Scandinavia – a start-up delight!

Nowadays, numerous individuals’ start each morning by using their tablet or iPhone; we go through the nightly received e-mails, glance the latest news or simply catch up on one of the many social platforms. Internet has become an exceptional tool that has given rise to the daily economy of sharing. Small start-ups can instantly reach out to gigantic global players, and innovation is more global than ever.

Once again I am pleased to conclude that the Nordic countries seem to be in the forefront of this development. According to The Global Innovation Index 2013, the overall innovation capacity is in the very top here.

Annually, The Global Innovation Index ranks countries that inspire, emboldens and permits innovative ideas and knowledge intensive start-ups to grow and further develop. The countries in the top must have the right mixture of encouragement of ingenuity as well as the precise set of tools to stimulate innovation and commercialisation of academic research and creative ideas.

The Global Innovation Index relies on two sub-indices; the Innovation Input Sub-Index and the Innovation Output Sub-Index that are each built around pillars. For example, the five input pillars; human capital and research, infrastructure, market sophistication, institutions and business sophistication, all capture elements of the national economy respectively, and each of these pillars are in turn divided into sub-pillars composed of individual indicators, 84 in total. Hence, it is a complex index that takes many diverse dimensions of innovation into account.

The Global Innovation Index 2013 accentuates the importance of availability of funding for the development of start-ups, and emphasises the significance of well working innovation hubs. Most of the countries that positions in the top of the index all have top-ranked universities enclosing student incubators that offers everything from free working space to specific courses and mentor programs to encourage and foster virtuous entrepreneurship.

Three of the top ten countries in The Global Innovation Index 2013 stand in the Nordic region, and only Switzerland is ranked higher than Sweden. This subsequently means that Sweden is ranked to have the strongest innovation capacity within the whole European Union.

Sweden

For the third year in a row – Sweden remains in the second position. It is ranked as 3^rd on outputs and 5^th on inputs, and performs, with respect to its capability, especially well in gross domestic expenditures on R&D considered by business enterprise over GDP where it is ranked number 5. When it comes to patents Sweden is ranked number 6^th, and royalties and licences fees over total services as well as within citable document the country is listed as number 10. Sweden’s principal weakness is primarily intangible assets as well as in trade and competition where it ranks 39^th and 32^nd respectively. It also needs to work on embracing and encouraging creativity in a broader sense as it places 12^th in creative outputs. Overall, Sweden stands however very strong in all pillars of innovation and entrepreneurs seem undoubtedly to prosper and thrive in the cold country up north.

Finland

In business model creation, ICTs, rule of law, government effectiveness, freedom of press and political stability Finland, on an indicator level, places 1^st. Accordingly, it ranks 1^st in human capital and research and, with only Denmark ahead, 2^nd in institutions. Finland is extremely virtuous and good in some specific areas; however, the country positions significantly low in other sub-rankings. The country’s main areas of concern set in areas of gross capital formations, intensity of local competition, protecting investors and foreign direct investment net flow. Finland furthermore ranks notably low, in opposition to Sweden, in gross domestic expenditures on R&D. Nevertheless, Finland achieves positions among the top 25 in all primary pillars of innovation, and most certainly – start-ups seems to flourish and grown in the land of the thousand lakes.

Denmark

In the overall ranking Denmark is listed as number 9. Denmark’s main difficulties are the decline in employment in knowledge-intensive services; from 45.1% in 2008 to 34.0% in 2010, the drop in school life expectancy from 16.8 years in 2009 to 13.2 years in 2010, and the decline in the growth rate of labour productivity that fell from 40% in 2010 to just 1.5% the year after. The country is however ranked in top when it comes to market sophistication, business sophistication, infrastructure, research and human capital. Regarding creative outputs Sweden could advantageously learn a lot from Denmark whereas Denmark beneficially would learn significantly from Sweden considering knowledge-intensive services – a reciprocal exchange. Denmark is ranked 1^st considering institutions, and the country is reaches high positions in all 25 fundamental posts of innovation; no wonder that innovation capacity is so strong in Denmark!

Roots in creating major industries within engineering and technology, high levels of general innovation, strong government support, high level of public environmental awareness and a constant desire to apply technological insights to environmental challenges is argued to be some of the reasons for why the Nordic countries constantly seem to rank highly in global innovation rankings. With several additions, this is probably true; and what certainly can be concluded is that even though there are still much left to work on – the Nordic countries are indeed a start-up delight!

The full Global Innovation Index 2013 report can be downloaded here.