”,

“number of patent applications to the Patent Cooperation Treaty (PCT) per

10,000 business enterprise researchers” and “business enterprise researchers


中国科学技术发展战略研究院as a percentage of all researchers in the society”, are included in the report

for the first time. Second, four indicators have been slightly adjusted. “Gross

domestic expenditure on R&D”, “number of domestic resident invention patent

grants”, “number of triadic patent applications per 10,000 business enterprise

researchers” and “value added of hi-technology industries as a percentage

of GDP” have been replaced by “R&D expenditure as a percentage of the

world’s total”, “number of domestic resident invention patent grants per 10,000

researchers”, “triadic patent families as a percentage of the world’s total” and

“value added of knowledge-intensive industries as a percentage of the world’s

total”. The twenty quantitative indicators focus on measuring innovation scale,

quality, efficiency and international competitiveness, with a balance between big

and small countries, while the ten qualitative indicators seek to provide a picture

of the innovation environment.

The report again looks at the 40 countries which represent over 98% of the

global expenditure on R&D, and uses the most commonly used method

of benchmarking analysis to calculate the national innovation index. All the

data used are from the database and publications of national governments

or international organizations, which are internationally comparable and

authoritative. The report has calculated the innovation index of 40 countries

based on the statistical (survey) data of 2011-2012 and compared the figures

with the results of the last report. In comparison with the first three reports,

the fourth report gives a more vivid expression to the indicators with the use of

new tools such as innovation maps in order to capture the various aspects of

China’s progress in innovation development.


中国科学技术发展战略研究院In the world today, international competition is moving from the competition

of comparative resource advantages into the competition of advantages in

innovation factors. The prosperity and sustainable development of a country

increasingly depends on the cultivation and accumulation of innovation

capability, rather than the abundance of human and natural resources. As the

world constantly evolves, the national innovation capability also strengthens

or weakens with the changes in the mix of innovation factors. In the face

of the opportunities and challenges resulted from the advance in science

and technology and the evolution of the international political and economic

landscape, nations are all stepping up investment in science and technology

in an effort to boost innovation capabilities. Against the backdrop of global

competition, China’s national innovation index continues to rise in international

standing. Now, China ranks 19th in the world in innovation capability, one place

higher than the previous year.

Innovation-driven development is already a national strategy of China. The

establishment of the national innovation survey system will create enabling

conditions for the improvement of the innovation evaluation indicator system

and the implementation of innovation monitoring, analysis and assessment. To

evaluate the country’s comprehensive innovation capability, monitor the features

and changes of China’s innovation capability and analyze the gap between

China and the most innovative countries in the world, more efforts are needed

in relevant studies and research. We sincerely hope that the annual report of the

national innovation index will serve as a window for the public to know about

and assess China’s progress in innovation. In the meantime, we welcome our

experts and scholars in various fields to contribute their valuable opinions to

the improvement of the national innovation index and join us in witnessing the

historical process of building an innovative country in China.


中国科学技术发展战略研究院We would like to express our heartfelt thanks to Yang Qiquan, Luo Yafei, Sun

Cheng, Lv Yongbo, Lu Yue, Yang Lingchun and other experts and scholars for

the valuable guidance and support they have given us in the preparation of this

report.


Editorial Committee


中国科学技术发展战略研究院Contents

I. China’s progress reflected in the key indicators 1

(I) China continues to scale up input of innovation resources 2

(II) China has established a convincing advantage in the output of knowledge 5

(III) Science and technology is making greater contribution to economic growth 8

II. The International Standing of Chinese Innovation 12

(I) China’s innovation capability is stronger than countries with

the same level of economic development 13

(II) China continues to lead in innovation capability

among BRICS countries 17

(III) China still has considerable room for further boosting innovation

capability 20

III. Evaluation of the indicators of the national innovation index 25

(I) China is securing its ranking in the input of innovation resources 26

(II) China is quickly enhancing its knowledge creation capability 30

(III) China is at the middle-to-upper level in enterprise innovation 34

(IV) China’s score is mixed in innovation performance 38

(V) China’s innovation environment continues to improve 44


中国科学技术发展战略研究院VI. Development and Outlook of China’s Innovation

Capability 49

(I) Index growth indicates rapid improvement of innovation capability 50

(II) China is on the road of Big Power innovation 52

(III) All goals in the 12th Five-year Plan are on track to be accomplished 58

V. Methodology 63

(I) Evaluation guidelines 63

(II) Indicator system 67

(III) Calculation method 68

Appendix 73

Appendix 1 Measurement and sequencing of the indicators used

in the innovation index 74

Appendix 2 Definition of indicators 77



1China’s progress reflected in the key indicators

I. China’s progress reflected in the key indicators

China has made new and significant progress in S&T innovation, which is turning

China from the manufacturing center of the world into the innovation center of

the world. The total volume of innovation resources is steadily growing. China

ranked third and first in the world respectively in terms of total R&D expenditure

and number of R&D personnel in 2012. China’s capability in knowledge creation

is growing rapidly. In 2012, China ranked second in the world in the number

of international scientific & technical articles, and first and second in the world

respectively in the number of domestic resident invention patent applications

and grants. The ability of science and technology to serve economic and social

development is being enhanced. The contribution rate of S&T progress is

steadily increasing, reaching 52.2% in 2012; the intensity of R&D expenditure,

which now stands at 1.98%, is already close to that of an innovative country; hi-

technology and knowledge service industries are thriving, and China’s industrial

structure is being further optimized.



2


In recent years, China has continued to register new and significant progress in

S&T development, resulting in marked improvement in independent innovation

capability and significantly enhanced S&T competitiveness and international

influence. Analysis of the key indicators concerning the input of innovation

resources, the output of S&T activities as well as hi-technology and knowledge

service industries shows that China is already being transformed from the

manufacturing center of the world into the innovation center of the world.

(I) China continues to scale up input of innovation resources

R&D activity is at the heart of innovation. R&D expenditure and personnel are

important resources of innovation, and reflect the level of investment a country

makes in innovation activities and in its national reserve of human resources for

innovation.

1. China ranks third in the world in R&D expenditures

Global R&D expenditures (including 40 countries, the same as in the following

paragraphs) maintained an upward trend and reached 1.4 trillion US dollars in total

in 2012. Geographically, it is equally distributed between North America, Europe

and Asia1, each accounting for about 1/3 of the total (see Figure 1-1). China, which

registered total R&D spending of 163.15 billion US dollars, ranked third in the

world, with its global percentage jumping from 1.7% in 2000 to the current 11.7%,

further narrowing its gap with the US and Japan (see Figure 1-2). The US, which is

the No.1 power in science and technology, maintained a notable lead over other

countries, with total R&D spending 2.3 times and 2.8 times that of Japan and China

respectively, despite the fact that its percentage in the world’s total R&D expenditure

1 Asian Countries: China, Japan, ROK, Singapore, India, Israel, and Turkey; European Countries: Austria, Belgium, Czech, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Holland, Norway, Poland, Portugal, Romania, Italy, Luxembourg, Russia, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom; North American Countries: United States, Canada, Mexico; South American countries: Argentina, Brazil; Oceanian countries: Australia, New Zealand; African countries: South Africa.




has been declining year by year. The figures also clearly demonstrate that although

global R&D expenditures are still largely concentrated in G8 countries, the degree

of concentration is notably reduced with the rapid rise of emerging economies and

developing countries. In 2012, G8 countries represented 67.1% of the world’s total

R&D expenditures, which was 16.4 percentage points lower than that of 2000.

Figure 1-1 Global Distribution of GDP, R&D Expenditures, R&D Personnel, Scientific (SCI) Papers and Domestic Resident Invention Patent Grants (2012)

ROK

Israel

Russia

ChinaJapan

Canada

New Zealand

Australia

Brazil

Mexico

South Africa

Singapore

India

Argentina

United States

30000～160000

10000～299993000～9999

0～2999

N/A

GDP ($100 million)

R&D expenditure as a percentage of the world’s total (%)

R&D personnel as a percentage of the world’s total (%)

SCI papers as a percentage of the world’s total (%)

Domestic resident invention patent grants as a percentage of the world’s total (%)

Germany

United KingdomIreland

Portugal Spain

Sweden

Norway

Holland

Denmark

France

Italy

Greece

Switzerland

Iceland

Luxembourg

Austria

Turkey

Belgium

Finland

Hungary

Slovenia

Romania

Slovakia

PolandCzech 0 332

7

12

16 （%）



4


Figure 1-2 Percentage of the R&D Expenditures of Certain Countries in the World’s Total (2000 and 2012)

2. China continues to lead in R&D expenditure growth

Globally, since the beginning of the 21st century, R&D expenditure has been

expanding in almost all countries. At constant prices, China’s average annual

growth in R&D expenditures, which stands at 17.6%, is the highest in the world.

Other emerging economies like the ROK and India have also maintained a

relatively high rate of growth, significantly higher than G8 countries such as the US,

Japan, Germany, France and the UK. Due to the impact of the financial crisis, the

European debt crisis and other factors, the increase in R&D expenditures has been

slowing in countries like Canada, Finland, Spain, Greece and the UK over the past

five years, with some even experiencing negative growth. Meanwhile, countries like

Japan and the US have gradually moved out of the shadow of the financial crisis,

and their R&D expenditures are now back to the upward trajectory (see Figure 1-3).

3. China ranks first in the world in terms of the number of R&D personnel

The total number of R&D personnel in the world amounted to 11.107 million fulltime

equivalents (FTE) in 2012. Compared to R&D expenditures, the distribution of R&D

personnel is even more concentrated, primarily located in Asian and European

countries, and accounting for 45.7% and 31.7% of the world’s total respectively.

In the past decade, most countries in the world, except for Finland, Japan, Russia

and a few others, have seen their R&D personnel growing in number, which is

China1.7%ROK

1.9%

United Kingdom4.1%

France4.4%

Germany7.2%

United States41.5%

Japan21.9%

Others17.3%

ROK3.5%

United Kingdom 3.1%

France4.2%

United States32 .6%

Japan14.3%

Others23.4%

China11.7%

Germany 7.2%

2000 2012




particularly evident in China, the ROK and Brazil. In 2012, China ranked first in

the world in R&D personnel for the fifth consecutive year, with the number of R&D

personnel amounting to 3.247 million FTE or 29.2% of the world’s total. On the

other hand, although Japan and Russia are two major powers in terms of the

human resources in S&T research, their percentage in the world in R&D personnel

has been constantly declining, falling to 7.8% and 7.5% respectively in 2012 (see

Figure 1-1).

Figure 1-3 Growth Rate of R&D Expenditures in Certain Countries (at constant prices)

(II) China has established a convincing advantage in the output of knowledge

Knowledge innovation is a key component of national competitiveness. The output

of knowledge, which is an intermediary product of innovation activities, is a major

manifestation of a country’s innovation level and capability. A strong capability

in knowledge dissemination and application is one of the common features of

innovative countries. The indicator of international scientific & technical articles

China

ROK

US

Germany

Japan

UK

30

25

20

15

10

5

0

-5

-10

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

%



6


shows a country’s capability for original innovation, and the number of domestic

resident invention patent applications and grants offers a more vivid picture of the

dynamism of innovation activities and the level of technological innovation.

1. China is producing international scientific & technical articles with

both higher quantity and better quality2

The number of SCI papers continued to increase globally in 2012. The US produced

369,000 SCI papers, accounting for 27.5% of the world’s total, which is still far

ahead of other countries. China, with 187,000 SCI papers or 13.9% of the world’s

total, ranked second only to the US. Since 2000, the number of SCI papers has been

steadily growing in all countries, and the speed of growth in emerging economies is

visibly faster than that of developed countries. China has registered an annual growth

of 16.4% in the number of SCI papers, which is the highest in the world. On the other

hand, developed countries such as the US, the UK, Germany and Japan are growing

more slowly than the world average speed (4.5%), and as a result, their percentage

in the world’s total is also declining year by year (see Figure 1-1 and Figure 1-4).

Figure 1-4 Percentage of SCI Papers of Certain Countries in the World’s Total (2000 and 2012)

2000 2012

40

30

20

10

0 US China UK Germany Japan France Canada Italy Spain ROK

%

2 Source of data: Thomson Reuters; statistical methodology: all authors; type of literature: Article, Note and Review; China refers to mainland, Hong Kong and Macao. The number of paper citations in 2008-2012 refers to the number of citations of papers published during the 2008-2012 period.




While maintaining the growth in quantity, China has also improved the quality of its

SCI papers. During the 2008-2012 period, SCI papers produced by China were

cited 3.073 million times. This figure, which puts China in fourth place in the world,

is already very close to that of Germany and the UK, but still falls far behind that of

the US. With the promulgation and implementation of the National Medium- and

Long-Term Program for Science and Technology Development (2006-2020) (MLP),

the quality of scientific & technical articles is drawing the close attention of the

academic and S&T communities. Since 2005, the number of citations of China’s

SCI papers has increased by about 3.9 times, which is the fastest growth of all

countries except that of Luxemburg. During the same period, India, Brazil and the

ROK have also maintained rapid growth in SCI paper citations. Their average speed

of growth, which is over 1.8 times, is notably faster than the US, the UK and other

developed countries. Highly cited papers3 reflect the scientific research outcomes

of high quality and high level. According to the latest statistics of the Institute of

Scientific and Technical Information of China (ISTIC), China produced more than

10,000 highly cited papers during the 2004-2013 period, doubling the figure of the

beginning of the 12th Five-year period, accounting for 5.2% of the world’s total and

ranking fourth in the world, next only to the US (67,000 articles), the UK (18,000

articles) and Germany (14,000 articles).

