Global innovation index as a predictor of future economic readiness: A cross-country forecasting analysis

• Adbelhafid LAOUAR

  University of Boumerdes

• Ibrahim FERZIZI

  Higher School of Social Security, Mohamed Saleh Mentouri, Algiers, Algeria

In this research paper, the predictive power of the Global Innovation Index (GII) is explored within the scope of using it as a tool of strategic foresight, as opposed to its common perception as a static comparative measure of the current state. The concept of the GII is redefined and interpreted as a tool that helps in predicting countries' future readiness for economic growth through innovation. A database with data from cross-sections of six benchmarking economies – Switzerland, the United States, Germany, China, India, and Algeria – is used to create an initial dataset containing the GII score, the Economic Complexity Index, the IMD Digital Competitiveness score, R&D spending, Human Capital Index, and internet penetration level. Based on descriptive statistics, correlations, and principal components analysis, the composite indicator of Future Economic Readiness (FERI) is developed. According to the results, high correlation exists between the index and economic complexity, digital competitiveness, and R&D spending levels, while correlation with internet penetration is much lower. Limited by the sample size, generalization of results is impossible, and the next step would involve estimation via panel data econometrics. As such, policymakers need to focus on increasing investment in R&D and developing human capital resources as two innovation drivers highly correlated with future economic readiness, with the lowest performing economies gaining the most benefit from changes to their innovation ecosystems. Novelty of this work is due to the use of the GII as an innovation foresight instrument and creation of the FERI indicator.

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