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‘Innovation divide’ persists; investment crucial to vibrant competitive economy

MD Staff

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A new report published by the United Nations World Intellectual Property Organization (WIPO) has shown that for the first time, a middle-income country, China, has joined highly developed economies among global leaders in innovation.

“China’s progression reflects the country’s improved innovation performance as well as methodological considerations such as improved innovation metrics in the GII [Global Innovation Index],” noted a press release issued by WIPO today.

However, despite China’s rise, an “innovation divide” persists between developed and developing countries, according to the Global Innovation Index 2016, released today by the WIPO, Cornell University, and the multi-nation business graduate school INSEAD.

Switzerland emerged as the global leader among innovative economies followed by Sweden, the United Kingdom, the United States and Finland. Switzerland ranked first in the 2015 index as well.

WIPO also noted that the 2016 findings point to an increasing awareness among policymakers that fostering innovation is crucial to a vibrant, competitive economy.

“Investing in innovation is critical to raising long-term economic growth,” said WIPO Director-General Francis Gurry. “In this current economic climate, uncovering new sources of growth and leveraging the opportunities raised by global innovation are priorities for all stakeholders,” he added

The agency added that innovation requires continuous investment. Before the 2009 crisis, research and development expenditure grew at an annual pace of approximately seven per cent. However, 2016 data has indicated that global research and development grew by only four per cent in 2014.

“This was a result of slower growth in emerging economies and tighter research and development budgets in high-income economies – this remains a source of concern,” it noted.

According to WIPO, among the GII 2016 leaders, four economies – Japan, the US, the UK, and Germany – stand out in “innovation quality,” a top-level indicator that looks at the calibre of universities, number of scientific publications and international patent filings. China ranked 17th in innovation quality, making it the leader among middle-income economies for this indicator, followed by India, which has overtaken Brazil.

However, Sub-Saharan Africa continued to lag behind. Mauritius took the top spot among all economies in the region (53rd), followed by South Africa (54th), Kenya (80th), Rwanda (83rd), Mozambique (84th), Botswana (90th), Namibia (93rd), and Malawi (98th).

That said, since 2012, Sub-Saharan Africa has had more countries than any other region among the group of “innovation achievers” – countries that perform better than their level of development would predict. This year, Kenya, Madagascar, Malawi, Mozambique, Rwanda, and Uganda stood out.

“As economic growth in Sub-Saharan Africa is slowing, the GII 2016 shows that [the region] must preserve its current innovation momentum, while continuing to diversify economies away from oil production and commodity revenues,” noted WIPO.

Average regional performance shows strengths in the ease of starting a business, information and communication technologies (ICTs), business-model creation, and relative expenditure on education, with weaknesses in firms conducting global research and development, high-tech exports, the quality of local universities and number of scientific publications.

The press release further added that in general, further efforts are required in Human capital, Research and Infrastructure.

Highlighting the importance of investment in improving innovation quality as essential for closing the “innovation divide”, co-editor Soumitra Dutta, Dean at the Cornell College of Business pointed out that: “While institutions create an essential supportive framework for doing so, economies need to focus on reforming education and growing their research capabilities to compete successfully in a rapidly changing globalized world.”

The report also found that Europe benefits from comparatively strong institutions and well-developed infrastructure, while room for improvement is found in business sophistication and knowledge and technology outputs.

The WIPO press release also noted that Europe did particularly well in environmental performance, ICT access, and school life expectancy. At the same time, it noted that there is room for improvement in research and development, financed by businesses, research and development financed by foreign firms, high-tech exports, and international patent filings.

Pointing to the benefits of innovation, Bruno Lanvin, INSEAD Executive Director for Global Indices, and co-editor of the report said, “Some may see globalization as a trend in search of its ‘second breath.’ Yet, the relative contraction of international trade and investment flows does give even more strategic importance to the two sides of global innovation: on one hand, more emerging countries are becoming successful innovators, and on the other hand, an increasing share of innovation benefits stem from cross-border co-operation.”

The Global Innovation Index

The Global Innovation Index 2016 (GII) explores the rising share of innovation carried out via globalized innovation networks, finding that gains from global innovation can be shared more widely as cross-border flows of knowledge and talent are on the rise. It also concludes that there is ample scope to expand global corporate and public R&D cooperation to foster future economic growth.

At the national level, the report says that innovation policies should more explicitly favour international collaboration and the diffusion of knowledge across borders. New international governance structures should also aim to increase technology diffusion to and among developing countries.