2. China registers strong growth in the application and granting of

domestic resident invention patents4

In terms of the global distribution of patents, the application and granting of

domestic resident invention patents is mainly concentrated in China, Japan, the US

and the ROK. In 2012, the number of domestic resident invention patent applications

totaled 535,000 pieces in China, accounting for 37.9% in the world, making China

the world leader in this field for the third consecutive year. Meanwhile, China also

granted 144,000 domestic resident invention patents, accounting for 22.3% of the

3 “Highly cited papers” refers to the top 1% of papers in their respective academic fields in order of citations.4 “Domestic resident invention patenst” refers to the invention patents of the country’s residents.



8


world’s total, only after Japan.

Since 2000, China has sustained rapid growth in the application and granting of

domestic resident invention patents, contributing to 84.8% and 38.5% of the global

growth in applications and grants respectively. During this period, approximately

half of the countries in the world have seen their applications and grants of invention

patents recording negative growth. In contrast, China has performed strongly in

this field, growing on average by 28.9% for patent applications and 30.0% for

patent grants per year. Japan, a major global power in patents, maintained a

strong momentum of growth in the granting of resident invention patents, despite

a steady decline in patent applications. This trend of growth is particularly evident

in the period starting from 2006, which has witnessed a 10.0% average annual

increase in patent grants (see Figure 1-5 and Figure 1-1).

Figure 1-5 Number of Domestic Resident Invention Patent Applications and Grants in Major Countries (2000 and 2012)

(III) Science and technology is making greater contribution to economic growth

Since the launch of reform and opening-up, China has made remarkable progress

in economic and social development. In 2010, China for the first time overtook

2000 201280

60

40

20

0 Japan US ROK Germany China

10,000 pieces

Number of applications

2000 201240

30

20

10

0 Japan US ROK Russia China

10,000 pieces

Number of grants




Japan in GDP and became the second largest economy in the world. During this

process, the capacity of science and technology to serve economic and social

development has been constantly improving, and the role of S&T innovation

in promoting industrial upgrading and economic restructuring has become

increasingly visible.

1. The contribution rate of S&T progress is steadily increasing

The contribution rate of S&T progress refers to the percentage of economic

growth brought on by advances in science and technology. It is a comprehensive

indicator that reflects how well science and technology is aligned with the needs

of the nation’s economic growth as well as the progress in shifting the growth

model. The National Medium-and Long-Term Program for Science and Technology

Development has set the goal of raising the contribution rate of S&T progress to

60% by 2020. Taking the contribution rate of S&T progress as a development

target not only makes a clear requirement for China’s science and technology

development, but also offers an important guide for its effort to apply the scientific

concept of development in all respects, shift the growth model and implement the

strategy of innovation-driven development. According to the findings published

by the China Statistical Yearbook on Science and Technology 2013, if calculated

with a five-year cycle5, the contribution rate of S&T progress has been expanding

steadily in China over the past ten years, reaching 52.2% in 2012, 11.3 percentage

points higher than that of 2003. In other words, of the 9.3% average GDP growth

China had recorded in this period, 52.2% is contributed by the advance in science

and technology. Based on the economic growth trend since the beginning of the

11th Five-year period as well as the increase in labor and capital investment, the

development goals set out in the Outline are expected to be fulfilled on schedule.

5 The 2012 contribution rate of S&T progress is the five-year average calculated based on the relevant data of the 2007-2012 period.



10


2. China’s intensity of R&D expenditures is approaching the level of

innovative countries

According to the World Economic Forum, countries with a per capita GDP of over

17,000 US dollars are in the stage of innovation-driven development. At present,

there are over 20 countries that have reached this standard including the US,

Japan and France. One common feature of these countries is that their intensity

of R&D expenditures (proportion of R&D expenditure to GDP) has stayed above

2.0% for a long period of time. The intensity of R&D expenditures reflects not only

the aggregate input in science and technology but also the overall performance

of a country in terms of structural adjustment, economy-science alignment and

economy-science collaboration. In 2012, China’s R&D expenditure intensity

hit a record high of 1.98%, which is higher than the average level of the 28 EU

member states (1.97%), further narrowing the gap with the world’s most innovative

countries. During the same period, the intensity of R&D expenditure surpassed 2%

in seven Chinese provinces and municipalities, including Beijing, which has a R&D

expenditure intensity of 5.95%, higher than the ROK, Israel and Finland which have

been leading the world for years in this field. Both statistical data and evaluation

indicators demonstrate that the pattern of growth and economic structures are

going through deep changes in China, and S&T innovation is becoming a major

driver for the transformation and upgrading of China’s economic structure.

3. China’s industrial structure is further optimized

Hi-technology industry is a strategic lead industry of a country’s economy, and

it plays a significant role in promoting the adjustment of the industrial structure

and the shift in growth models. Since the beginning of the 21st century, China’s

hi-technology companies have flourished and become more competitive in the

international arena. The average annual growth rates of the value added and export

volume of China’s hi-technology industries, 18.2% and 21.6% respectively, are

both the highest in the world. In 2012, the value added of China’s hi-technology




industries accounted for 24.5% of the world’s total, ranking second globally for the

sixth consecutive year, and its gap with the US also further narrowed. Domestically,

the percentage of hi-technology industries in the value added created by the

manufacturing sector also increased from 9.6% in 2000 to 15.0%. In 2011, China

recorded the largest export volume of hi-technology industries in the world for the

seventh consecutive year, and its percentage in the global total also expanded to

26.0%, further widening its lead over Germany, the US, Japan and other countries.

China’s high-technology exports as a percentage of manufactured exports reached

25.8%, 6.8 percentage points higher than at the beginning of the 21st century,

ranking first in the world. China is gradually moving from a major manufacturing

country into a “smart manufacturing power”.

With the advent of the age of the knowledge economy, knowledge service industry

has become a major component of the industrial value chain, and it now plays an

important role in innovation. The US is still the dominant player in the knowledge

service industry worldwide, with its value added accounting for 34.8% of the

world’s total in 2012. However, in terms of speed of growth, China is clearly the

leader in the world. With its global percentage in the value added of the knowledge

service industry growing from 2.7% in 2000 to the current 8.8%, China has lifted

its ranking to third place in the world and has moved ever closer toward the level of

Japan.



12


II. The International Standing of Chinese Innovation

Innovation is a dominant trend around the world, yet the international landscape

of innovation has not changed much, and the innovation divide between countries

is hard to overcome. As its innovation capability strengthens, China has risen to

the 19th place in the international ranking, which is the highest among countries

with the same level of development and among BRICS countries as well.

China’s progress in innovation capability is manifested in the following aspects:

continued increase in the input of innovation resources, marked improvement

in the innovation environment and fruitful results in knowledge creation. These

positive factors suggest that there remains a huge potential to tap in further

enhancing China’s innovation capability.



The International Standing of Chinese Innovation 13

Against the backdrop of increasingly intensive international competition, innovation

has become a major driver of global economic growth and prosperity. From

China’s score and ranking in the national innovation index, it is clear that China’s

strategy of innovation-driven development has produced good results.

(I) China’s innovation capability is stronger than countries with the same level of economic development

The result of the national innovation index shows that China’s international ranking in

comprehensive innovation capability has moved up by one position to 19th place in

2012, making China the only developing country in the top 20 list. The composition

of the top ten countries remains stable, with one from America, three from Asia

and six from Europe. The US, with its rich innovation resources and outstanding

innovation performance, remains the most innovative country in the world. Japan and

the ROK, because of their strong performance in enterprise innovation and capability

in knowledge creation, rank 2nd and 4th respectively, maintaining their lead over

other Asian countries. The most impressive performance this year comes from Israel,

whose position in the list has jumped from 11th place last year to 5th place this

year. Singapore, which ranked 7th last year, has fallen to 11th place due to its poor

performance in enterprise innovation. Europe is still the most innovative region in the

world, with the largest number of top ten countries. Switzerland, because of a slightly

lower ranking in the indicator of innovation resources, has fallen to 3rd place in the

overall innovation index. Three Nordic countries, Sweden, Finland and Denmark,

have maintained their strength in innovation, ranking 6th , 7th and 9th respectively,

while Netherlands and Germany, two western European countries, occupy 8th and

10th position on the list.



14


China ranks 19th in innovation capability, which is in the medium-to-upper range

globally. China’s per capita GDP has just exceeded 6,000 US dollars, ranking

39th among 40 countries, higher only than India. It can be seen from the list that

China’s ranking in innovation index is already higher than many of the countries

with a per capita GDP of over 10,000 US dollars. In other words, China has already

surpassed countries with the same level of development in innovation capability.

The score of the national innovation index correlates closely with a country’s

stage of economic development. Figure 2-1 shows that there is a positive linear

correlation between a country’s ranking in the innovation index and its per capita

GDP, which means countries with a higher per capita GDP tend to get higher

scores in the innovation index. In Figure 2-1, most countries are in the corridor

between the two dotted lines, which is the normal trajectory of development for

a country. The US, Japan, the ROK, Israel and China are the only countries that

are situated above this corridor. These countries have one thing in common,

that is, their governments attach a great deal of importance to the role of

science, technology and innovation in their national development strategy. The

US implements a strategy that aims to keep its lead in all aspects of science

and technology. Japan is committed to building a strong country on the basis

of technologies and intellectual property rights. The ROK follows a strategy

of supporting major corporate groups in making technological breakthroughs

in certain priority areas and building up global competiveness. Israel seeks to

consolidate its lead in priority areas by boosting the intensity of R&D investment.

On the opposite side of the spectrum, Australia, a country with a high per capita

GDP, has opted for a growth model that is dependent on the exploitation of natural

resources. As a result, its ranking in the innovation index is lower than that of its per

capita GDP, and that is why its ranking is lower than the corridor.




The 40 countries selected for the calculation of the national innovation index are

the world leaders in R&D spending. They come from all five continents of the

world. Based on their rankings in the national innovation index, we have divided

the 40 countries into four groups, with ten in each group, and marked them with

four different colors in Figure 2-2. Although China is in the second-tier group, the

competition it faces is the most intensive. The score of China shows that it has a

very narrow lead over countries in the third-tier group. China’s score of national

innovation index, 65.2 points, is very close to that of countries lower down, i.e.

Canada (64.6 points), Luxemburg (64.3 points) and New Zealand (63.9 points); yet

its gap with 18th place Belgium is quite significant. Belgium’s score on the national

innovation index is 68.2 points, which is a full three points higher than China’s. So

the bottom line is, in the competition of national innovation, those who fail to make

progress will be easily left behind.

Portugal

National innovation index

per capita GDP (USD)

0 10000 20000 30000 40000 50000 60000 70000 80000 90000

ROK

USJapan

Switzerland

SwedenSingaporeHollandFinland

AustraliaFrance

BelgiumAustria

Ireland

Iceland

New Zealand

Italy

Slovenia

Greece

Czech

Slovakia

GermanyUK

Israel

110

100

90

80

70

60

50

40

30

China

Hungary

Mexico

South Africa

Argentina

Russia

Romania Poland

Brazil

India

Denmark

Canada

Figure 2-1 Per Capita GDP and National Innovation Index by Country



16


Figure 2-2 Global Distribution of Innovation Capability

The year-over-year comparison of the international ranking of the national

innovation index shows that the innovation divide between countries in different

tiers seems to be hard to overcome. There is little change in the annual rankings of

the top ten countries and the ten countries at the bottom of the list, which means

Germany

UK

Ireland

Portugal

Spain

Sweden Norway

Holland

Denmark

France

Italy

Greece

Turkey

Belgium

Finland

Hungary

Romania

Poland

ROK

Israel Russia

China

Japan

Canada

US

New Zealand

Australia

Brazil

Mexico

South Africa

Singapore

India

Argentina

Iceland

Slovakia

N/A

1～1011～2021～3031～40

Ranking of national innovation index

R&D/GDP index

Each square represents 0.5%

Czech

AustriaSwitzerland Slovenia

Luxembourg




that the composition of countries in these two tiers is relatively stable. In the 2012

list, there is only one new name in the top-ten list1, while for the ten countries at

the bottom, the only change is in their relative positions, and none of them has

been able to “jump” to the upper tier. This suggests that there exists an innovation

divide between developed countries that are at the top of the national innovation

index rankings and those with lower rankings. Such a phenomenon can even be

found within the same continent. For example, there is a big gap between southern

European and Nordic countries in the innovation index rankings. Since innovation

is the new trend of the world, all countries are scaling up investment in science

and technology and are trying to enhance their innovation capability. Although

China is already ahead of countries with the same level of development in terms

of innovation capability, more efforts are required if it wants to keep and further

enhance its innovation capability.

(II) China continues to lead in innovation capability among BRICS countries

BRICS countries, which are the stars of emerging economies, have drawn the

attention of the entire world. However, the five countries’ rankings on the innovation

index are all in the lower range of the list. Except for China which has moved up by

one place to 19th in the latest table, all four other countries are behind 30th place.

Russia and South Africa, which have both improved their rankings by two positions,

now rank 32nd and 35th respectively. Brazil's latest ranking, 38th place, is two

positions lower than last year. India now ranks 39th on the table, which is already

one place higher than last year. Compared to developed countries, notably the G7

countries, the BRICS countries still have a long way to go in pursuing innovation.

1 Singapore fell from seventh place last year to 11th place, while Israel moved up from 11th place to 5th place.



18


Figure 2-3 Scores of BRICS Countries in primary indicators

China is leading the BRICS countries in innovation environment, innovation

performance and enterprise innovation. There exists a big gap between the

five BRICS countries in innovation environment, with China ranking 14th on the

international table while South Africa is only at 24th place. In terms of enterprise

innovation, China ranks 15th, with a score of 51.8 points, which puts China well

ahead of Russia’s 41 points. With respect to innovation performance, China’s

global ranking is 14th place, leading Brazil by almost 20 points. However, it must

also be pointed out that the advantage of China is only in relative terms. Although

China’s score in innovation environment (84.2 points) is quite impressive, its scores

in innovation performance and enterprise innovation are both below 60 points,

which fall far behind those of developed countries.

