Israel ranks only 36th out of 152 nations in new innovation index

Shining in economic diversity and digital economy, the ‘startup nation’ trails in stability and freedom in Indigo Index

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

The Indigo Index's top 25 countries - click to enlarge. (courtesy)
The Indigo Index's top 25 countries - click to enlarge. (courtesy)

Despite its thriving and innovative startup sector, Israel scores only 36th out of 152 countries ranked in a new global index that lists the countries that are most likely to thrive and prosper in the coming decades, based on their creative and digital prowess.

The new Indigo Index, published on Tuesday by the journal Global Perspectives, is based on the assumption that the world is moving away from an economy based on natural resources toward one that is powered by creativity and digital skills. While the gross domestic product (GDP) of nations measures the value of goods and services in an economy in monetary terms, the Indigo Index sets out to be a measure of the entrepreneurial ecosystem, mapping out the future potential of the countries it ranks within this changing world.

The new gauge ranks 152 countries according to five metrics that are measures of the development of a country’s infrastructure for doing business: creativity and innovation, economic diversity, digital economy, freedom, and stability and legal frameworks. The ranking sheds light on how impacttful each of the Indigo criteria are in shaping a country’s economic growth.

Sweden is at the top of the list, followed by Switzerland, Finland, Denmark, and then the UK. The score places Israel 36th overall, behind countries like the US (18th) and Italy (22nd) and just above Slovakia (37th) and Croatia (38th).

The Indigo era

The index shows that Israel is ranked a high 11th for economic diversity and 14th for digital economy, but 36th for creativity and innovation, 57th for stability and legal framework, and 59th for freedom.

Israel’s ranking reflects its strong high-tech sector, its strength in a variety of industries from technology to defense to aerospace, and its highly advanced digital economy, the compilers of the index said.

The ranking is named after The Indigo Era, a term coined by Russian-Jewish billionaire Mikhail Fridman to describe the new economic shift. The term Indigo has been used to refer to children with special or unusual abilities, and the term was adopted by Fridman to argue that countries must encourage creative education and digital skills to give students and employees an edge over competing economies.

Fridman is the founder of LetterOne, a global investment business, and also the founder of the Genesis Prize, in which Israel’s prime minister annually awards $1 million to Jews who win global recognition due to their achievements in the fields of science and the arts. LetterOne is the producer of the journal and the index.

Mikhail Fridman singing at Musical Marathon 5775 in Moscow on June 24, 2014. (Photo courtesy Russian Jewish Congress)
Mikhail Fridman singing at Musical Marathon 5775 in Moscow on June 24, 2014. (Photo courtesy Russian Jewish Congress)

“We are entering a disruptive era driven by extraordinary levels of human creativity. A new generation of curious, strong-willed and talented individuals is unrestricted by convention or the past. This new ‘Indigo’ generation is now shaping tomorrow’s economy and creating national wealth,” wrote Fridman in an article for the first volume of Global Perspectives, citing the changes in free market principles occurring in the US and Britain’s exit from the European Union as part of the global disruptions.

The Nordic countries are particularly well-prepared for the future global economy, with three (Sweden, Finland and Denmark) scoring in the global Index’s top five. This is attributed to their very high scores for creativity and innovation as well as freedom, which are strong drivers of the overall score, the compilers said.

The UK scores well in terms of economic diversity (coming third globally) and its digital economy (4th), but lags in creativity and innovation (12th) and freedom (14th), when compared to other rich developed nations. The Asia-Pacific region is represented in the top 25 by Japan (9th), Australia (10th), Singapore (15th), New Zealand (19th) and South Korea (23rd).

The Indigo Index's bottom 25 countries - click to enlarge. (courtesy)
The Indigo Index’s bottom 25 countries – click to enlarge. (courtesy)

“In order to gauge a country’s potential ability to compete and grow in this new era, we believe it is important to look at broader socioeconomic factors such as education, digital infrastructure, the legal system and IP rights, for example, hence we have created a new ‘Indigo Index,’” said Global Perspectives Series Director Stuart Bruseth in a statement. “The Indigo Index provides some insight into the state of a country’s infrastructure that will shape and influence its economic performance in this new economic era.”

The Indigo Index uses over 30 socioeconomic measures from a wide range of published data sources, including the World Bank, UNESCO, CIRI Human Rights Data Project, the Center for International Development at Harvard University and the Global Education Monitoring Report.

The data was compiled by UK-based BoxClever Consulting, in association with LetterOne and freuds, a public relations firm.

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