Saudi Arabia, along with Qatar, UAE, Bahrain and Oman are classified among the top 50 countries in terms of innovation performance, the "Global Innovation Index 2012 (GII): Stronger Innovation Linkages for Global Growth" published by INSEAD, the leading international business school, and the World Intellectual Property Organization (WIPO), a specialized agency of the United Nations, said Wednesday.

The GCC needs to foster innovation to diversify its economic base, reduce its dependence on hydrocarbons, and create opportunities for its large number of young citizens.

The GCC has made marked strides in creating innovation-based economies. However, it still lags behind developed countries and has room to improve its global rankings by creating vibrant, entrepreneurship-friendly environments.

Overall, the GCC needs to forge ties that bring together al l the stakeholders in the innovation ecosystem - academics, regulators, multinational companies, and entrepreneurs among them - in a cohesive, targeted program aimed at fostering innovation.

The creation of coherent links is vital to establishing an innovation economy. The process must involve an innovation-promotion entity that fuses policies, stakeholders, and operations into a focused effort.

For the second year running, Qatar and the United Arab Emirates lead the Middle East in overall innovation performance, the report said.

The list of overall GII top 10 performers has changed little from last year. Switzerland, Sweden, and Singapore are followed by Finland, the United Kingdom, the Netherlands, Denmark, Hong Kong (China), Ireland, and the United States of America. The Global Innovation Index ranks 141 countries/economies on the basis of their innovation capabilities and results. It is calculated as the average of two sub-indices. the Innovation Input Sub-Index gauges elements of the national economy which embodies innovative activities grouped in five pillars: (1) Institutions, (2) Human capital and research, (3) Infrastructure, (4) Market sophistication and (5) Business sophistication. The Innovation Output Sub-Index captures actual evidence of innovation results, divided in two pillars: (6) Knowledge and technology outputs and (7) Creative outputs.

The GII includes 15 economies from the Middle East and Northern Africa (MENA), of which two--Qatar (33rd) and the United Arab Emirates (37th) - rank among the top 40 overall. Similarly, the UAE (28th) and Qatar (30th) rank highest among MENA countries in the input sub-index and rank in the top 20 on several pillars.

Where most MENA countries trail innovation leaders is in innovation outputs. Qatar, Jordan and the UAE lead the regional ranking, although they score below the top forty with Qatar at 41st place, Jordan at 46th and the UAE at 51st.

Consequently, most MENA countries underperform on the Innovation Efficiency Index - a measure calculated as the ratio of the output sub-index over the input sub-index and that shows how innovation inputs are best translated into innovation outputs. Jordan ranks highest in efficiency at position 21 followed by Kuwait in 54th place out of 141 countries. Such examples from Jordan and the GCC demonstrate rising levels of innovation achievements in MENA as a result of improvements in institutional frameworks, a skilled labor force (with an expanded tertiary education), and deeper integration with local and global investment and trade markets. These examples also point to the need for improvement in knowledge outputs such as scientific journals and patents that ultimately result in creative goods and services for both local and global consumption.

"The GII is a timely reminder that policies to promote innovation are critical to the debate on spurring sustainable economic growth," WIPO Director General Francis Gurry said. "The downward pressure on investment in innovation exerted by the current crisis must be resisted. Otherwise we risk durable damage to countries’ productive capacities. This is the time for forward-looking policies to lay the foundations for future prosperity."
At the pillar level, Qatar ranks 14th, 8th and 19th among 141 countries in Human capital and research, Business sophistication and Creative outputs respectively. Similarly, the UAE shines in Infrastructure, Business sophistication and Creative outputs where it ranks 17th, 16th and 20th respectively.

Other MENA countries managed to secure high rankings in several pillars. For example, Oman scored a high 33rd position in Institutions, Saudi Arabia ranks 36th in market sophistication and first in MENA.

Similarly, Bahrain’s human capital and research ranks 18th overall, second only to Qatar in the region. In Knowledge and technology outputs, Lebanon comes first in MENA at position 48 overall.

Soumitra Dutta, Roland Berger Professor of Business and Technology at INSEAD and the founder of the GII noted, "The GII seeks to update and improve the way innovation is measured. Today’s definitions must capture an environment which is context-driven, problem-focused and interdisciplinary. The 2012 variables were broadened in an effort to find the right mix which captures innovation as it happens today."

The study shows that the dynamics of innovation continue to be affected by the emergence of new successful innovators, as seen by the range of countries across continents in the top twenty GII ranking, as well as the good performances of emerging countries such as Jordan (56th). The report also highlights those economies that are over-performing countries/economies with similar income levels (as measured by GDP per capita in PPP$ ).

Jordan is placed among the innovation learners, Tunisia, Lebanon, Morocco, and Egypt achieve GII scores that correspond to their income levels, while the remaining countries in the region achieve positions below their potential.

"Innovation is becoming the spearhead of competition - at a regional level, on a national level, and for companies," said Ben Verwaayen, CEO of Alcatel-Lucent. "How to deal with that challenge will determine the destiny of competitiveness for all players."

China (34th) is the top-ranked emerging economy while Russia is ranked (51st), Brazil (58th) and India (64th). The report notes a need for the BRIC countries (Brazil, the Russian Federation, India, and China) to invest further in their innovation capabilities to live up to their expected potential. China’s performance on the key knowledge and technology outputs pillar is outpaced only by Switzerland, Sweden, Singapore, and Finland. However, the report notes that both China and India have weaknesses in their innovation infrastructure and environment.

"By cultivating human capital, promoting research and development (R&D) and developing traditional and nascent sectors, the GCC and other MENA countries have, undeniably, made significant progress to further expand their innovation capabilities in past years", said Karim Sabbagh, Senior Partner with Booz & Company. However, MENA countries must focus their efforts on a coherent capabilities-driven strategy to unlock value creation on a reliable and sustained basis. In particular, MENA countries need to pursue a clear strategic direction, build a system of differentiating capabilities consistent with that direction, and create products or services that thrive within that system. When these three elements are aligned and mutually reinforcing, countries of the region would be able to have a global comparative advantage. Chandrajit Banerjee, Director General, CII, said "every country can aspire to be an innovation-driven economy. The more resource-constrained an economy is, the more prone to innovation it actually can be. Importantly, innovation is about acts which improve everyday lives and a journey towards faster-sustainable-inclusive-growth."