China ranks 2nd among BRICS countries in both innovation resources and

knowledge creation, trailing behind Russia and South Africa respectively in the

two indicators. China’s score in innovation resources, 49.8 points, is lower than

Innovation resources

Knowledge creation

Enterprise innovationInnovation performance

Innovation environment

80

100

60

40

20

0

Brazil

China

India

Russia

South Africa




Russia’s 57.0 points. It must be noted that all five BRICS countries have a relatively

low score in innovation resources, and none of them is able to get even 60 points.

The following reasons might be considered. First, the BRICS countries all lag

behind in total R&D personnel per thousand population. Although the BRICS group

has a large population, accounting for approximately 42% of the world’s total,

the proportion of R&D personnel is not very high, and the situation of inadequate

R&D personnel is unlikely to improve anytime soon. Second, the informationization

level is low in BRICS countries. The building of innovation infrastructure takes time

and money, so the situation cannot be changed overnight. China currently ranks

18th in knowledge creation, which is lower than South Africa’s 13th place, but

the advantage of China is that it is catching up fast and demonstrating growing

potential. Among the five countries, China is the only one that is constantly

increasing R&D expenditures. China's gross domestic expenditure on R&D as a

percentage of GDP, which has already reached the level of France and the UK, is

expected to match the advanced level of developed countries in just a couple of

years. China is already among the world leaders in terms of the quantity of scientific

& technical articles, which is the product of knowledge creation, and it is only a

matter of time before their quality also improves. The common sequence of events

in innovation output is that following the publication of international scientific &

technical articles and the granting of invention patents, it will take some additional

time for paper citation and patent grant to produce their spillover.

Human resources in S&T are a common asset of BRICS countries, and a major

advantage for China to keep its lead over other BRICS countries is that it is at

the prime time to reap the benefits of human resources in S&T, which are the

building blocks of a country’s research system, and the most important innovation

factor for a country. To reap the benefits of human resources in S&T, a country

must constantly increase its investment in education and R&D, and create an

enabling environment for innovation and entrepreneurship. BRICS countries all

have a large reserve of human resources in S&T. Although the number of R&D



20


personnel is somewhat declining in Russia over recent years, its sheer size is still

quite large. In the case of Brazil and India, their numbers of R&D personnel are

still growing, more than doubling during the 2000-2012 period. Compared to

other BRICS countries, China continues to possess an absolute advantage in the

number of R&D personnel, even globally. Moreover, with the training of high-caliber

professionals and increased investment in R&D, China is entering the golden period

for reaping the benefits of human resources in S&T. This golden period, which is

going to provide a long-term driver for the growth of China’s innovation capability,

is expected to last longer than the earlier period of labor dividend creation.

(III) China still has considerable room for further boosting innovation capability

China has achieved notable progress in building innovation capability. As shown

in Figure 2-4, China's global ranking in the innovation index has moved from 38th

place in 2000 to 19th place in 2012. Despite some ups and downs in this process,

it has on the whole stayed on an upward trajectory. In particular, the sluggish

growth of the world economy since 2009 has had little impact on China, which is

clear evidence of the growing innovation capability China has acquired in the 21st

century. Acknowledging that innovation is the driver of economic growth, China has

made great efforts to promote the development of strategic emerging industries

and knowledge-intensive services through increased input of S&T resources,

continued innovation and conversion of S&T outcomes, which has enabled China

to weather the impact of the European debt crisis, the global economic downturn

and other negative factors. Going forward, there is still greater room for China to

enhance its overall strength of innovation.




Figure 2-4 China's ranking in the national innovation index

China's performance has improved to varying degrees in all five primary indicators

of the innovation index (see Table 2-1). Knowledge creation is where China has

made the biggest progress, which has seen China's ranking jump from 37th place

in 2005 to 18th place in 2012. However, such a rise in status is closely related to

the development of higher education and foreign-invested R&D institutions. The

least encouraging performance is in innovation resources, for which China has

only moved one position up to 30th place in 2012. This is primarily due to China's

large population and its current stage of development. Compared to 2011, China

has made a big step forward in the indicator of innovation environment, jumping

from 19th place in 2011 to 14th place, up by five positions. This has to do with

the growing public attention paid to the output of S&T activities over recent years,

enhanced protection of intellectual property rights, reduced burden of government

regulations over enterprises, the development of industrial clusters and other

factors. In enterprise innovation, China is still in 15th place. Yet considering the

weak growth of the global economy, such a performance has not been easy to

achieve. Meanwhile, China's ranking in innovation performance2, which is now at

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

19

21

23

25

27

29

31

33

35

37

39

3837

34

30

2625 25

2221

22

20 2019Ranking

2 Innovation performance: In order to make the evaluation indicators more scientific and relevant, the report this year has replaced the indicator of high-technology exports as a percentage of the world’s total with the indicator of the value added of knowledge-intensive industries as a percentage of the world’s total.



22


14th place, is the result of indicator adjustment and the fact that China is still at

the primary stage of knowledge-intensive industries. In fact, knowledge-intensive

industries are one of the priority areas for further boosting China's innovation

capability.

Table 2-1 China's ranking in the primary indicators of the national innovation index

The potential for enhancing China's innovation capability comes primarily

from its advantage of scale. Many of the indicators used in the calculation of

the national innovation index are relative indicators, in which China has no

advantage. This is the main reason why China's ranking is not quite satisfactory

in many of these aspects. Such a situation is closely linked with China's

national conditions and big-country status. Because of its large population and

early stage of development, China is still trailing far behind most of the OECD

countries in those relative indicators concerning per capita input or output of

resources. The use of these relative indicators is for the purpose of ensuring

the efficiency of innovation and the equity in the international comparison of

national innovation capability. However, in a real economic context, the scale of

a country's innovation activities is also important to consider.

YearInnovation resources

Knowledge creation

Enterprise innovation

Innovation performance

Innovation environment

Innovation index ranking

2005 31 37 17 17 27 25

2006 32 34 17 16 28 25

2007 33 34 14 13 27 22

2008 33 33 12 9 23 21

2009 31 32 18 6 16 22

2010 30 29 15 5 18 20

2011 30 24 15 5 19 20

2012 30 18 15 14 14 19




Qualitative change is always preceded by quantitative change. The improvement

in China's innovation capability may start from changes that seem insignificant

to the eye. The implication of one scientific & technical article or one patent

grant may be limited, but the output of a large number of articles and patent

grants over a relatively short period of time will greatly facilitate technological

innovation in cross-cutting areas. R&D expenditures in one year may not

produce any visible result in the short term. After all, China has been investing

in R&D for only about thirty years, and it is only in the last couple of years that

such an investment has reached a double-digit scale of growth. However,

although there still remains a major gap with Europe and the US in terms of the

cumulative R&D expenditure, China has already climbed up to 19th place in

the global ranking. It is believed that such a long-term investment will start to

pay off in the coming years, and make a profound impact on the world, and on

every one of us. With the improvement in its education and informationization

level (i.e., the capability to build infrastructure for knowledge creation and

dissemination), China will be able to turn its labor advantage of a big population

into a large pool of high-caliber S&T professionals who are needed for building

an innovation powerhouse. The benefits generated by its significant human

resources in S&T will enable China to make even bigger strides in innovation for

a long time to come.

Countries with a relatively large scale of innovation activities tend to take

innovation as a given and the trend of innovation is often quite stable, which

can protect them from the risks of uncertainty and vulnerability associated

with innovation. A country's innovation strength is determined not just by its

immediate capability, but more importantly whether it can withstand the failure

of innovation in times of crisis. China's advantage of scale will continue to

generate new innovation highlights that can keep it active in innovation. The

rapid rise of a large number of knowledge- and capital-intensive innovation

enterprises like Huawei, ZTE, Alibaba and Tencent is the best evidence of this.



24


It can be expected that the innovation spirit of enterprises, once embedded in

China's large economy, will provide an inexhaustible drive for the economic and

social prosperity of the country.

On the whole, China's innovation activities are still at the stage of rapid

development. With the continued increase in R&D expenditures and S&T

output, there is still greater room for enhancing China's innovation capability.

How to tap the full advantage and potential of China's significant S&T human

resources and large domestic market, and how to improve the innovation

environment so that the idea of innovation will become an integral part of

companies' business strategy, people's way of life and government's approach

to governance, will be key areas for breakthroughs in the building of innovative

countries. If the history of developed countries is any guide, the building of a

country's independent innovation capability requires S&T input and knowledge

accumulation over a long period of time. Therefore, in order to boost its national

innovation capability, China will need to make still greater efforts in the inputs of

innovation resources and knowledge creation in the future.



Evaluation of the indicators of the national innovation index 25

III. Evaluation of the indicators of the national innovation index

China has ranked 30th in innovation resources for three consecutive years. China's ranking in gross domestic expenditure on R&D as a percentage of GDP has reached a historic high of 18th place, while its positions in total R&D personnel per thousand population and tertiary enrollment are both one place higher than the previous year.

China continues to make rapid progress in its ranking in knowledge creation, jumping by six positions to 18th place in 2012. This is largely due to the rapid development of knowledge-intensive services, the increasing dynamism of innovation activities and the explosive growth of invention patents. China has also improved its ranking in the number of invention patent grants per 10,000 researchers and the number of invention patent applications per 100 million US dollars of GDP from 30th and 13th place in 2000 to third and second place respectively in 2012. Meanwhile, China is still falling behind in the two indicators of innovation efficiency, i.e. the number of scientific & technical articles per 10,000 researchers, and the number of scientific papers citations per 1 million US dollars of R&D expenditure of academic institutions.

China's performance in enterprise innovation is at the medium-to-upper level in the world, ranking 15th in 2012, a position it has been holding for three consecutive years. China has improved its ranking by two positions in three indicators and made it to the top-ten list in two other indicators. Its progress in the R&D input of enterprises and the efficiency of patent output is significant, and its comprehensive technology independency is also somewhat improved, but there remains a big gap with Japan and the ROK.

China's global ranking in innovation performance is also in the medium-to-upper range, but the "efficiency" side of the performance is still quite low. Therefore, there is a need for China to make innovation inputs in a more efficient way.

China's innovation environment is constantly improving, which has lifted its global ranking by five positions to 14th place. China's advantages are mainly: a stable macroeconomic environment and favorable government policies which are playing a visible role in supporting enterprise innovation. In particular, the chance for innovation projects of enterprises to receive the support of venture capital has significantly improved. However, more progress is needed in such areas as the local availability of research and training services, intellectual property protection, and the effectiveness of anti-monopoly policy.



26


(I) China is securing its ranking in the input of innovation resources

Innovation resources provide the fundamental guarantee for a country to conduct

innovation activities on a sustained basis, and are indicative of the country's

input to innovation activities, its reserve of human resources for innovation

and the allocation of innovation resources. The index of innovation resources

consists of five secondary indicators, i.e. gross domestic expenditures on R&D

as a percentage of GDP, total R&D personnel per thousand population, tertiary

enrollment, informationization level and R&D expenditure as a percentage of the

world’s total. The index makes an assessment of the country's ability to allocate

innovation resources in terms of manpower, funding and material supplies.

In 2012, China scored 49.8 points in the index of innovation resources, ranking

30th among the world's 40 major countries, the same position as in the previous

year. Looking at the historical pattern of China's ranking in innovation resources, we

can see that there was a notable improvement in China's ranking in 2003, followed

by a modest drop in 2005. After 2008, China started to move up the rankings of

innovation resources once again, and reached a record high of 30th place in 2010.

By the year 2012, China's ranking had stayed stable for three consecutive years.

See Appendix 1 for the 2012 rankings of major countries in the index of innovation

resources.




Figure 3-1 China's global ranking in the index of innovation resources

China's rankings in the five secondary indicators of innovation resources have

moved in both directions. This year, China is up in three indicators, down in one

indicator and unchanged in one indicator. As a result of sustained increase in

R&D expenditures, China's ranking in gross domestic expenditures on R&D as a

percentage of GDP has continued to rise since 2000, reaching a record high of

18th place in 2012. Meanwhile, its rankings in total R&D personnel per thousand

population and tertiary enrollment were also one place higher than the previous year.

1. There is not much change in the positions of top-performing

countries, but there is a relative change at the bottom of the list

The world leaders in the index of innovation resources for the year 2012 are the US,

the ROK, Finland, Sweden, Denmark and Japan, the same six countries as in the

previous year's list. In terms of their respective positions, the US has topped the

list for 12 consecutive years since 2000. The ROK has moved up by one position

from last year, improving its ranking from 10th place in 2000 to the current second

Gross domestic expenditure on R&D as a percentage of GDP

R&D expenditure as a percentage of the world’s total

Informationization level Total R&D personnel per thousand population

Innovation resources

Tertiary enrollment

5

10

15

20

25

30

35

40

45

1

2002 2001 2000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

38 38 3732 32 32 33 33

31 31 30 30 30

Ranking



28


place, which is its highest ranking in history. Compared to the 2011 list, Japan and

Sweden have swapped their positions. At the other side of the list, countries with

a lower score in the index of innovation resources include South Africa, Mexico,

India and Brazil. There has been no change in the positions of South Africa, Mexico

and India from 2011, which are still trailing among the 40 countries, while Brazil's

ranking has dropped from 35th place in 2011 to 37th place in 2012.

