Paradox of Plenty: Innovation and Growth

The 2013 Global Innovation Index report describes different characteristics of countries that learn and innovate. There are 'innovation leaders' or those that have succeeded in creating well-linked innovation ecosystems where investments in human capital thrive in 'fertile and stable innovation structures'. There are also the 'innovation learners' - which include a group of 18 middle income countries that are 10% or higher above the trend line (Republic of Moldova, China, India, Uganda, Armenia, Viet Nam, Malaysia, Jordan, Mongolia, Mali, Kenya, Senegal, Hungary, Georgia, Montenegro, Costa Rica, Tajikistan,and Latvia) and demonstrate rising levels of innovation due to improvements in 'institutional frameworks, a skilled labour force with expanded tertiary education, better innovation infrastructures, a deeper integration with global credit investment and trade markets, and a sophisticated business community'. Countries like Uganda, Mali, Kenya, and Tajijistan have above-average performances, relative to their income class.

Costa Rica, Bulgaria, Montenegro, China, and Moldova, country's with relatively smaller income per capita scored higher innovation points than Mexico - how can this be? Similarly to other 'resource rich' countries in the report, countries endowed (or, historically endowed with) oil, gas, or some other natural resource crowd out investment in other productive sectors and hinder innovation. This phenomenon, known as 'the resource curse' or 'paradox of plenty' has been well documented historically. Some low- and middle-income oil rich countries usually use Norway as an example of 'what's possible when one is resource oil rich', but fail to realize that Norway is an extremely poor innovator, punching far below its weight relative to the amount of money that the country has.

It seems that being richer, and throwing more money at problems doesn't fix them. For an economy of over $1 trillion dollars, Mexico only has 15 venture-capital funds which only invested in 25 projects in 2011. The Bay Area alone (California) invested over $2 billion in the first quarter of 2013. What Mexican researchers and innovators need is support - institutions and incentives - that can fund projects from technology to market. Not empy promises.

Read More: The Global Innovation Index