Last year, a consortium composed of Cornell University, European Institute of Business Administration and World Intellectual Property Organization unveiled the annual 2013 Global Innovation Index. It ranked the innovation capabilities of 142 countries by using 84 indicators, which included, among others, the quality of higher education, availability of venture capital and government support.
Even a brief look at the Index led me to a curious observation: the top of the ranking was heavily populated by countries representing established democracies. To make sure this observation had any statistical meaning, I compared the Index with the 2013 Freedom of the World Report published by Freedom House, a U.S.-based non-government organization that monitors democratic developments around the world. (I know, Freedom House is often criticized for its highly subjective, often biased, assessments. Yet, it provides the only systematic source of data on democratic credentials of the world’s countries.)
The Freedom of the World Report makes assessments in two categories, political freedom (PF) and civil liberties (CL), by using a 7-point scale: 1 represents the “most free” and 7 the “least free” rating. Depending on the rating, a country is classified as “Free,” “Partly Free” or “Not Free.” Of 30 countries on the top of the innovation Index, 28 were “Free” (the combined PF/CL ranking of 1.1). Only two countries, Hong Kong (#7) and Singapore (#8) were classified as “Partly Free” (the combined PF/CL ranking of 3.5 and 4.0, respectively).
In contrast, among 30 countries at the bottom of the Index, only two, Lesotho (#124) and Benin (#127) were classified as “Free” (the combined PF/CL ranking of 2.5 and 2.0, respectively). Of the rest, 17 countries were “Partly Free” and 11 “Not Free” (the combined PF/CL ranking of 4.1 and 6.2, respectively).
Indeed, there appears to be a strong correlation between the level of democratic developments in a given country and the ability of this country to innovate. This finding may have implications for U.S. government when it allocates funds to promote entrepreneurship and innovation in foreign countries. Government officials would be wise to consider the maturity of democratic institutions in recipient countries when anticipating potential return on innovation investment.
As for the rest of us, we have yet another confirmation of what we always intuitively knew: to be more innovative, you have to live in a free country.