Figure 3-2 Year-on-year rankings of leading and trailing countries

2. The composition of the Asian group remains stable

The rankings in the index of innovation resources of the six Asian countries

included in the list have not changed much in 2012. The ROK, Japan and Israel

are all in the top-ten list, and they together make up the first-tier group of the six

Asian countries. Of the three countries, Japan's ranking is down by two places,

Israel’s is down by one place, while the ROK is up by one position. Singapore,

which constitutes the second-tier group, continues to rank at 13th place. India and

China, which are low in the rankings, appear in the third-tier group. Their rankings

have not changed compared to the results of last year. Looking at the historical

trend, both China and the ROK have made notable progress in their rankings since

2000, jumping from 38th and 10th place to their current 30th and second place,

both up by eight positions. On the other hand, the rankings of Singapore and Israel

5

10

15

20

25

30

35

40

452002 2001 2000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

China

Denmark

ROK

India

Mexico

US

Brazil

South Africa

Sweden

Japan

Finland

1

Ranking




have dropped significantly, falling from eighth and fourth place to 13th and seventh

place, down by five and three positions respectively. As for Japan and India, there

has been little change in their rankings since 2000.

3. From the assessment of informationization to the assessment of

impact

Information technology (IT) facilities and their application are playing an increasingly

critical role in innovation activities. The informationization level has also become

a major criterion for measuring the levels of innovation resources. With the rapid

improvement of the informationization level, access to information and services

is becoming more convenient, which has not only made state-to-state relations

closer and more open, but also redefined the relationship among individuals,

between consumers and enterprises and between the government and the public.

From January to October 2013, total sales of online stores surpassed that of

traditional retail chains for the first time in Beijing, and new forms of consumption

are building their competitiveness over traditional retail industries. The application

and dissemination of the internet has given new meaning to public oversight.

While the activities of the public must adjust to the new codes of conduct, the

government also needs to reconsider the way it approaches public management.

Informationization is changing the economy and society in profound ways. The

impact of ICT (information communication technology) on the economy, society,

environment and public health is also becoming a key manifestation of economic

competitiveness. The "informationization level" indicator of this report will continue

to make reference to the World Economic Forum's assessment of various

economies presented in the form of the Networked Readiness Index (NRI).

In line with the new development of the information society, the NRI assessment of

the World Economic Forum has expanded its focus from measuring the progress

in the building of informationization infrastructure to evaluating the economic and

social impact of informationization. With the introduction of new indicators, the



30


evaluation system now consists of not just the three components of environment,

readiness and usage, but also a new component of impact. In the meantime, the

total number of indicators used in the evaluation has been reduced from 71 in the

previous year to the current 53. Because of the adjustment of the NRI calculation

method, China's ranking in informationization level dropped from 25th place in

2011 to 30th place in 2012. This reminds us that with the continued improvement

in China's IT infrastructure, our focus on informationization should also move from

investment and construction towards utilization and impact. We should make better

use of existing facilities, quickly change our way of thinking, be more proactive in

the transition toward an information society, keep up with global advances, and

secure a solid foundation of national competitiveness for the future.

(II) China is quickly enhancing its knowledge creation capability

Knowledge creation and application is a direct manifestation of a country's

innovation capability. It also reflects the country's capability in R&D output and

overall S&T strength. The "knowledge creation" index of this report evaluates a

country's performance in knowledge creation and application with five secondary

indicators, i.e. scientific papers citations per 1 million US dollars of R&D

expenditures of academic institutions, scientific & technical articles per 10,000

researchers, value added of knowledge-intensive services as a percentage of GDP,

number of invention patent applications per 100 million US dollars of economic

output, and number of invention patent grants per 10,000 researchers.

Since 2000, China has made rapid progress in the ranking of the knowledge

creation index, especially during the "11th Five-year" period. In 2012, China's

ranking in knowledge creation continued to climb rapidly, jumping to 18th place

among the world's 40 major countries, up by another six positions compared to the

previous year. See Appendix 1 for the 2012 rankings of the world's major countries

in the index of knowledge creation.




Figure 3-3 China's ranking in the index of knowledge creation

Among the five secondary indicators of knowledge creation, China's ranking in the

value added of knowledge-intensive services as a percentage of GDP made the

most significant progress, up by four positions over 2011. Meanwhile, its ranking in

scientific papers citations per 1 million US dollars of R&D expenditure of academic

institutions dropped by three positions. And there was little change in the other

three indicators. In terms of historical trend, China's rankings in the number of

invention patent grants per 10,000 researchers and the number of invention patent

applications per 100 million US dollars of GDP soared from 30th and 13th places

in 2000 to 3rd and 2nd places respectively in 2012, which is the most significant

increase among the five indicators.

Number of invention patent applications per 10,000 researchers

Scientific papers citations per 1 million US dollars of R&D expenditure of academic institutions

Knowledge creation

Number of invention patent applications per 100 million US dollars of economic output

Value added of knowledge-intensive services as a percentage of GDP

Scientific & technical articles per 10,000 researchers

1

6

11

16

21

26

31

36

41

462002 2001 2003 2000 2004 2005 2006 2007 2008 2009 2010 2011 2012

393937 38

37 3734 34 33

32

29

24

18

Ranking



32


1. Changes in the composition of leading and trailing groups

Globally, the leading countries in the index of knowledge creation in 2012 were

Switzerland, the ROK, Japan, Israel, the UK and the Netherlands. Among these

countries, the ROK and Switzerland were the top two countries for four consecutive

years, Japan dropped by one place, and Israel made the biggest progress, jumping

from 15th place in 2011 to 4th place. The countries at the other end of the list

include Luxemburg, Russia, Brazil and Mexico. Brazil, Russia and Mexico had been

in the bottom-four group of the 40 countries for the past five years. Luxemburg fell

by five positions from the 35th place in 2011 to the lowest ranking among the 40

countries in this review period.

Figure 3-4 Year-over-year rankings of countries in the leading and trailing groups

2. Israel and China have made into the higher-tier group

Of the six Asian countries covered by the rankings, the ROK and Japan ranked

the highest in the index of knowledge creation in 2012, occupying the 2nd and 3rd

places respectively. They formed the first-tier group of the Asian region together

with Israel, which also made it into the top-ten list with an advance of 11 positions

this year. China rose from the third-tier to the second-tier group with a ranking

of 18th place, one position below Singapore. India, which ranked 35th place,

Israel

Luxembourg

Mexico

Holland

Russia

Switzerland

UK

China

ROK

Brazil

Japan

5

10

15

20

25

30

35

40

452002 2001 2000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

1

Ranking




constituted the third-tier group. In terms of historical trend, China made the fastest

progress since 2000, rising from 39th place in that year to 18th place in 2012, up

by 21 positions. Israel increased its standing by 16 places during this period, while

Singapore dropped by three places since 2000.

3. China has competitive strengths in certain areas of knowledge

creation

The secondary indicators of knowledge creation are primarily relative. The two

indicators of scientific & technical articles per 10,000 researchers and scientific

papers citations per 1 million US dollars of R&D expenditure of academic

institutions can be used to evaluate a country's efficiency of knowledge creation by

analyzing the output and influence of its scientific papers. China's rankings in these

two indicators, 38th and 33rd places, still trail behind most of the 40 countries.

The indicator of the total number of scientific & technical articles is a symbol of

a country’s strength in knowledge creation, and an indication of its innovation

capability. The report analyzes the SCI papers and citations of China and other

major developed countries in the various engineering fields defined by the US

National Academy of Engineering based on the SCI data. From 2001 to 2010,

the average citations of China's scientific & technical articles in civil engineering,

computer science & engineering, power & energy engineering, electronic

communications & information systems engineering, industrial manufacturing &

operational systems engineering were similar to the US, Germany, France, Italy,

Japan and the ROK, and the total number of publications was also roughly the

same, which shows that China's S&T output in these five disciplinary sections

is already quite close to that of developed countries. In the fields of aerospace

engineering, bioengineering, chemical engineering, materials engineering and

mechanical engineering, although China outnumbers all other countries except for the

US in scientific & technical articles, its average papers citation is lower than most of the

developed countries. This demonstrates that as long as we keep increasing our input

in R&D, China will be able to produce scientific & technical articles with good quality in



34


areas where it has comparative advantage. This is an advantage in R&D determined by

the scale and scope of China’s innovation activities over smaller countries.

Figure 3-5 Total number of SCI papers of certain countries in different engineering fields

Figure 3-6 Average SCI paper citations of certain countries in different engineering fields

(III) China is at the middle-to-upper level in enterprise innovation

Enterprises are the main players in innovation activities and a key component

of the national innovation system. The scale and quality of enterprise innovation

9000

8000

7000

6000

5000

4000

3000

2000

1000

China US Germany France Italy Japan ROKPieces

Aerospace engineering

Bioengineering Chemical engineering

Civil engineering

Materials engineering

Mechanical engineering

Computer science &

engineering

Power & energy

systems engineering

Electronic communications

& information systems

engineering

Industrial manufacturing & operational

systems engineering

Aerospace engineering

Bioengineering Chemical engineering

Civil engineering

Materials engineering

Mechanical engineering

Computer science &

engineering

Power & energy

systems engineering

Electronic communications

& information systems

engineering

Industrial manufacturing & operational

systems engineering

China US Germany France Italy Japan ROKNo.

25

20

15

10

5

0




represents, to a large extent, the innovation capability and level of a country. The

sub-index of enterprise innovation, which measures the innovation activities of

enterprises mainly from the national perspective, consists of five key indicators, i.e.

R&D expenditure of enterprises as a percentage of industrial value added, number

of business enterprise researchers as a percentage of the country’s total, number

of triadic patent families as a percentage of the world’s total, number of patent

applications to the PCT per 10,000 business enterprise researchers and overall

technology independence.

1. China’s ranking in the sub-index of enterprise innovation has

remained stable for three consecutive years

The top ten countries in the sub-index of enterprise innovation in 2012 are exactly

the same as those of the 2011 list, though with minor changes in their relative

positions. Countries in the top-ten group include, in descending order, Japan,

the US, Switzerland, the ROK, Germany, Israel, Sweden, Finland, France and

Denmark. China ranks 15th in enterprise innovation, a position it has kept for three

consecutive years.

Figure 3-7 China’s world ranking in the sub-index of enterprise innovation

10

20

30

402002 2001 2000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

2523

21 21 1917 17

1412

1815 15 15

Ranking

1



36


2. There has been a major difference in China’s rankings across the

secondary indicators

China has improved its world rankings in three of the five secondary indicators,

occupying the 17th, 28th and 12th place in R&D expenditure of enterprises as a

percentage of industrial value added, number of patent applications to the PCT

per 10,000 business enterprise researchers and overall technology independence

respectively, all of which are up by two positions over the previous year. Meanwhile,

China’s ranking in the number of triadic patent families as a percentage of the

world’s total, 7th place, is the same as last year, and its ranking in the number of

business enterprise researchers as a percentage of the country’s total has dropped

by two positions to 8th place this year.

China’s ranking in the sub-index of enterprise innovation is four positions higher

than that of the national innovation index, yet its rankings across the five secondary

indicators are not balanced, which is reflective of China’s problems in enterprise

innovation. Although China is making the third largest investment in R&D globally,

it only ranks 17th in the indicator of gross domestic expenditure on R&D as a

percentage of GDP, and trails far behind other world leaders in R&D expenditure

such as the US, Japan, Germany and the ROK. China ranks seventh in the number

of triadic patent families as a percentage of the world’s total, which is ahead of

most countries. However, when calculated in absolute terms, the total number of

patents is no more than 1,000 pieces, which is only equivalent to 6.9% of Japan,

7.3% of the US and 18.1% of Germany. In the meantime, although China ranks

fourth in the number of patent applications to the PCT by enterprises, its ranking

in the number of patent applications to the PCT per 10,000 business enterprise

researchers is only 28th place, which shows that the efficiency of patent output is

low in China when compared with its high investment in human resources.




Figure 3-8 Top ten countries in the R&D expenditure of enterprises (2012)

Figure 3-9 Top ten countries in the number of triadic patent families as a percentage of the world’s total (2011)

US

Japan

China

Germany

France

ROK

UK

Australia

Canada

Italy

0 500 1000 1500 2000 2500 3000 3500

USD100 million

%

Japan

US

Germany

France

ROK

UK

China

Holland

Switzerland

Sweden

0 5 10 15 20 25 30 35



38


3. Japan has the best performance in enterprise innovation

Of the five secondary indicators of enterprise innovation, R&D expenditure of

enterprises as a percentage of industrial value added and number of business

enterprise researchers as a percentage of the country’s total are focused on

comparing the performance of enterprises on the investment side. They are used

to measure the R&D expenditure and personnel of enterprises in relative terms.

Countries that made it to the top-ten group of the 2012 rankings in both of the

two indicators included the US, Japan, the ROK, Israel, Switzerland and Sweden.

The other two indicators, the number of triadic patent families as a percentage of

the world’s total, and the number of patent applications to the PCT per 10,000

business enterprise researchers, are focused on comparing the performance of

enterprises on the production side. They are used in to measuring the capability

of enterprises in producing high-quality patents as well as their efficiency in PCT

applications. Countries that made it to the top-ten group of the 2012 rankings in

both of the two indicators included Japan, Germany, the Netherlands, Switzerland

and Sweden. The last indicator, overall technology independence, looks at the

technological innovation capability of enterprises from both the investment and

production perspectives. Countries that made it to the top-ten group of the 2012

rankings in both enterprise innovation index and overall technology independence

included Japan, the ROK and France. We can tell from these statistics that Japan is

the only country that is in the top-ten list on all five of these secondary indicators. This

is a reflection of the technological innovation capabilities of Japanese enterprises and

a balanced mix of the key factors underpinning enterprise innovation.

