Singapore tops the list in innovation and competitiveness among 40 global nations and regions, with the United States ranking sixth on a variety of key indicators, according to a recent study from The Information Technology & Innovation Foundation. The EU-15, comprised of 15 large countries in the European Union including France, German, and the United Kingdom, lags at No. 18 in the study. The Washington-based non-partisan think tank based its rankings on 16 indicators in six categories: human capital, innovation capacity, entrepreneurship, IT infrastructure, economic policy, and economic performance.

 

The foundation essentially faults the United States and Europe for having grown relatively passive about competiveness, allowing countries like Singapore, which it says has made technological innovation something of a “national obsession,” to gain crucial ground. “The rise of global economic competition means that the United States and Europe need to think of themselves as a big state (in the case of the United States) or a big nation (in the case of Europe), and proactively put in place national or continental economic development strategies,” says the report. “This particularly applies to the United States, where the prevailing view among many Washington policymakers is that the United States for so long that it will continue to be number 1.”

 

Singapore scores at the top or near the top of the list on a variety of key indicators, including ease of doing business and trade balance, with its trade balance as a percentage of gross domestic product at 29 percent, versus -6 percent for the United States. The foundation says a nation’s trade surplus is a reflection of the ability of its businesses to sell goods and services they produce in global markets. The United States is hardly a laggard, however, scoring the highest in gross domestic product per capita per working age adult—$ 83,422—and second in several key indicators including productivity, e-government, and the share and quality of world’s scientific and technical publications.

 

However, it trails in other areas, pulling down its overall score. It ranks seventh in broadband telecommunications and last in effective corporate tax rates, with a rate of 32 percent compared with No. 1 rank Ireland, at 9.6 percent. “When it comes to corporate tax competition, Europe is far more competitive than the United States,” the report says.

 

The foundation says its methodology differs from other reports that often place the U.S. higher in similar rankings because it relies exclusively on hard data, eschewing opinion surveys. What’s more, it says it divides every indicator by a denominator such as GDP or workforce, to control for the size of the country, while some others rely on aggregate data.

 

As for prescriptions, the report says the United States “needs to put into place a robust economic development policy.” The report says the European Commission “needs to expand its efforts to spur economic development, particularly by increasing its support for science and innovation and ensuring that its regulatory framework supports innovation.”

 

The foundation gives a broad outline of a competitiveness and innovation agenda, saying countries should institute incentives such as R&D tax incentives and accelerated depreciation to encourage firms to innovate within their borders. Among other suggested moves are to welcome high-skill immigrants, and to foster a digital economy, by expanding information technology investments in areas such as healthcare and education.

 

Additionally, nations must support institutions that are critical to innovation by expanding funding, not just for university research, but also boosting support for local economic development, and entrepreneurship development, among other areas. Lastly, the foundation calls for making sure that regulations and policies promote innovation rather than hinder it.

 

After Singapore in the rankings comes Sweden followed by Luxembourg, Denmark, and South Korea and No. 5.