10 most innovative countries in the world (2009)

No. 10 – Sweden
Overall score: 1.64
Innovation inputs score: 1.25
Innovation performance score: 1.88
GDP (Purchasing Power Parity): $358.4 billion
Foreign Direct Investment: $289.6 billion
Sweden has a strong engineering tradition that has made the country a leader in the automobile and telecom industries. Stockholm is a good incubator for startup companies. The European Union's 2008 survey of member nations put Sweden in the top tier of Innovation Leaders.

No. 9 – Japan
Overall score: 1.79
Innovation inputs score: 1.16
Innovation performance score: 2.25
GDP (Purchasing Power Parity): $4.5 trillion
Foreign Direct Investment: $597 billion
Japan's export-based economy might be enduring a deep recession, but its leading companies continue to innovate in key technologies. This year, pioneering carmakers Toyota (TM) and Honda (HMC) are both rolling out new, more advanced hybrids. Mitsubishi Motors and Fuji Heavy Industries unit Subaru will become the world's first major automakers to sell electric vehicles. And with energy-efficient industries set to be beneficiaries of government stimulus spending, Japan's technology strengths in solar, nuclear, and other carbon dioxide emissions-reducing technologies continue to attract investment, despite the downturn.

No. 8 – U.S.
Overall score: 1.80
Innovation inputs score: 1.28
Innovation performance score: 2.16
GDP (Purchasing Power Parity): $14.6 trillion
Foreign Direct Investment: $2.7 trillion
The recession has slammed the American economy, but the U.S. still is a world leader in all types of innovation. BusinessWeek's 2008 survey of the world's 50 most innovative companies had 31 American companies. Although many business executives are concerned about the quality of America's schools, U.S. universities continue to attract top talent from around the world. The global recession and visa difficulties, however, have led some foreign students to stay home.

No. 7 – Finland
Overall score: 1.87
Innovation inputs score: 1.76
Innovation performance score: 1.81
GDP (Purchasing Power Parity): $201.2 billion
Foreign Direct Investment: $121.9 billion
According to the European Union's survey released in January, Finland is an Innovation Leader, "with innovation performance well above that of the EU average and all other countries." The big booster to innovation in Finland is Nokia (NOK); the cell-phone giant is a major source of innovation and startups.

No. 6 – Hong Kong
Overall score: 1.88
Innovation inputs score: 1.61
Innovation performance score: 1.97
GDP (Purchasing Power Parity): $318.2 billion
Foreign Direct Investment: $1.1 trillion
One of the world's top financial centers, Hong Kong is a favorite for multinationals with operations in China and other parts of Asia. The city has a well-educated workforce and several top universities, although some business leaders fret about declining levels of English ability since Hong Kong's return to Chinese rule in 1997. Most of Hong Kong's labor-intensive factories have shifted operations across the border to mainland China, with Hong Kong now serving as a hub for logistics, design, and other services.

No. 5 – Ireland
Overall score: 1.88
Innovation inputs score: 1.59
Innovation performance score: 1.99
GDP (Purchasing Power Parity): $198.5 billion
Foreign Direct Investment: $149.1 billion
A low tax regime and a well-educated workforce have attracted Microsoft and other tech players to Ireland. Another factor helping Ireland move up the innovation ranking: The country's universities cooperate well with the private sector. The global financial crisis is taking its toll on the Emerald Isle, though: On Mar. 10, central bank governor John Hurley predicted Ireland's GDP would fall 6% this year and unemployment would hit 11%.

No. 4 – Iceland
Overall score: 2.17
Innovation inputs score: 2.00
Innovation performance score: 2.14
GDP (Purchasing Power Parity): $12.9 billion
Foreign Direct Investment: N/A
The global financial crisis has hammered Iceland. On Mar. 7, as part of a program to fight unemployment, the government announced plans to support an innovation center in Reykjavik. In addition to funding infrastructure projects like avalanche protection systems and revegetation efforts, the plan will also focus on "improving the competitive position of startups and innovative companies," the government information office said in a statement.

No. 3 – Switzerland
Overall score: 2.23
Innovation inputs score: 1.51
Innovation performance score: 2.74
GDP (Purchasing Power Parity): $309.9 billion
Foreign Direct Investment: $621.7 billion
Switzerland is a world leader in pharmaceuticals, thanks to companies such as Novartis (NVS) and Roche (RO.DE). Home to Nestlé (NESR.DE), it's also a leader in food research. Traditionally at the forefront of financial innovation, banks like UBS (UBS) have been badly damaged by the financial crisis.

No. 2 – South Korea
Overall score: 2.26
Innovation inputs score: 1.75
Innovation performance score: 2.55
GDP (Purchasing Power Parity): $1.3 trillion
Foreign Direct Investment: $74.6 billion
South Korea, which has often promoted joint research and development between state think tanks and large conglomerates, and has emerged as a leading innovator for electronics and telecommunications products, is now trying to reposition the country as a leader in green technologies. As part of the campaign, the government is seeking what it calls "Green New Deal" projects worth some $35 billion by 2012, and aims to increase the country's R&D spending to 5% of its GDP by 2012, from 3.47% in 2007. President Lee Myung Bak has also given a top priority to streamlining regulations to help accelerate innovation.

No. 1 – Singapore
Overall score: 2.45
Innovation inputs score: 2.74
Innovation performance score: 1.92
GDP (Purchasing Power Parity): $240 billion
Foreign Direct Investment: $142.4 billion
For decades, the Singapore government has aggressively courted foreign investment. The Southeast Asian island nation is a center for manufacturing, with strong petrochemicals, consumer electronics, and pharmaceutical industries, and the government has funded the growth of industrial parks focused on nurturing innovation in technology and biotech. Singapore's universities receive extensive support from the government, helping to make the country an attractive destination for multinationals seeking a well-educated workforce. Although Singapore has a population of just 4 million, the country makes it relatively easy for foreign talent to live and work there.


Source: BusinessWeek