South Korea Ranks No. 1 Again in Innovation Index

The U.S. dropped out of the top 10 in the 2018 Bloomberg Innovation Index for the first time in the six years the gauge has been compiled. South Korea and Sweden retained their No. 1 and No. 2 rankings, according to Bloomberg. The index scores countries using seven criteria, including research and development spending and concentration of high-tech public companies.

The U.S. fell to 11th place from ninth mainly because of an eight-spot slump in the post-secondary, or tertiary, education-efficiency category, which includes the share of new science and engineering graduates in the labor force. Value-added manufacturing also declined. Improvement in the productivity score couldn’t make up for the lost ground.

Singapore jumped ahead of European economies Germany, Switzerland and Finland into third place on the strength of its top ranking in the tertiary-efficiency category. South Korea remained the global-innovation gold medalist for the fifth consecutive year. Samsung, the nation’s most-valuable company by market capitalization, has received more U.S. patents in the 2000s than any firm except IBM. And its semiconductors, smartphones and digital-media equipment spawned an ecosystem of Korean suppliers and partners similar to what Japan developed around Sony and Toyota.

China moved up two spots to 19th, buoyed by its high proportion of new science and engineering graduates in the labor force and increasing number of patents by innovators such as Huawei. Japan, one of three Asian nations in the top 10, rose one slot to No. 6. France moved up to ninth from 11th, joining five other European economies in the top tier. Israel rounded out this group and was the only country to beat South Korea in the R&D category.

South Africa and Iran moved back into the top 50; the last time both were included was 2014. Turkey was one of the biggest gainers, jumping four spots to 33rd because of improvements in tertiary efficiency, productivity and two other categories. The biggest losers were New Zealand and Ukraine, which each dropped four places. The productivity measure influenced New Zealand’s shift, while Ukraine was hurt by a lower tertiary-efficiency ranking.

Movements in this year’s list were generally less dramatic than last year, when Russia took a 14-spot tumble following sanctions related to Ukraine and the plunge in energy prices. In the current index, it moved up one spot to 25th.