(IV) China’s score is mixed in innovation performance

Innovation performance is reflective of the outcomes and impact of a country’s

innovation activities. The secondary indicators used for measuring innovation

performance this year have been notably improved on the basis of the 2012 report




of the national innovation index. The five new indicators, i.e. labor productivity,

GDP per unit of energy use, number of patents in force, high-technology exports

as a percentage of manufactured exports and value added of knowledge-

intensive industries as a percentage of the world’s total, are more effective in

capturing the performance and quality of innovation. Such an adjustment has

resulted in a notable drop in China’s international rankings, but it is more aligned

with China’s realities.

1. China’s ranking in innovation performance is at the medium-to-

upper level

In 2012, China ranked 14th in innovation performance, trailing behind leading

innovative countries like the US, Switzerland and Luxemburg in the European and

American region, and Japan and the ROK in Asia, but it was already higher than

several developed countries such as Sweden, the Netherlands, Austria, Canada

and Italy and far ahead of other developing countries. This shows that China has

achieved marked progress in the overall development of innovation performance.

Compared with the rankings in other years, the adjustment of the secondary

indicators of innovation performance this time has caused a major impact on

China’s rankings. China ranked 32nd in 2000, entered the top-ten group for the

first time in 2008 and rose to 5th place in 2010 and 2011 (see Figure 3-10). As a

result of the adjustment of the indicators in this report, China’s ranking in innovation

performance fell to 14th place in 2012. The comparison of China’s rankings in

innovation performance from 2000 to 2011 with the use of the new indicators

shows that China’s global ranking has been constantly on the rise (see the dotted

line in Figure 3-10).



40


Figure 3-10 China’s world rankings in the sub-index of innovation performance

According to the analysis based on the new indicators, China’s ranking in

innovation performance edged up slowly during the “10th Five-year” period, up by

only three positions from the 32nd place in 2001 to the 29th place in 2005. During

the “11th Five-year” period, China’s ranking in innovation performance improved

by a large margin, rising to 18th place in 2010, up by 10 positions compared with

2006. In particular, in 2010 alone, China lifted its global ranking by six positions

over the previous year. Entering the “12th Five-year” period, China’s ranking in

innovation performance continued to rise quickly in 2011, up by four positions

compared with 2010. In 2012, China kept the same ranking of 14th place as in the

previous year.

2. China’s innovation performance is high in “quantity” but low in

“quality”

From China’s international rankings in the five secondary indicators, we can

tell that China is one of the leading countries in innovation, but more efforts are

needed to raise its efficiency. In terms of the achievements of innovation, China

has a clear advantage in the three indicators of number of patents in force, high-

technology exports as a percentage of manufactured exports and value added of

1

6

11

16

21

26

31

36

412002 2001 2000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

3226 26

2117 17 16

13

96

5 5

14

Ranking




knowledge-intensive industries as a percentage of the world’s total. In particular,

China’s rankings in the two indicators of high-technology exports as a percentage

of manufactured exports and value added of knowledge-intensive industries as a

percentage of the world’s total have been improving since 2000 (see Table 3-1).

In 2012, China ranked second in both of the two indicators, up by 14 and four

positions respectively over 2000. The indicator of the number of patents in force

measures the output of patents with long-term values for protection, and directly

reflects companies’ independent innovation capability and market competitiveness.

China ranked fourth in this indicator in 2012, up by two positions over 2005. In

terms of the economic and social efficiency of innovation, China is yet to catch up

in the rankings of labor productivity and GDP per unit of energy use. Of the two

indicators, China’s ranking in labor productivity made no change between 2000

and 2012, occupying 39th place throughout the period. Meanwhile, China’s 2012

ranking in GDP per unit of energy use, 36th place, remained unchanged since

2010, up by only two positions compared with 2000. It shows that the effect of

S&T innovation in boosting energy efficiency has not been very visible in recent

years.

The change in China’s world rankings in the five secondary indicators of the sub-

index of innovation performance shows that China’s innovation performance is still

mainly driven by the output of hi-technology industries and aggregate technological

output, yet the effect of innovation in boosting the efficiency of economic and

social development is still not very clear. As a result, during the “12th Five-year”

period and for an even longer time to come, China may continue to face a very

grave situation in its efforts to shift the growth model and achieve sustainable

development.



42


Table 3-1 China’s world rankings in the secondary indicators of the innovation performance index

YearLabor

productivity

GDP per unit

of energy use

Number

of patents

in force

High-technology

exports as a

percentage of

manufactured exports

Value added of

knowledge-intensive

industries as a

percentage of the

world’s total

2000 39 38 — 16 6

2001 39 36 — 13 6

2002 39 37 — 10 6

2003 39 39 — 6 7

2004 39 39 — 6 6

2005 39 39 6 6 6

2006 39 40 6 6 6

2007 39 40 5 6 5

2008 39 38 4 6 3

2009 39 37 4 4 3

2010 39 37 4 3 3

2011 39 37 4 2 2

2012 39 36 4 2 2

3. Developed countries in Europe and America have clear advantages

Developed countries in Europe and America have clear advantages over the rest of

the world in the rankings of innovation performance. The composition of the top-

ten group in the 40 countries between 2000 and 2012 is basically unchanged. The

US, Japan, Switzerland, Norway, Luxemburg, Singapore, Ireland, Denmark and

the UK have been in the top-ten group for the entire period. In particular, the US

has topped the list for 13 consecutive years since 2000. Japan, except for 2002

and 2003, has ranked second in all other years as well. Apart from the US, there

were seven European countries in the top-ten group of the 2012 rankings, i.e.

Switzerland, Norway, Luxemburg, Ireland, France, Denmark and the UK, but only




two Asian countries, i.e. Japan and Singapore, were among the top ten in the 2012

rankings.

4. There is a big gap between emerging economies

In terms of innovation performance, China stands out among the emerging

economies, holding a notable lead over the other four BRICS countries. In 2012,

China made a rapid advancement in its global ranking. The latest result, 14th

place, was 19 positions higher than that of 2000. Compared with China, Russia,

Brazil, India and South Africa held a lower ranking and failed to make any significant

progress. Russia ranked 33rd, only three positions higher than that of 2000. India

has been switching between the last two positions since 2000, and its 2012 ranking,

39th place, was the same as in the previous year. Brazil and South Africa ranked

29th and 40th respectively in 2012, down by one and two positions over 2000.

Figure 3-11 The world rankings of BRICS countries in innovation performance (2000 and 2012)

5. Countries’ rankings in various innovation performance indicators are

not balanced

The rankings of the world’s major countries in the five secondary indicators used

for measuring innovation performance are quite unbalanced. None of the top-ten

countries in the 2012 ranking of innovation performance was able to make it to the

15

10

15

20

25

30

35

40

45

20002012

China Brazil Russia India South Africa

14

3329 28

3336

39 39 40 38

Ranking



44


top-ten list in all of the five secondary indicators. Although the US held considerable

advantages in the number of patents in force and the development of knowledge-

intensive industries, it only ranked 24th and 12th in the GDP per unit of energy use

and high-technology exports as a percentage of manufactured exports. Japan

was among the top-ten countries in the three indicators of GDP per unit of energy

use, number of patents in force and value added of knowledge-intensive industries

as a percentage of the world’s total, but it only ranked 12th and 13th in labor

productivity and high-technology exports as a percentage of manufactured exports.

The same situation also existed in countries with a lower ranking in innovation

performance. For example, Russia, which ranked 33rd in innovation performance:

although it ranked sixth in the number of patents in force, its rankings were among

the lowest in all of the other four indicators.

(V) China’s innovation environment continues to improve

Innovation environment refers to both the hard and soft environment of the

innovation process. It provides an important basis and guarantee for boosting the

country’s innovation capability. The sub-index of innovation environment consists

of ten secondary indicators: intellectual property protection, burden of government

regulation, macroeconomic environment, local availability of research and training

services, effectiveness of anti-monopoly policy, pay and productivity, venture

capital availability, state of cluster development, university-industry research

collaboration, and government procurement of advanced tech products1.

1. China’s ranking in the sub-index of innovation environment has

advanced by five positions

In the index of innovation environment, Singapore, Finland, Switzerland, Sweden

1 The indicators and statistics are from the annual Global Competitiveness Report published by the World Economic Forum.




and Norway, the top-five countries in the ranking, have a visible lead over the rest

of the countries. China’s ranking in the index of innovation environment maintained

an upward trend during the 2005-2009 period, rising from 27th place in 2005 to

16th place in 2009, before falling by a slight margin in the following two years.

In 2012, as China placed greater emphasis on the development of its innovation

environment, its ranking in innovation environment climbed to 14th place. At the

macro level, China reduced the burden of government regulation and stepped up

support for technological innovation through government procurement; at the micro

level, the constant improvement in the corporate governance system resulted in

notably higher pay for employees that was proportionate to the rise in productivity.

Table 3-2 China’s world rankings in the index of innovation environment and its secondary indicators

Year Indicator2005 2006 2007 2008 2009 2010 2011 2012

Innovation environment index 27 28 27 23 16 18 19 14

Secondary indicators:Macroeconomic environment

— 2 2 5 — — 4 3

Burden of government regulation

13 15 11 6 5 7 6 3

Government procurement of advanced tech products

9 15 17 13 6 8 8 3

Venture capital availability 35 40 34 29 12 11 12 8

State of cluster development

— — 19 16 12 12 16 18

University-industry research collaboration

24 24 23 21 22 24 26 25

Pay and productivity 6 39 8 6 12 9 28 5

Intellectual property protection

36 37 36 31 21 28 28 27

Effectiveness of anti-monopoly policy

37 12 37 35 28 28 28 27

Local availability of research and training services

32 36 29 30 32 30 33 30



46


2. China has a mixed performance in the various indicators of innovation

environment

China has higher rankings in macroeconomic environment, burden of government

regulation, and government procurement of advanced tech products. Among the

three indicators, China’s ranking in macroeconomic environment has always stayed

in the top-five group. Meanwhile, its ranking in the burden of government regulation

has advanced from 13th place in 2005 to 3rd place. It shows that the Chinese

government’s efforts to reduce the administrative cost of companies have paid off,

and have significantly reduced the innovation costs of companies. In the indicator

of government procurement of advanced tech products, China’s ranking jumped to

3rd place in 2012, which shows that government procurement is playing a positive

role in facilitating technological innovation in China.

The indicators where improvement is urgently needed for China include local

availability of research and training services, intellectual property protection, and

effectiveness of anti-monopoly policy. In terms of local availability of research

and training services, Switzerland, the Netherlands and Austria have the highest

ranking, which is attributed to the rapid development of the service sectors in

these countries. Because of the relative backwardness of its service sectors,

especially innovation-related service industries, China ranked only 30th in this

indicator. Intellectual property protection, anti-monopoly and other aspects of the

policy environment are an important basis for protecting and stimulating innovation

activities. China currently ranks 27th in these related indicators.

On the other hand, China has made rapid progress in the indicator of venture

capital availability. There has been a development boom of the venture capital

agencies and market in China over recent years. Venture capital has increasingly

become a major source of funding for the innovation projects of companies. As

a result, China’s ranking in this indicator has made a big leap forward during the

2005-2012 period, occupying 8th place at the moment. However, there still exists

a visible gap between China and the leading countries in Europe and America.




3. China leads the BRICS countries in innovation environment

There is a notable disparity between the BRICS countries in their innovation

environment rankings. China’s ranking in 2012 was higher than the other four

BRICS countries, with South Africa, India and Brazil ranking 24th, 25th and

30th respectively, and Russia at 34th place. This shows that China has a clear

advantage over the other four countries in terms of innovation environment.

Compared with previous years, all the BRICS countries, except for South Africa,

had lifted their rankings in the sub-index of innovation environment by a varying

margin. China’s ranking made the biggest leap, from 27th place in 2005 to 14th

place in 2012. Brazil rose from 35th place to 30th place, India from 28th place to

25th place, Russia from 39th place to 30th place, while South Africa dropped from

22nd place to 24th place.

Figure 3-12 Score of BRICS countries in the secondary indicators of the innovation environment index 2012

Intellectual property

protection

Burden of government regulation

Macroeconomic environment

Local availability of research and training services

Effectiveness of anti-monopoly policy

Pay and productivity


University-industry research collaboration


State of cluster development

Venture capital

availability

Brazil

India

China

Russia

South Africa

6.07.0

5.04.03.02.01.00.0



48


In terms of secondary indicators, China had a higher ranking than the other four

countries in the five indicators of burden of government regulation, government

procurement of advanced tech products, macroeconomic environment, pay and

productivity, and venture capital availability. South Africa was leading in intellectual

property protection, effectiveness of anti-monopoly policy, and university-industry

research collaboration. Brazil had a slightly better performance in local availability of

research and training services.



Development and Outlook of China’s Innovation Capability 49

VI. Development and Outlook of China’s Innovation Capability

Historically, China has been in an upward trend in indicators of innovation resources, knowledge creation, enterprise innovation and innovation performance. During the 2000-2012 period, China maintained an average growth rate of 11% in innovation resources, 13% in knowledge creation, 16% in enterprise innovation, and 12% in innovation performance. Although there was no significant growth in innovation environment in the period, eight indicators have seen growth.

Compared with major developed countries at the corresponding historical stages, China is at a medium level in the gross domestic expenditure on R&D as a percentage of GDP, in line with the basic pattern of R&D activities in the world. However, China’s total R&D personnel per ten thousand population is clearly at a low level at only 42 FTE. China only reached the level of Germany, France, Britain and Sweden in the mid-1980s in the invention patent output efficiency of R&D personnel, and was at a lower level than Germany, France, Britain and Sweden in 1990 in the scientific & technical articles output efficiency of R&D personnel.