Published annually since 2007, the GII is a leading benchmarking tool for business executives, policy makers and others seeking insight into the state of innovation around the world. Policymakers, business leaders and other stakeholders use the GII to evaluate progress on a continual basis.

The WIPO press release added that this year’s study benefited from the experience of its Knowledge Partners, A.T. Kearney and IMP³rove – European Innovation Management Academy, the Confederation of Indian Industry and du, as well as of an Advisory Board of international experts.

The core of the GII Report consists of a ranking of world economies’ innovation capabilities and results. Recognizing the key role of innovation as a driver of economic growth and prosperity, and the need for a broad horizontal vision of innovation applicable to developed and emerging economies, the GII includes indicators that go beyond the traditional measures of innovation such as the level of research and development.

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Environment

Major Environmental Groups Call On Businesses To Lead On Climate Policy

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Eleven leading environmental and sustainable business organizations published an open letter in the New York Times today, urging the CEOs of Corporate America to step up their engagement on climate policy. Signatories include the heads of BSR, C2ES, CDP, Ceres, Conservation International, Environmental Defense Fund, The Climate Group, The Nature Conservancy, the Union of Concerned Scientists, World Resources Institute, and World Wildlife Fund.

In the letter, the organizations call on businesses to adopt a science-based climate policy agenda that is aligned with the recommendations of the Intergovernmental Panel on Climate Change, and with the goal of achieving net-zero emissions by 2050.

The letter highlights three essential actions for businesses to execute this agenda:

  1. Advocate for policies at the national, subnational and/or sectoral level that are consistent with achieving net-zero emissions by 2050;
  2. Align their trade associations’ climate policy advocacy to be consistent with the goal of net-zero emissions by 2050; and
  3. Allocate advocacy spending to advance climate policies, not obstruct them.

Additionally, the signatories call for “robust disclosure of the above actions to ensure transparency and demonstrate leadership, as well as strong corporate governance to enable sustained, strategic and effective engagement in climate policy.”

The recommended actions follow a statement from 200 institutional investors, with a combined $6.5 trillion in assets under management, who recently called on publicly traded corporations to align their climate lobbying with the goals of the Paris Agreement. They also build on momentum from the U.N. Global Climate Action Summit in September, when many companies announced ambitious commitments to reduce their emissions to net zero by 2050 and unprecedented global youth strikes demanded accountability from business leaders.

Further, the groups’ call for corporate leadership on climate policy is in line with the goals of upcoming Santiago Climate Change Conference (COP 25), which will focus on increasing ambitious actions to tackle climate change.

“Corporate voluntary science-based commitments have spurred progress and innovation. But alone they’re not enough. We need strong national policy and regulations to protect business and their customers from the greatest risks of climate change. And we need the voice of business to insist that our government leaders deliver the policies we need. ” said Carter Roberts, President and CEO of  World Wildlife Fund, United States. “It’s time for business to make this a policy priority – not only for their own government relations teams but also for the trade organizations that represent their interests.”

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Human Rights

Venezuela, Poland and Sudan amongst 14 new Human Rights Council members

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14 new members were elected to the Human Rights Council on Thursday, following a secret ballot held in the General Assembly Hall in New York.

The Council, which meets throughout the year at the UN Office in Geneva, is an international body, within the UN system, made up of 47 States, and is responsible for promoting and protecting human rights around the world. It has the power to launch fact-finding missions and establish commissions of inquiry into specific situations.

Three times a year, it reviews the human rights records of UN Member States, in a special process designed to give countries the chance to present the actions they have taken, and what they’ve done, to advance human rights. This is known as the Universal Periodic Review.

Costa Rica, Iraq and Moldova lose out

Elections to some seats – those reserved for countries from the Asia-Pacific, Eastern Europe, and Latin America and Caribbean regions – were competitive, with more candidates than available places.

Costa Rica’s late decision, on 3 October, to throw its hat in the ring, meant that three countries contested the two available Latin America and Caribbean places. However, their bid failed, and Venezuela and Brazil took the seats.

Five nations – Indonesia, Iraq, Japan, Marshall Islands and Republic of Korea – put themselves up as candidates for the Asia-Pacific region, for which four seats were reserved: following the vote, Iraq failed to get the support it needed.

As for Eastern Europe, three nations vied for two places. Armenia and Poland won the requisite votes, whilst Moldova did not make the cut.

Africa had four seats up for grabs, and four candidates, who were duly elected: Libya, Mauritania, Namibia and Sudan. Western Europe was also a non-competitive election, with Germany and Netherlands taking the two seats reserved for their region.

