SOUTH KOREA retained the global crown in the 2019 Bloomberg Innovation Index, though improvements by Germany in research and education brought Europe’s largest economy to near-parity in the annual ranking.

The United States moved up to eighth place, a year after cracks in education scores pushed it out of the top 10 for the first time.

The annual Bloomberg Innovation Index, in its seventh year, analyzes dozens of criteria using seven metrics, including research and development spending, manufacturing capability and concentration of high-tech public companies.

The ranking comes as global elites gather at this week’s annual World Economic Forum in Davos, Switzerland, where they will discuss the future of globalization, the role of the state and how innovation propels countries forward.

In the Bloomberg Index, Germany almost caught six-time champion South Korea on the strength of added-value from manufacturing and research intensity, much of it built around industrial giants such as Volkswagen AG, Robert Bosch GmbH and Daimler AG. Although South Korea extended its winning streak, its lead narrowed in part because of lower scores in patent activity.

Sweden, the runner-up in 2018, fell to the seventh spot. Patent activity boosted the scores for China and Israel, which was a big winner by jumping five spots to fifth overall. Israel surpassed Singapore, Sweden and Japan in the process.

South Korea’s staying power at No. 1 should receive a boost from fresh investments in strategic technologies and a regulatory programs that encourage startups, according to Khoon Goh, head of research at Australia & New Zealand Banking Group Ltd. in Singapore. He sees the challenge, though, in moving innovation beyond the “highly concentrated large chaebols,” or family-run conglomerates.

“Innovation is becoming increasingly important to drive economic performance, particularly in the higher-income Asian economies where there is no longer a demographic dividend and higher value-added manufacturing assembly is being shifted to lower-cost countries in the region,” Goh said.

Germany’s rise in the ranking also seems tentative, as Europe’s largest exporter struggles with a shortage of skilled workers and changing immigration policies, according to Juergen Michels, chief economist of Bayerische Landesbank. It must hone its strategy in industries such as diesel, digital communications and artificial intelligence.

(SD-Agencies)