GENEVA: Funding for innovation swelled during the Covid-19 pandemic, with significant growth in developing countries, the UN said on Thursday, warning though that the current geopolitical turmoil was threatening the advances.
In a fresh report, the UN’s World Intellectual Property Organisation (WIPO) found that research and development spending and other investments that drive innovative activities continued to boom last year despite the still-raging pandemic.
“This is contrary to what we expected,” WIPO chief Daren Tang told reporters, pointing out that during previous downturns, innovation spending plummeted.
But the global health crisis sparked an upsurge in innovation spending in “whole new areas”, and in regions that do not usually receive a large share of such investments.
Research and development investment by the top corporate spenders swelled by nearly 10 percent in 2021 to over $900 billion — higher than before the pandemic — with most going to areas including pharmaceuticals, biotechnology, and information and communications technology.
Venture capital (VC) deals meanwhile “exploded” by nearly 50 percent last year, recording levels comparable to the internet boom years of the late 1990s, WIPO said.
The greatest growth was seen in the Latin America, Caribbean and African regions.
2022 outlook ‘clouded’
But WIPO warned that “the VC outlook for 2022 is more sober,” with the geopolitical turmoil swirling around the war in Ukraine and the worsening food and energy security crises appearing to put a damper on spending.
WIPO also warned that the productivity that usually follows in the wake of an upsurge in funding of innovative activities like appeared to have stagnated.
“The global innovation economy is at a crossroads this year,” Tang said.
“While innovation investments surged in 2020 and 2021, the outlook for 2022 is clouded not just by global uncertainties but continued underperformance in innovation-driven productivity.” His comments came as the UN agency published its annual ranking of the world’s most innovative countries, with Switzerland topping the list for the 12th year running.
But the Global Innovation Index 2022 indicated that the innovation economy — which has long been heavily concentrated in North America and Western Europe — is gradually diversifying.
The top 10 still counts only Western countries, with the exception of Singapore in seventh position, and showed improved performance by the United States, which moved up one spot to second place, ahead of Sweden and Britain.
But China is swiftly closing in, moving up to 11th place from 12th last year, and from 34th a decade ago.
India and Turkey both rose significantly in the ranking, making it into the top 40 for the first time.
The UN agency also highlighted how a number of developing countries, including Indonesia, Pakistan, Kenya, Brazil and Jamaica had performed “above expectation” on the innovation index relative to their level of economic development.
Sacha Wunsch-Vincent, co-author of the report, hailed the “fresh oxygen” pumped into new markets with the surge in VC spending last year, voicing hope that “this oxygen will not be cut off.” So far in 2022, though, he said the picture “is not reassuring.” “We’re going from one crisis to the next.” Asked how this could impact innovation, Tang acknowledged that geopolitical tensions do “affect the innovation ecosystem because… ideas need openness, collaboration to really bring them to the world.” At the same time, some sectors could see a boost in innovation, “because people need to overcome challenges”, including supply chain disruptions.
Investments in green energy and food and agriculture-related technologies might “get a boost”, he said, as countries strive for food and energy security.
Published in Dawn, September 30th, 2022