A country’s innovation capability depends on advanced planning and long-term investment. China’s total R&D expenditure in the 20 years after 1991 was less than the US’ in the recent two years or Japan’s in the recent four years, and just equal to Germany’s in the recent seven years. As China’s demographic dividend gradually disappears, it should attach full importance to releasing the dividend of the country’s human resources in S&T to promote the continued improvement of China’s innovation capability. Meanwhile, importance should also be attached to the quality of patents and publications.

Some of the goals set in the 12th Five-year Plan for indicators have been accomplished ahead of schedule. In 2013, China rose to 5th place in the world in scientific papers citations, and the number of invention patent applications per 100 R&D personnel reached 16. Some goals will soon be achieved. The total R&D personnel per 10,000 employees reached 42 FTE, only one FTE short of the goal. The number of invention patents owned per 10,000 persons increased from 1.7 in 2010 to 3.2, only 0.1 short of the goal. The total value of contract deals in the domestic technical market reached RMB746.9 billion, completing 90% of the target. Some indicators have shown good growth. The R&D to GDP ratio rose to 1.98%. The contribution of S&T progress rose to 52.2%. And China’s global ranking in the national innovation index rose from 21st place in 2010 to 19th place.



50


(I) Index growth indicates rapid improvement of innovation capability

1. Basic trend of China’s national innovation index

Although the international financial crisis in 2008 had a serious impact on the

economy of developed countries, they did not reduce investment in science and

technology, and have not been surpassed by emerging countries in national

innovation capability. Since the promulgation and implementation of the Outline,

there has been a substantial growth in China’s S&T input and knowledge output.

Enterprises’ innovation capability has rapidly improved and innovation performance

has been increasingly visible. With its innovation environment becoming better,

China’s national innovation capability has grown significantly with a narrowing of the

gap with innovative countries. This trend has been fully borne out by the changes

in China’s national innovation index. If China's national innovation index in 2000 is

set at 100, then the index will be 209 in 2008 and 375 in 2012, and is increasingly

going up, as shown in Figure 4-1.

Figure 4-1 Historical performance of China’s national innovation index

2. Factors influencing China’s national innovation index

Of the five primary indicators of the national innovation index, except for slight

fluctuations in innovation environment, China has shown a clear upward trend in

indicators of innovation resources, knowledge creation, enterprise innovation and

400

350

300

250

200

150

100

50

0

100 114 122 138 152 151 168188

209

265303

375350

2002 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011 20122000




innovation performance. In particular, the indicator of enterprise innovation has

seen a rapid growth, as shown in Table 4-1.

Table 4-1 Historical performance of the primary indicators of China’s national innovation index

From 2000 to 2012, the sub-index of innovation resource saw an average

annual growth of 11%, reflecting the steady increase in China’s S&T innovation

resource input. The substantial growth of innovation resources provided a

fundamental support for China’s innovation capability improvement and economic

transformation and development.

During the same period, the sub-index of knowledge creation achieved an average

annual growth of 13%, reflecting the rapid improvement in China’s R&D capacity, with

knowledge creation and conversion providing a strong support for innovation activities.

An enhanced knowledge creation capability provided an important source for China to

improve its original innovation capability and independent innovation levels.

YearComposite

Index

Innovation

resources

Knowledge

creation

Enterprise

innovation

Innovation

performance

Innovation

environment

2000 100 100 100 100 100 —

2001 114 113 102 130 109 —

2002 122 126 109 135 117 —

2003 138 142 135 151 126 —

2004 152 153 158 167 130 —

2005 151 149 165 201 140 100

2006 168 163 182 225 161 110

2007 188 204 188 260 188 102

2008 209 229 201 280 229 108

2009 265 262 284 401 263 115

2010 303 288 310 491 316 112

2011 350 314 367 579 381 109

2012 375 345 418 595 404 112



52


Enterprises are the main force of technological innovation and their innovation

capability reflects the national innovation capability. From 2000 to 2012, China’s

enterprise innovation capability saw a steady improvement, with the sub-index

of enterprise innovation growing at an average annual rate of 16%. As Chinese

enterprises become increasingly involved in international competition, they will have

a stronger growth in innovation input and output.

Economic development and social progress are the ultimate goals of innovation

activities and indispensable factors in any innovation capability assessment.

In recent years, China’s innovation performance has been improving steadily,

recording an average annual growth of 12% from 2000 to 2012.

Innovation environment is an important guarantee for innovation activities to

proceed efficiently. Since the promulgation and implementation of the Outline,

China’s innovation environment has seen great improvement. In the period

from 2005 to 2012, China’s innovation environment did not see a significant

improvement, but still improved somewhat; of the ten indicators of the sub-index of

innovation environment, only two indicators dropped slightly in their rankings and

the other eight all saw a rise.

(II) China is on the road of Big Power innovation

1. Comparison and analysis of innovation characteristics between

China and innovative countries in corresponding historical stages

A comparison and analysis of innovation characteristics between China and

innovative countries in their corresponding historical stages in major S&T indicators

will help us to understand the historical development of innovative countries and to

discover China’s advantages and disadvantages in S&T innovation, thus identifying

the direction of China’s S&T innovation efforts.




The comparison and analysis is based on data provided by Madison Database,

and on the widely accepted method of using per capita GDP to measure the core

indicators of a country at different economic development stages. The data show

that, measured by the per capita GDP of 1990 in international dollars, China's

current level of economic development is equivalent to the US in around 1950, the

UK, Sweden and Canada in around 1960, Japan, Germany, France and Italy in

around 1970, and the ROK in around 1990.

Four core indicators in two aspects, i.e. R&D intensity and R&D efficiency, were

used for calculation, comparison and analysis. R&D intensity indicators include

R&D expenditures as a percentage of GDP and R&D personnel FTE per 10,000

employees; and R&D efficiency indicators include the number of invention patent

applications per 100 R&D personnel and number of SCI papers published per 100

R&D personnel.

Table 4-2 Comparison of China and some innovative countries in major S&T indicators in comparable years

Note: Data used was of 2012 for China; a: 1953 for the US; 1970 for Japan; 1971 for Germany; 1991 for the ROK; and 1981 for the rest. The data of Japan and Germany is from China’s Innovation in the Global Context by Ma Mingjie and Shi Guang (J). Think Tanks in China, 2013(2),92-108; b: 1995 for the ROK, and 1981 for the rest; c: 1995 for the ROK, and 1990 for the rest.

CountryR&D/GDP

(%)a

R&D personnel per 10,000 employeesb

Number of invention patent applications

per 100 R&D personnelb

Number of SCI papers published

per 100 R&D personnelc

China 1.98 42 16 5.1

UK 2.35 119 6.7 21.0

Germany 2.35 128 8.5 11.4

France 1.90 109 4.4 12.1

Italy 0.86 48 6.2 13.2

Canada 1.22 78 2.4 26.7

Sweden 2.18 98 9.3 20.1

Japan 1.59 109 25.5 5.4

ROK 1.80 75 38.9 4.3

US 1.36 — — —



54


In terms of the gross domestic expenditure on R&D as a percentage of GDP,

China's R&D to GDP ratio reached 1.98% in 2012, at a medium level compared to

major innovative countries in their corresponding historical stages, lower than that

of Germany, UK and Sweden but higher than that of the US, Japan and France. It

shows that as far as R&D expenditure is concerned, China is in line with the basic

historical pattern of R&D activities in the world.

In terms of total R&D personnel per ten thousand population, China’s number of

R&D personnel per 10,000 employees in 2012 was 42 FTE, significantly lower than

the levels of major innovative countries. The number in Germany, UK, France, and

Japan was above 100 FTE as early as 30 years ago. This is mainly because China

has not yet completed its industrialization and urbanization. The number will see a

significant increase as China’s higher education develops further.

Figure 4-2 Total R&D personnel per ten thousand population of certain countries

In terms of invention patent output, China is prominent compared to major

innovative countries. In 2012, China’s number of domestic resident invention patent

applications per 100 R&D personnel was 16, versus fewer than 10 in the case of

Germany, France, UK, or Sweden in the early 1980s.

FTE/10,000 persons

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

160

140

120

100

80

60

40

20

0

ROK

France

Japan

Germany

Canada

UK

Italy

China




Figure 4-3 Number of domestic resident invention patent applications per 100 R&D personnel in certain countries

In terms of scientific & technical articles output, compared with the historical data

of innovative countries, China was still at a low level relative to its huge number of

R&D personnel. China’s number of SCI papers published per 100 R&D personnel

was 5.1 in 2012, which was only 1/2-1/5 of the number of Germany, France, UK,

or Sweden in 1990, and which was also lower than that of Japan in 1990.

2. Lessons from the historical comparative analysis of China and

Foreign countries in innovation capacity development

First of all, a country's innovation capability is dependent on its advanced planning

and long-term investment. The historical analysis of the development of innovative

countries shows that the improvement of a country's innovation capability is the

result of long-term high-intensity innovation investment.

Though the US, Japan and France had slightly lower R&D to GDP ratio than China

in historical stages when they had similar economic development levels to China,

it should be noted that they did not stay at this level for a long period of time. For

example, the US's R&D to GDP ratio rose to more than 2% in 1957 and never

Piece/100 FTE

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

60

50

40

30

20

10

0

ROK

Japan

France

UK

Germany

China

Canada



56


dropped below 2.1% in the subsequent 50 years, while Japan's stayed at more

than 2% from the 1980s and has been more than 3% since 2000.

In comparison, China’s R&D to GDP ratio stayed below 1.5% for a long period of

time, and it took ten years to gradually rise from 1% to 1.98%. As a result, although

China ranks third in annual gross domestic expenditure on R&D in the world, only

next to the US and Japan, its cumulative R&D expenditure is still far behind that of

major innovative countries. According to statistics provided by the OECD, China’s

cumulative R&D expenditure in the 20 years from 1991 was still behind that of the

US, Japan, Germany, France and UK, and China’s cumulative R&D expenditure

in the first 20 years is less than the US’ R&D expenditure in the recent two years

or Japan’s in the recent four years, and only equivalent to Germany’s R&D

expenditure in the recent seven years.

Figure 4-4 R&D expenditure of certain countries

Only through long-term high-intensity innovation input can a country create a

profound knowledge and technology reserve, form a strong R&D force, and achieve

world-leading R&D results and remarkable economic and social benefit. Therefore,

China needs to continue to increase its R&D intensity in the years to come.

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

4500

4000

3500

3000

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2000

1500

1000

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USD100 million

US

Japan

China

Germany

France

UK

ROK




Secondly, China’s dividend of human resources in S&T will promote the steady

improvement of its innovation capability. As the percentage of R&D personnel in

the labor force reflects a country’s employment structure, and S&T innovation is

a knowledge creation activity, this indicator no doubt marks the high level of the

employment structure. The number of people capable and willing to engage in S&T

innovation activities is also reflective of a country’s overall innovation environment

and, to some extent, its innovation capability.

Data show that in response to population aging and shrinking working-age

population after entering the post-industrial age, western countries increased their

investment in human capital to upgrade industrial structure and labor productivity in

order to maintain sustainable economic and social development. This trend led to

their high percentage of R&D personnel in population.

China’s massive working population supported China’s 30 years of high-speed

economic growth. In 2012, the working population aged between 15 and 59

decreased for the first time, indicating the diminishing of the country’s demographic

dividend1. Meanwhile, China’s total human resources in S&T have been steadily

growing, surpassing the US to be the world’s No.1 in 2007, laying a solid

foundation for China’s independent innovation. With the upcoming dividend of

human resources in S&T, China should make prior deployments and make good

use of the opportunity.

Thirdly, subsequently China should focus on improving the quality of its S&T output.

With respect to S&T output, innovative countries have two common characteristics:

The first is a stable output scale. Most innovative countries have maintained

a stable growth in the number of patent applications and S&T publications. In

patent applications, only Japan, the US and ROK saw a rapid growth in the 1980s

and 1990s. After 2000, China surpassed all countries in the growth of patent

1 Kong Xinxin, Guo Tiecheng. China is entering a dividend period of S&T human resources [R], Research Report of Chinese Academy of Science and Technology for Development, 2013 (14), 1-15



58


applications. Today, China ranks among the top two in the world in both the

number of invention patent applications and the number of invention patent grants.

In terms of scientific & technical articles output, China began experiencing an

astonishing growth in the late 1990s and rose to 2nd place in 2008.

The second is that the patents and publications of innovative countries tend to have

greater originality and higher quality, with more prominent characteristics of long-

term retention and economic benefit generation after patent grants. In 2011, China

had the world’s largest number of domestic resident invention patent applications,

but the number of its invention patents in force was only one third of that of the US

and half of that of Japan. The S&T publications of innovative countries tend to have

higher citations. According to the latest data, China now ranks fifth in the world in

the number of SCI papers citations, with an average of citations of 6.92 times per

paper, far lower than the world average of 10.69.

Therefore, although China has had relatively high patent output efficiency and a

world-leading number of publications compared to innovative countries in their

corresponding historical stages, China still leaves much room for improvement in

the quality of its patents and publications.

(III) All goals in the 12th Five-year Plan are on track to be accomplished

1. Analysis of completion of major goals

The S&T indicators specified in the national program for S&T development are core

indicators for measuring the country’s S&T innovation progress, and the analysis of

the completion of the goals set in the program provides an insight into the evolution

of China’s national innovation capability. The National Program for Scientific and

Technological Development during the 12th Five-year Plan Period sets forth the

core S&T indicators and development goals by 2015 from the perspective of




innovation resources input, innovation activities output and S&T contribution to

economic development. The 12th Five-year Period is now more than half-way over,

and the completion status of the development goals of major indicators can be

summarized as follows:

First, the goals for some indicators, especially the output of publications and

patents, have been completed ahead of schedule. China’s ranking in the number

of scientific papers citations has surpassed one country every year since 2008

and rose to 5th place in the world in 2013, completing the development goal set

forth in the 12th Five-year Plan ahead of schedule. The number of invention patent

applications per 100 FTE increased from 10 in 2010 to 16 in 2013, exceeding the

development goal of 12.

