Australia has slipped three places in an annual innovation assessment of global economies, moving down to 21st from 18th last year, even though it has developed a strong, innovative environment, boosted by advancements in ICT infrastructure.
The Global Innovation Index 2011, which has been produced by international business school Institut Européen d'Administration des Affaires (INSEAD) since 2007, ranks 125 economies across the world in terms of their innovation capabilities and results.
It considers six areas of innovation input: those that create the environment for innovation. It also considers two areas of innovation output: the achievements and results of innovation.
Australia scored well in terms of inputs, due in large part to its advancements in ICT infrastructure. Even though this sub-score was pulled down notably by poor imports and exports, Australia ranked 12th on innovation inputs alone, representing a strong environment for innovation.
Outputs, on the other hand, were let down, especially by poor productivity and creative goods exports. Australia ranked 31st on outputs alone, dragging the overall innovation score to 21st from 18th last year. The top three countries were Switzerland, Sweden and Singapore.
In terms of inputs, Australia's ICT infrastructure placed third, creating a conducive environment for innovation rivalling that of the top-scoring Republic of Korea and second-placed UK.
This was attributed to Australia's high rankings in ICT use, online government services and online participation rates — 8th, 5th and 2nd respectively. Australia also ranked 24th in ICT access. According to the assessment, criteria improvements could be made in this category in the areas of fixed telephone line access, mobile telephone subscriptions, broadband bandwidth per internet user, household computer access and household internet access.
Australia was also ranked highly in other non-ICT areas of innovation input. The country ranked first in the number of joint ventures or strategic alliance deals made, the length of time children remained in school and for workplace regulations.
Poor performance in other innovation inputs have dragged Australia's ranking down. These were in the areas of imports and exports of goods and services, the number of students studying abroad and the total tax rates for businesses. Australia ranked 113th for imports, 109th for exports, 110th for students studying abroad and 90th for taxes.
With regards to innovation outputs, the key areas contributing to a positive rank were better expenditure on recreational and cultural goods and services, ranked 4th, and the number of scientific and technical articles produced each year, ranked 7th.
The innovation outputs that contributed negatively were computer and communications service exports; the growth rate of GDP per person, or labour productivity; and creative goods exports such as music, jewellery and fashion.
Australia ranked 76th for computer and communications service exports, which covered a broad number of activities such as courier services, but also included international telecommunications and technical services. Productivity and creative goods ranked 82nd and 81st respectively.
The complete report is available online.