The report assesses a country's institutions, human capital and research, infrastructure and market and business sophistication to gauge its level of innovation input and its knowledge and technology and creative outputs.
UAE tops region in new innovation index report
The UAE leads the region in Global Innovation Index rankings this year, according to a new report.
The report, produced by Cornell University, Insead and the World Intellectual Property Organisation (Wipo), outlines the business environment to identify the world's most innovative economies.
It assesses a country's institutions, human capital and research, infrastructure and market and business sophistication to gauge its level of innovation input and its knowledge and technology and creative outputs.
The UAE has the region's strongest inputs, but it is down one place to 38th in global ranking compared with last year. Its output index, like the rest of the GCC, lags behind.
"If we take the UAE's performance, it is remarkable on the input side, in terms of finance, resources, right type of ICT infrastructure, elements of support and guidance, interest from the Government. The ingredients are well-aligned, yet we don't see that being matched by the output side," said Bruno Lanvin, a co-editor of the report and executive director of Insead's European Competitiveness Initiative.
Mr Lanvin said: "What is missing right now is the most difficult component. The ingredients are there, but it is about creating the right environment. You have to retain, attract and generate talent and combine them with local talent."
While there is capital to fund innovation and education, the GCC is not yet producing enough products and services to export. The lack of patents filed and registered in the region was identified as one of the main reasons for poor output scores.
"We are an economy rich in natural resources, but we need other sources of income and to diversify our economies," said Hatem Samman, a principal at Booz & Co. "To do that, we have to innovate to be competitive in order to sell those new innovations domestically and hopefully internationally."
In 2011 just 194 patents were filed in the UAE, a fraction of the 195,000 filed across the world.
Overall, Switzerland ranks top place, followed by Sweden, the United Kingdom and Netherlands, all of which rely on service economies.
"There is a commonality between the top 10 countries - they are small with typically less than 10 million people with no natural resources. So historically those countries have had to focus on innovation and find a way to be competitive internationally," said Mr Lanvin. "To some extent it is more difficult when a country is endowed with oil and gas to think of the future, which is not tomorrow but 10 to 20 years from now. It requires a vision and long-term planning."
The domination of large state-owned or backed conglomerates was also highlighted as a hindrance to innovation.
"Monopolies don't allow you to compete," said Mr Samman. "You have to pave the way towards competition, but it is not always easy. You can bring in competition from outside that are very advanced but in some way they can hurt your economy because they can damage the indigenous companies."
Experts agreed, though, that the country and the region as whole were on the right tracks and that the innovation output index scores would improve in the coming years.
"The UAE has witnessed incredible social economic momentum, making it a hub for goods and merchandise a few decades ago, then a social hub and now one for ideas. We can see the focus of leadership on that theme. We feel we have role to play in this fabric, not alone, but as part of the whole ecosystem," said Osman Sultan, the chief executive of du, and one of the knowledge partners of the report.