Secondly, the goals for some indicators will soon be accomplished, including the

indicators of R&D personnel input, and patent and technology trade indicators. In

recent years, the number of R&D personnel in China has been steadily growing,

with the total R&D personnel per 10,000 employees increasing from 33 FTE in

2010 to 42 FTE in 2013, only one FTE short of the goal of 43 FTE. The number of

invention patents owned per 10,000 persons increased rapidly from 1.7 in 2010 to

3.2 in 2013, only 0.1 short of the goal. In 2013, the total value of contract deals in

the domestic technical market reached RMB746.9 billion, having completed 90%

of the goal.

Thirdly, some indicators have growthmomentum. This is especially true of the

indicators that reflect how science and technology supports the country’s

economic transformation and national innovation capability. Since the beginning

of the 12th Five-year Period, China’s R&D to GDP ratio has increased significantly,

rising from 1.76% in 2010 to 1.98% in 2013, representing an average annual

growth of 0.11 percentage point, far higher than the 0.08 percentage point during

the 10th Five-year Period and the 0.09 percentage point during the 11th Five-year

Period. The contribution of science and technology to economic growth has been



60


greater and greater, rising from 50.9% in 2010 to 52.2% in 2013. China’s national

innovation capability has improved significantly, with the ranking in the national

innovation index rising from 21st place in the world in 2010 to 19th place in 2013.

Table 4-3 Major indicators in the 12th Five-year S&T development plan and completion status

2. Outlook of completion of major indicator goals

Since the beginning of the 12th Five-year Plan Period, China’s S&T effort has

developed by leaps and bounds. Some important science and technology

indicators, such as the number of scientific papers citations, have achieved their

goals ahead of schedule and are moving toward even higher levels. The following

is an outlook on the development of indicators whose goals have not been

accomplished ahead of schedule.

First, some indicator goals will be accomplished in 2013. These goals include the

total number of R&D personnel per 10,000 employees (90% completed) and the

Major Indicators 20102015

Development Goals

2012

R&D to GDP ratio (%) 1.76 2.2 1.98

Total R&D personnel per 10,000 employees 33 43 42

World ranking in the number of scientific

papers citations8 5 5 (2013)

Invention patents owned per 10,000 persons 1.7 3.3 3.2

Number of invention patent applications per

100 R&D personnel (piece/100 FTE)10 12 16

Total value of contract deals in the domestic

technical market (RMB100 million)3907 8000 7469 (2013)

Contribution of S&T progress (%) 50.9 55 52.2

World ranking in the national innovation index 21 18 19




number of invention patents owned per 10,000 persons (94% completed), which

are expected to be accomplished in 2013 according to their growth rates in the

recent two years. Therefore, these two goals should be revised up to reflect China’s

S&T development and enable a more accurate judgment and understanding of its

outlook.

Secondly, some goals will be accomplished before the end of the 12th Five-year

Plan Period. The most significant are the R&D to GDP ratio and the total value of

contract deals in the domestic technical market. Since the beginning of the 12th

Five-year Plan Period, with China placing a greater emphasis on its economic

restructuring and transformation and the quality of economic development, China’s

economic growth has slowed somewhat; meanwhile, S&T innovation has been

assigned growing importance by governments and enterprises, and R&D input has

been growing accordingly, as has the R&D to GDP ratio. If economic growth and

the growth of R&D expenditures remain at their levels of the previous two years,

then the R&D to GDP ratio will reach the goal of 2.2% in 2014. If the R&D to GDP

ratio grows at the average annual rate during the 10th and 11th Five-year Plan

Period, the goal set for the 12th Five-year Plan Period will also be accomplished by

2015. Based on the growth rate in recent years, the total value of contract deals in

the domestic technology market will reach the goal before the end of the 12th Five-

year Plan Period.

Thirdly, there is uncertainty for the accomplishment of some indicator goals,

which need further analysis. These indicators mainly include the contribution of

S&T progress and China’s world ranking in the national innovation index. The

contribution of S&T progress is an overall indicator that reflects the contribution

of S&T progress in broad terms to economic growth; it is subject to the influence

of not just S&T development per se but also other factors such as capital and

labor input. In 2012, the contribution of S&T progress to China’s economic growth

reached 52.2%, close to the 55% goal for the 12th Five-year Plan Period, but

whether the goal will be accomplished is still uncertain. It is still necessary to further



62


transform China’s economic development pattern, further reduce the reliance of

economic growth on investment, and make S&T innovation a core force driving

economic development and transformation. It will by no means be easy to move

China’s world ranking of national innovation index up to the top-18 list before 2015.

In the second half of the 12th Five-year Plan Period, there is still the need for the

entire society to step up the input of innovation resources and pay more attention

to the intensity and structure of resource input. More efforts are needed to further

substantially improve knowledge innovation and enterprise technological innovation

capabilities, break the constraint of energy, resource and the environment through

S&T innovation, steadily improve innovation performance, and foster a policy, legal,

economic and technical environment favorable for innovation.



Methodology 63

V. Methodology

The evaluation of the national innovation index is inspired by both Chinese and

international theories and methodologies for evaluating national competitiveness

and innovation. We have established the principles for the selection of indicators

in line with the purpose of evaluation and the implications of innovative countries,

constructed an indicator system of the national innovation index in the five aspects

of innovation resources, knowledge creation, enterprise innovation, innovation

performance and innovation environment, and developed a full-fledged system of

evaluation guidelines and methods.

(I) Evaluation guidelines

1. Purpose of evaluation

The construction of the evaluation indicators and the calculation of the national



64


innovation index are aimed at providing a comprehensive, objective and accurate

picture of the characteristics of China’s innovation capability at the different levels

of the innovation chain as well as the position of Chinese innovation in the world.

By conducting the evaluation, we have established a standard indicator system

for evaluating the innovation capability of countries, the methods for indicator

explanation and calculation, and the related analytical framework, which has

provided the foundation and services for monitoring and evaluating the progress in

the building of an innovative country and for improving scientific and technological

innovation policies.

2. The implications of innovative countries

In terms of the development model, countries basically fall into three categories:

resource export-oriented countries, economically dependent countries and

technologically innovative countries. Countries with a distinctive mark in

technological innovation are at the core of the international community, holding

the biggest say in international affairs. China neither has excess resources to

export, nor will pursue the Latin American path of economic dependency and

marginalization, and technological innovation is therefore the only development

path we can take. This is the very reason why China has set the goal of

“becoming an innovative country” in its national medium- and long-term plan for

S&T development.

A comparative study of 209 countries and regions in the world shows that

the S&T progress of a country always goes hand in hand with its economic

advancement. As suggested by the statistics, there are 97 countries in the

world that are involved in R&D activities, yet only 31 countries have spent over

1% of their GDP on R&D. Though the population of these 31 countries only

accounts for 38% of the world’s total, they represent 96% of the world’s gross

R&D expenditure and 83% of the global GDP. This proves that the strength

of the economic powers in the world does not come from the endowment of



Methodology 65

human and natural resources, but from the advance in science and technology.

A further analysis shows that although some small countries have managed

to leverage their natural resources to achieve growth in national economy and

individual wealth, not a single big country has acquired the status of economic

power through the factor of natural resources.

A comparison between the top 15 countries in science, technology and

economy and the rest of the world finds that the most distinctive feature

of these “innovative countries” is that they have completely changed their

approach to economic and social progress from the traditional model of

development. To tell whether a country is an “innovative country” or not, we

should analyze whether its economic, social and income growth is mainly driven

by factors (the traditional model of natural resources consumption and capital

utilization) or based on innovation activities featuring the creation, dissemination

and application of knowledge.

Innovative countries must have the following five capabilities:

(1) Capability of innovation input

(2) Capability of knowledge creation, dissemination and application

(3) Capability of enterprise innovation

(4) Capability of leveraging the impact of innovation output

(5) Capability of providing an enabling environment for innovation

3. Evaluation approach

We have taken into consideration the fact that innovation is an on-going process,

from the introducing of innovation concepts, research and development to the

output of knowledge and commercial application. The innovation capability



66


of a country is manifested in the whole process of the production, flow and

commercial application of knowledge. We must develop the indicators for the

evaluation of national innovation capability to cover all the important links in the

innovation chain, including input of innovation resources, knowledge creation and

application, enterprise innovation, innovation impact on business performance

and innovation environment. Inspired by the EU method for evaluating countries’

innovation performance, the report has adopted the approach of general indicators

in conducting evaluation. From the perspective of innovation process, we have

selected the five primary indicators of innovation resources, knowledge creation,

enterprise innovation, innovation performance and innovation environment, and

developed an indicator system for evaluating the national innovation index with the

appropriate secondary indicators. Then, we conducted comprehensive analysis,

comparison and assessment of the innovation capability of countries based on the

general national innovation index and its supporting indicators.

4. The principles for the selection of indicators

- The data used in the report all come from authoritative sources. The raw data

must all come from universally recognized statistics and surveys of international

organizations and national authorities. The statistics are collected through formal

channels on a regular basis to ensure accuracy, authoritativeness, continuity and

timeliness.

- The subjects of evaluation are highly representative. The subjects selected for

the evaluation must be countries with a large input of S&T resources and output of

innovation outcomes. The report looks at the performance of 40 major countries,

which account for over 98% of the world’s gross R&D expenditure and over 88%

of global GDP.

- The indicators are internationally comparable. We have developed an evaluation

indicator system based on commonly used indicators. The definition and statistical



Methodology 67

scope of the indicators are consistent with international standards.

- The indicators are expandable. All indicators have their unique manifestations

at the macro level. We have defined the indicators in relatively board terms,

rather than tied to a narrow scope of data, in order to facilitate the expansion and

adjustment of the indicator system.

- The evaluation system gives balanced consideration to countries in different sizes.

Most of the indicators in the system are relative indicators that can accommodate

the varying features of countries in terms of the efficiency of innovation input and

output, as well as the scale and scope of innovation activities.

- Quantitative examination and qualitative analysis are both employed. There are

both quantitative statistical indicators and qualitative survey indicators extracted

from reliable and authoritative sources in the evaluation process.

- Historical trend analysis and country-by-country comparison are both employed.

There are both comparisons between countries and analysis of historical trends in

the evaluation process.

(II) Indicator system

The indicator system of the national innovation index consists of five primary

indicators, i.e. innovation resources, knowledge creation, enterprise innovation,

innovation performance and innovation environment, and 30 secondary indicators.

Innovation resources reflect a country's resources input in innovation activities,

supply of innovation talents and investment in innovation infrastructure. Knowledge

creation reflects a country’s capability of R&D output and knowledge dissemination.

Enterprise innovation reflects the intensity, efficiency and industrial technologies of

enterprises in carrying out innovation activities. Innovation performance shows the

effect and impact of a country’s innovation activities. Innovation environment, which



68


consists of 10 secondary indicators (based on the survey indicators in the annual

Global Competitiveness Report of the World Economic Forum), describes the

external software and hardware environment underpinning a country’s innovation

activities.

(III) Calculation method

The national innovation index is calculated with the use of benchmarking, a

popular calculation method adopted by the IMD World Competitiveness Yearbook.

Benchmarking is a methodology widely used in the world today. It works in the

following way: first, a benchmark value will be set; then, the subjects of evaluation

will be measured against the benchmark value to identify the gap and rank the

subjects.

1. Data processing of the secondary indicators

The original values of the 30 secondary indicators of the 40 countries are

processed through the method of nondimensionalization.

Nondimensionalization is used for the purpose of removing the discrepancies in

quantitative units and the differences in order of magnitude and form of relative

number, in order to enable the generalization of indicators in evaluation using

multiple indicators.

Linear nondimensionalization is used in processing the secondary indicators:

In the equation: =1~40; =1~30

2. Calculation of primary indicators

The scores under the primary indicators are calculated based on equal weight



Methodology 69

In the equation, is the weight, =1~40; =1~4.

3. Calculation of the national innovation index

The national innovation index is calculated based on equal weight, and the 40

countries are ranked in order of scores.

In the equation, is the weight, =1~40.

4. Method for measuring the growth in China’s innovation index

We used the 2005-2012 data associated with the indicators of the national

innovation index, with 2005 as the base year (with a score of 100), to calculate

China’s innovation index and scores under the primary indicators in different years

of the period. A comparison with the score of the base year captures the growth

trend of China’s innovation index.

(1) Calculation of primary indicators

The scores for the primary indicators are calculated based on equal weight

In the equation, =1~31 are the sequence number of the indicator, =1~8 are the

sequence number of the reference year (2005-2012)



70


In the equation, is the weight (equal weight set at 0.2 for quantitative indicators,

and at 1/10 for qualitative indicators), =1~7; =1~4.

(2) Calculation of the growth index of national innovation capability

The national innovation index is calculated based on equal weight, which

provides the basis for the calculation of index in different years.

In the equation, is the weight (equal weight set at 0.2), =1~7.



