"Innovation will be the single most important factor in determining America ’s success in the 21^st century. Where once we optimised our organisations for efficiency and quality, now we must optimise our entire society”. (US’ Council on Competitiveness).

Innovation is on the agenda; and the former dictum is felt no less by Asia and the EU.

At a guess, you might presume on a global scale that the United States leads the way in innovation. And you’d be right. Their spending is staggering. Their military R & D budget alone is more than $50 billion. But other nations too harbour ambitious goals. Headed by president Hu Jintao , China wants to raise R & D spending to 2.5% of GDP, and other emerging economies are nipping at their heels. Globalisation has created a unique situation; simply doing the same as before – only more intensively – is in the doldrums. For countries to remain really competitive they must get creative.

So if the US tops the list of innovators, where does that leave the rest of the world? and which countries respond best to the new challenges?

World Business and INSEAD, in association with BT recently launched the Global Innovation Index 2007 (GII), designed ‘to show the degree to which individual nations and regions currently respond to the challenges of innovation’. It’s very interesting.

To get the full breadth of the study I would encourage you to read the research and view the methodology (World Business - registration needed), but for those without the time, here are a few highlights:

• no surprises, the US is the top innovator
• Germany is in second place
• Europe ’s performance (10 of the top 20) is an optimistic sign for the future
• India come 23^rd and China 29^th
• Finland spend 3.4% of GDP on R & D
• look east for the future of innovation
• the innovative Asian market will produce some interesting challenges for global firms
• UAE is the star of the middle east

As the article explains there are many intriguing plots and sub-plots lurking in the details of the model, and it’s probably important to point out that it’s more than a simple ranking measure. Countries at the top of the list are there because they have the best environments to innovate and are adept at exploiting them. Having said that, although top institutions, plenty of money and strong minds can go a distance, to really strive ahead it takes a culture of diversity, optimism and ultimately a meritocracy to be at the top. Over time the GII will chart how each country performs.