UK’s impressive innovation record will continue to attract investment

A global innovation index co-published by Cornell University, INSEAD and the World Intellectual Property Organisation (WIPO), which highlights the role of innovation and IP as a driver of economic growth, has identified the UK as the second-most innovative country. In fact, the UK has risen to second place this year from 10th position in 2011 – a remarkable trajectory which is linked to its performance in five pillars of R&D competence: institutions; human capital and research; infrastructure; market sophistication and business sophistication. The UK’s heritage in the field of R&D in areas such as the oil and gas industry, pharmaceuticals and high-value engineering is world-renowned and this has attracted some of the world’s leading OEMs to locate here. Building on this, the UK’s use of technology clusters to support R&D talent in areas like software design and clean technologies is adding fresh momentum to Britain’s home-grown innovation drive.

According to the report, the most innovative country in the world is Switzerland, followed by the UK, Sweden, Netherlands, USA, Finland, Singapore, Ireland, Luxembourg and Denmark. A number of low-income economies are also noted among the report’s list of ‘innovation achievers’ – those that outperform their peers for their level of gross domestic product (GDP). In particular, Rwanda, Mozambique and Malawi in Sub-Saharan Africa are performing on a par with middle-income economies in terms of their GDP.

Of course, it’s not just how much innovation that is happening that matters – quality also counts. When it comes to innovation quality, which is measured in the report by university performance, the reach of scholarly articles and the international dimension of patent applications, only a few economies stand out. The US and the UK are leaders, largely as a result of their world-class universities, closely followed by Japan, Germany and Switzerland. Top-scoring middle-income economies on innovation quality are China, Brazil and India, with China increasingly outpacing the others.

While the UK has a strong track record in terms of innovation, it languishes around the 25th position in terms of the value of its GDP per capita and there is definitely a strong case for improvement in the exploitation of our excellent innovation for the common good. In order to become better at commercialising this investment in innovation, it is vital that companies are more proactive about protecting their IP. At the moment, a general lack of engagement with IP, and in particular patent filings, in which the UK ranks only 9th by European patent filings in 2014, arguably is making it harder for the UK economy to profit from its outstanding innovation.

The introduction of the Patent Box in 2013 has gone some way to providing a worthwhile tax incentive for companies that choose to locate their R&D teams in the UK. In addition, recent government proposals to allow more freedom for Research Institutes could support innovation further. If the proposals go ahead it could become easier for Research Institutes to attract and retain talent, invest in cutting edge technology and re-invest commercial income.  At the moment, they are often beholden to set annual budgets that they have to spend in order to justify receiving the same amount in the following year. This creates a feast or famine scenario whereby teams constantly have to either attract funding or justify spending. Any measure that helps to break this funding cycle and allow Research Institutes to be more certain about their funding future will be very welcome.

The calibre of the research activity taking place at British universities is also helping to position the UK as the best place to innovate in Europe. It is clear to the world that we have the skills, the people and the track record needed to innovate, encourage entrepreneurialism and greatly help successful commercialisation. We must continue to encourage this and create an innovation culture that understands the value of intellectual property protection in supporting the delivery of exciting technologies.