Time to make way

The newly elected countries will serve for three years and take up their seats after 31 December. As only 47 of the UN’s 193 Member States can sit on the Council at any one time, an equal number will be giving up their places.

The African States stepping down will be Egypt, Rwanda, South Africa and Tunisia; the Asia-Pacific States bowing out are China, Iraq, Japan and Saudi Arabia; for Eastern Europe the retirees are Croatia and Hungary; and the States leaving from the Western European and other States region, are Iceland and the United Kingdom.

As for the Latin American and Caribbean States, Cuba’s time on the Council will come to an end, and it will be replaced by Venezuela. Although Brazil’s current term comes to an end, its successful re-election means that it will serve another three years (according to Council rules, members can serve two consecutive terms).

The new members in full

Here is the how the Human Rights Council will look, as of 1 January 2020:

African States

Angola, Burkina Faso, Cameroon, Democratic Republic of Congo, Eritrea, Libya, Mauritania, Namibia, Nigeria, Senegal, Somalia, Sudan, Togo

Asia-Pacific

Afghanistan, Bahrain, Bangladesh, Fiji, India, Indonesia, Japan, Marshall Islands, Republic of Korea Nepal, Pakistan, Philippines, Qatar

Eastern Europe

Armenia, Bulgaria, Czech Republic, Poland, Slovakia, Ukraine

Latin American and Caribbean States

Argentina, Bahamas, Brazil, Chile, Mexico, Peru, Uruguay, Venezuela

Western Europe and other States

Australia, Austria, Denmark, Germany, Italy, Netherlands, Spain

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World Economic Forum 50th Annual Meeting in Davos: Defining Stakeholder Capitalism

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The World Economic Forum today announced the theme and details for its 50th Annual Meeting, to be held 21-24 January in Davos, Switzerland. The Meeting’s theme will be Stakeholders for a Cohesive and Sustainable World. It will bring together 3,000 participants from around the world, and aim to give concrete meaning to “stakeholder capitalism”, assist governments and international institutions in tracking progress towards the Paris Agreement and the Sustainable Development Goals, and facilitate discussions on technology and trade governance.

“People are revolting against the economic ‘elites’ they believe have betrayed them, and our efforts to keep global warming limited to 1.5°C are falling dangerously short,” said Professor Klaus Schwab, Founder and Executive Chairman at the World Economic Forum. “With the world at such critical crossroads, this year we must develop a ‘Davos Manifesto 2020’ to reimagine the purpose and scorecards for companies and governments. It is what the World Economic Forum was founded for 50 years ago, and it is what we want to contribute to for the next 50 years.”

The Programme for the Annual Meeting will prioritize six key areas:

Ecology: How to mobilize business to respond to the risks of climate change and ensure that measures to protect biodiversity reach forest floors and ocean beds.

Economy: How to remove the long-term debt burden and keep the economy working at a pace that allows higher inclusion.

Technology: How to create a global consensus on deployment of Fourth Industrial Revolution technologies and avoid a ‘technology war’.

Society: How to reskill and upskill a billion people in the next decade.

Geopolitics: How the ‘spirit of Davos’ can create bridgesto resolve conflicts in global hotspots. Informal meetings to set kickstart conciliation.

Industry: How to help business create the models necessary to drive enterprise in the Fourth Industrial Revolution. How to navigate an enterprise in a world exposed to political tensions and driven by exponential technological change as well as increasing expectations from all stakeholders.

The World Economic Forum and stakeholder capitalism

The Forum’s first meeting in 1971 was established to further the idea put forward by Professor Klaus Schwab that business should serve all stakeholders – customers, employees, communities, as well as shareholders. It was reaffirmed in 1973 in the “Davos Manifesto,” a document that has shaped the work of the Forum ever since. In a major update, this year’s Annual Meeting will see the publication of a universal “ESG scorecard” by the Forum’s International Business Council, which is currently chaired by Brian Moynihan, Chief Executive Officer of Bank of America.

A more sustainable Annual Meeting

The 2020 Annual Meeting will be among the most sustainable international summits ever held. Awarded the IS0 20121 standard for sustainable events in 2018, the Annual Meeting is fully carbon neutral through reducing, calculating and offsetting event-related emissions. Initiatives put in place to achieve this goal include using locally-sourced food suppliers, introducing alternative sources of protein to reduce meat consumption, sourcing 100% renewable electricity, and reducing or eliminating the use of materials that cannot easily be recycled or re-used, such as carpets and introducing more electric vehicles.

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