Methodology 71

1. Gross domestic expenditure on R&D as a percentage of GDP

2. Total R&D personnel per ten thousand population

3. Tertiary enrollment

4. Informationization level

5. R&D expenditure as a percentage of the world’s total

6. Scientific papers citations per one million US dollars of R&D expenditure of academic institutions

7. Scientific & technical articles per 10,000 scientific researchers

8. Value added of knowledge-intensive services as a percentage of GDP

9. Number of invention patent applications per 100 million US dollars of economic output

10. Number of invention patent grants per 10,000 researchers

11. Number of triadic patent families as a percentage of the world’s total

12. R&D expenditure of enterprises as a percentage of industrial value added

13. Number of patent applications to the PCT per 10,000 business enterprise researchers

14. Overall technology independency

15. Business enterprise researchers as a percentage of total R&D personnel

16. Labor productivity

17. GDP per unit of energy use

18. Number of patents in force

19. High-technology exports as a percentage of manufactured exports

20. Value added of knowledge-intensive industries as a percentage of the world's total

21. Intellectual property protection

22. Burden of government regulation

23. Macroeconomic environment

24. Local availability of research and training services

25. Effectiveness of anti-monopoly policy

26. Pay and productivity

27. Venture capital availability

28. State of cluster development

29. University-industry research collaboration

30. Government procurement of advanced tech products

I. Innovation resources

II. Knowledge creation

IV. Innovation performance

V. Innovation environment

III. Enterprise innovation

Nat

iona

l inn

ovat

ion

inde

x



Appendix 1 Measurement and sequencing of the indicators used in the innovation index 73

AppendixNational Innovation Index Report 2013



74


Appendix 1 Measurement and sequencing of the indicators used in the innovation index

Figure 1. National innovation index

Ranking

2012 2011

1 2 2 3 3 1 4 4 5 11 6 5 7 8 8 9 9 6 10 10 11 7 12 12 13 13 14 14 15 18 16 16 17 19 18 15 19 20 20 22 21 25 22 21 23 17 24 23 25 26 26 24 27 27 28 29 29 28 30 30 31 32 32 34 33 31 34 35 35 37 36 33 37 39 38 36 39 40 40 38

US

Japan

Switzerland

ROK

Israel

Sweden

Finland

Holland

Denmark

Germany

Singapore

UK

France

Norway

Austria

Australia

Ireland

Belgium

China

Canada

Luxembourg

New Zealand

Iceland

Slovenia

Italy

Spain

Czech

Hungary

Portugal

Greece

Turkey

Russia

Poland

Romania

South Africa

Slovakia

Mexico

Brazil

India

Argentina

0 20 40 60 80 100

38.4

99.1100

95.288.5

78.177.675.274.874.6

72.671.571.169.569.369.268.968.165.264.664.363.962.561.358.958.6

54.554.352.852.250.248.246.746.146.0

42.741.340.840.6

73.7

Figure 2. Innovation resources

Ranking

2012 2011

1 1 2 3 3 2 4 6 5 5 6 4 7 8 8 7 9 14 10 11 11 10 12 9 13 13 14 12 15 15 16 16 17 17 18 19 19 18 20 20 21 22 22 23 23 21 24 24 25 27 26 25 27 26 28 28 29 29 30 30 31 31 32 32 33 33 34 34 35 37 36 36 37 35 38 38 39 39 40 40

US

ROK

Finland

Sweden

Denmark

Japan

Israel

Iceland

Austria

Slovenia

Switzerland

Germany

Singapore

Australia

Norway

Holland

France

Belgium

Canada

UK

New Zealand

Ireland

Czech

Spain

Luxembourg

Russia

Portugal

Italy

Greece

China

Hungary

Poland

Slovakia

Argentina

Turkey

Romania

Brazil

India

Mexico

South Africa

0 20 40 60 80 100

24.8

93.1100

92.684.083.883.282.879.3

74.4

73.873.071.470.369.869.6

66.666.665.163.462.859.758.858.458.157.057.0

51.250.449.848.846.0

42.540.738.636.833.8

27.227.2

74.4



Appendix 1 Measurement and sequencing of the indicators used in the innovation index 75

Figure 3. Knowledge creation

Ranking

2012 2011

1 2 2 1 3 4 4 15 5 5 6 6 7 3 8 17 9 11 10 7 11 8 12 16 13 34 14 22 15 29 16 27 17 12 18 24 19 13 20 14 21 18 22 10 23 9 24 30 25 31 26 33 27 21 28 28 29 32 30 25 31 26 32 23 33 20 34 19 35 40 36 36 37 37 38 38 39 39 40 35

Switzerland

ROK

Japan

Israel

UK

Holland

New Zealand

Australia

Ireland

US

Belgium

Hungary

South Africa

Greece

Italy

Spain

Singapore

China

Sweden

Denmark

Canada

Slovenia

Iceland

France

Turkey

Romania

Poland

Austria

Portugal

Germany

Czech

Finland

Norway

Slovakia

India

Argentina

Mexico

Brazil

Russia

Luxembourg

0 20 40 60 80 100

21.9

98.1100

80.274.673.072.972.570.068.8

66.465.565.463.560.758.557.357.255.854.754.553.753.050.849.849.748.748.548.347.947.745.7

40.239.737.734.534.2

29.429.1

67.0

Figure 4. Enterprise innovation

Ranking

2012 2011

1 3 2 1 3 2 4 9 5 6 6 4 7 5 8 7 9 10 10 8 11 18 12 11 13 37 14 40 15 15 16 13 17 20 18 21 19 29 20 24 21 12 22 31 23 16 24 22 25 28 26 14 27 17 28 38 29 27 30 36 31 19 32 26 33 23 34 32 35 34 36 30 37 35 38 25 39 33 40 39

Japan

US

Switzerland

ROK

Germany

Israel

Sweden

Finland

France

Denmark

Austria

Holland

Slovenia

Luxembourg

China

Belgium

Italy

Canada

Turkey

Spain

UK

Russia

Ireland

Norway

Czech

Iceland

Australia

Romania

Portugal

Greece

Singapore

Hungary

New Zealand

India

Poland

South Africa

Mexico

Brazil

Argentina

Slovakia

0 20 40 60 80 100

20.4

83.6100

75.173.7

69.469.468.965.464.5

59.157.056.0

52.251.849.6

45.243.042.641.841.641.040.639.637.236.836.335.934.633.031.130.729.328.027.126.724.421.720.4

59.1



76


Figure 5. Innovation performance Figure 6. Innovation environment

Ranking

2012 2011

1 10 2 2 3 1 4 6 5 9 6 4 7 13 8 3 9 8 10 16 11 20 12 14 13 7 14 5 15 15 16 11 17 12 18 17 19 23 20 24 21 21 22 22 23 18 24 30 25 29 26 32 27 19 28 34 29 37 30 31 31 25 32 26 33 28 34 35 35 38 36 27 37 33 38 36 39 40 40 39

US

Japan

Switzerland

Norway

Luxembourg

Singapore

Ireland

France

Denmark

UK

Australia

ROK

Germany

China

Sweden

Holland

Austria

Italy

Canada

Israel

Belgium

Finland

Spain

New Zealand

Iceland

Hungary

Greece

Mexico

Brazil

Czech

Portugal

Slovenia

Russia

Argentina

Slovakia

Romania

Turkey

Poland

India

South Africa

0 20 40 60 80 100

11.2

88.3100

74.665.4

60.359.4

53.952.552.3

47.245.943.843.741.140.139.937.537.336.534.8

31.53130.229.728.92825.624.724.122

19.718.518.31816.816.416

11.4

49.4

Ranking

2012 2011

1 1 2 3 3 2 4 4 5 6 6 7 7 9 8 5 9 10 10 8 11 11 12 17 13 12 14 19 15 13 16 14 17 16 18 18 19 21 20 24 21 15 22 20 23 22 24 23 25 25 26 28 27 27 28 30 29 31 30 26 31 29 32 34 33 33 34 37 35 32 36 36 37 35 38 38 39 39 40 40

Singapore

Finland

Switzerland

Sweden

Norway

Luxembourg

Germany

Holland

US

UK

New Zealand

Japan

Canada

China

Austria

Belgium

Australia

Israel

Ireland

ROK

Denmark

France

Iceland

South Africa

India

Turkey

Czech

Portugal

Mexico

Brazil

Spain

Poland

Slovakia

Russia

Slovenia

Hungary

Italy

Romania

Argentina

Greece

0 20 40 60 80 100

54.7

95.3100

95.191.790.890.389.989.489.1

86.284.484.384.282.882.3

80.680.580.278.378.278.176.274.474.273.57270.470.469.767.967.667.266.465.864.764.463.7

55

86.9




1. Gross domestic expenditure on R&D as a percentage of GDP

The indicator, which refers to gross domestic expenditure on R&D as a percentage

of GDP, reflects the intensity of a country's investment in financial resources for

innovation.

2. Total R&D personnel per thousand population

The indicator, which refers to total R&D personnel per ten thousand population,

reflects the intensity of a country's investment in human resources for innovation.

3.Tertiary enrollment

The indicator, which is based on the gross tertiary enrollment rate, i.e. the

proportion of population with higher education in the 18-22 age group, reflects a

country's capability in the training and supply of S&T human resources.

4. Informationization level

The indicator, which is based on the Networked Readiness Index (NRI) published

by the World Economic Forum, reflects a country's capability to build infrastructure

for knowledge creation and dissemination.

5. R&D expenditure as a percentage of the world's total

The indicator, which refers to gross domestic expenditure on R&D (GERD) as a

percentage of the world's total, measures the scale of a country's R&D activities

and its capability of innovation resources investment.

Appendix 2 Definition of indicators



78


6. Scientific papers citations per one million US dollars of R&D

expenditure of academic institutions

The indicator, which is presented as the percentage point produced through

dividing the citations of the SCI scientific papers of a country's higher learning and

research institutions by its gross R&D expenditure, reflects the efficiency of S&T

output and quality of knowledge output.

7. Scientific & technical articles per 10,000 scientific researchers

The indicator, which is presented as the percentage point produced through

dividing the total number of a country's scientific & technical articles in the SCI (five-

year average) by the gross number of its scientific researchers (five-year average),

reflects the efficiency of scientific research output.

8. Value added of knowledge-intensive services as a percentage of

GDP

The indicator, which refers to the value added generated by financial and

insurance, postal and telecommunications, commercial activities, health, education

and other service sectors as a percentage of GDP, reflects the development of a

country's knowledge-intensive services, and measures the knowledge content of

its economic output and the advanced level of its industrial structure.

9. Number of invention patent applications per 100 million US dollars

of economic output

The indicator, which is produced through dividing a country's number of invention

patent applications by its GDP (with the unit of 100 million US dollars adjusted by

exchange rate), reflects the technological creativity of the country.




10. Number of invention patent grants per 10,000 researchers

The indicator, which refers to the average number of domestic resident invention

patent grants per 10,000 researchers, reflects a country's independent innovation

capability and the efficiency of its technological output.

11. Number of triadic patent families as a percentage of the world's

total

The indicator, which refers to a country's percentage in the invention patents

applied with the USPTO, EPO and JPO, measures the technological innovation

capability and international competitiveness of the country.

12. R&D expenditure of enterprises as a percentage of industrial value

added

The indicator, which refers to the ratio of a country's business R&D expenditure to

the value added of its industrial sectors, measures the intensity of the innovation

input of the corporate sector.

13. Number of patent applications to the PCT per 10,000 business

enterprise researchers

The indicator mainly reflects the efficiency of innovation input, quality of innovation

output and technological competitiveness of a country's corporate sector.

14. Overall technology independency

The indicator, which is presented as the mean value of 100 * R&D expenditure

/ (R&D expenditure + technology import costs) and 100 * number of domestic

resident invention patent grants / (number of domestic resident invention patent

grants + number of foreign resident invention patent grants), reflects a country's

independency of industrial technologies.



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15. Business enterprise researchers as a percentage of total R&D

personnel

The indicator, which refers to the percentage of business enterprise researchers

in a country's total R&D personnel, reflects the capability and level of the country's

corporate sector in R&D personnel input.

16. Labor productivity

The indicator, which is based on the average GDP of working-age population,

reflects the role of innovation activities in economic output.

17. GDP per unit of energy use

The indicator, which is based on the GDP per kilogram of standard oil use,

measures the effect of technological innovation in reducing resources consumption,

and the intensity of a country's economic growth.

18. Number of patents in force

The indicator, which refers to the number of invention patents in force owned by

a country's residents, reflects the independent innovation capability and market

competitiveness of the enterprises of a region.

19. High-technology exports as a percentage of manufactured exports

The indicator reflects the international competitiveness of a country's hi-technology

products and the role of technological innovation activities in improving the

economic structure.




20. Knowledge-intensive industries as a percentage of the world's total

The indicator, which refers to the sum of the value added of hi-technology

industries (manufacturing industries) and knowledge-intensive services as a

percentage of the world's total, reflects the scale and technological sophistication

of the industries formed through the application of innovation outcomes by a

country's enterprises.

21. Intellectual property protection

Intellectual property protection (1 = weak or without legal protection, 7 = strong or

with legal protection).

22. Burden of government regulation

The enterprises' burden of administrative requirement (permission, regulation,

report, etc.) issued by the government (1 = heavy burden, 7 = no burden).

23. Macroeconomic environment

The indicator, which consists of such sub-indicators as central government revenue

and spending, savings rate, inflation, deposit/loan differential and government debt,

measures the stability of a country's macroeconomic environment.

24. Local availability of research and training services

Professional research and training services (1 = no access, 7 = locally accessible

through world-class institutions).

25. Effectiveness of anti-monopoly policy

Anti-monopoly policy (1 = no effect in boosting competition, 7 = effective in

boosting competition).



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26. Pay and productivity

Employee pay (1 = no correlation with employee productivity, 7 = strong correlation

with employee productivity).

27. Venture capital availability

Enterprises can normally receive the funding of venture capital for their risky

innovation projects (1 = wrong, 7 = right).

28. State of cluster development

There are well-developed industrial clusters across the country (1 = strongly

disagree, 7 = strongly agree).

29. University-industry research collaboration

University-industry research collaboration (1 = little or no collaboration, 7 =

extensive collaboration).

30. Government procurement of advanced tech products

The government's decisions on the procurement of advanced tech products (1=

solely dependent on the price, 7 = considering the technological and innovative

features of products).


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