Note: this article is an excerpt from a full report published on Medium, visible here. If you like this article, or to understand the context of the model, I suggest consulting the complete text!
Innovation correlates with the raw index at a remarkable .9. This significance begets thought given its superiority in correlation over indicators one would think as mattering more to an overall economic system, such as quality of life, equity, and even regulatory quality, which we have determined to an important contributor to ultimate systemic strength.
Our adjusted innovation index is based upon the Global Innovation Index (GII), which defines innovation as “a new or improved product or process (or a combination thereof) that differs significantly from the unit’s previous products or processes and that has been made available to potential users (product) or brought into use by the unit (process).”
This takes a more expansive approach that purely measuring R&D and incorporates a country’s ability to “exploit new technological combinations” as well as directly develop new products or processes. The index compiles over eighty indicators including institutional environments, education and R&D, infrastructure and ICTs, market sophistication, knowledge sophistication, IP outputs, and creative goods…
