Why Bangladesh ranked 116th three times in a row in the Global Innovation Index

The Global Innovation Index (GII) released by the World Intellectual Property Organization (WIPO) on the 20th of this month ranked 132 nations, using 81 different indicators, to reflect their respective state of innovation.

Developed nations like Switzerland, Sweden, the US, the UK and South Korea were ranked as the most innovative nations while countries like Yemen and Myanmar ranked at the very bottom of the list. What is worth noting is the fact that Bangladesh ranked 116th every year since 2018 despite much progress made in the area of innovation thanks to countless government and private initiatives. 

What is innovation by the way? Innovation, in a nutshell, is the process of creating or improving products or services based on an idea. On a national level, innovation is essential for growth, prosperity and better living standards. Now the question is - does the GII reveal any systemic weaknesses or does it understate the country's innovative potential? The answer is complicated and requires some explanation.

Let us first take a look at the GII report generated by WIPO regarding Bangladesh. It said that given its GDP per capita, Bangladesh has a GII score that falls below expectations. In that regard, in 2019, according to the WIPO Statistics Data Center, the total number of patents filed (a tool for measuring the level of innovation) in Bangladesh was only 89, which was far less than that of both Sri Lanka (412), Pakistan (411) and India (34,051).

On the flip side, the report also added that Bangladesh produces more innovation output than expected relative to its relative level of innovation investment. At face value these conclusions send mixed signals, so let us explore further.

The report broke down the GII score (based on which the countries are ranked) into 7 pillars or areas, where Bangladesh performed the best in producing 'Knowledge and technology outputs' (ranked 92nd) while it performed the worst in 'human capital and research', where it ranked 128th out of 132 countries. From this, we can glean that while our country may have a lot of innovative potential, factors like our education system may be holding the country back. 

In fact, in the section highlighting the strengths and weaknesses of Bangladesh in the GII 2021, Bangladesh had the lowest rank in 'Education' (129th), 'Expenditure on Education as % of GDP ' (114th), 'University-industry Research and Development (R&D) collaboration' (123rd ), 'Pupil-teacher ratio, secondary' (122nd ), which reveals a structural weakness in Bangladesh's education system potentially limiting its innovation capabilities. 

In a brief interview regarding the obstacles to innovation in Bangladesh, Dr Syed Ferhat Anwar, a Professor at IBA, University of Dhaka, echoed the same sentiments. "The education system is the primary hurdle. It prioritises publications over innovation", he explained. 

Interestingly, Bangladesh was quite high (65th) in the 'Citable documents H-index' criteria, which was listed as one of its strengths. "R&D [for innovation] comprises two components, research and development. We as a nation are good with research but the methodology of the [GII] ranking focuses more on the development part," Anwar added in that regard.

"Still, I will put the primary blame on academia, including individuals like myself, and the lack of applied research," he responded. As mentioned, Bangladesh ranked 123rd in the area of 'University-industry R&D collaboration,' so clearly there is much room for improvement in that area. 

While the country's education system may be the primary obstacle to innovation in Bangladesh, the weaknesses revealed by the GII report hint at two others. The first one is a low percentage of graduates in science and engineering in Bangladesh (106th). This is not the result of a lack of capable institutions to educate graduates but a result of the lack of job opportunities in the country in that field, forcing the best scientific and innovative minds of the country to leave for better opportunities abroad (resulting in brain drain) or settle for more secure government or bank jobs.

Secondly, a lack of FDI to fuel innovation in the economy remains an issue for Bangladesh due to difficulties repatriating profits and doing business (168th out of 190 in the latest Ease of Doing Business Index). 

This is further supported by the fact that the GII report ranked Bangladesh 91st in the criteria of 'Venture capital recipients, deals/bn PPP$ GDP'. However, the situation may be changing fast this year as local startups like Chaldal, Truck Lagbe and Shopup have been able to attract around $120 million worth of foreign venture capital funding this year, which is three times higher than that of last year.

This is also where the cracks regarding the accuracy of the GII score in estimating the situation of innovation in Bangladesh start forming. We need to take the subjective rankings presented in the GII with a grain of salt. Dr Ferhat Anwar also expressed scepticism regarding the validity of the GII because of the qualitative nature of the rankings. 

Firstly, it does seem highly implausible for Bangladesh to remain in the same position in terms of innovation four years in a row despite a large number of promising startups like bKash coming out of the woodwork, significant government initiatives and growing venture capital funding the country has received. For example, the a2i Service Innovation Fund through its Idea Bank platform was able to receive over 3,835 proposals and grant over a quarter million dollars to innovators. 

Moreover, the Covid-19 pandemic may have heavily reduced the capability of existing startups to innovate as they focused on survival. According to an analysis done by LightCastle Partners, a management consultant, only startups in the MFS, grocery and logistics industry experienced a rise in demand while demand in all the other sectors plummeted, forcing many startups out of business. 

Finally, the GII is far from comprehensive since it does not rank all the countries in the world and because sometimes it had to compute values for indicators using outdated data (as early as 2012 in one case). Still, the GII is useful as a reference for understanding the productive and innovative potential of the economy (Bangladesh was ranked 2nd in labour productivity growth and 17th in GDP/unit energy consumed) and highlighting the biggest obstacles to its innovation journey and the need for substantial reform.

In other words, while the GII may not be the most accurate measure of the situation of innovation in Bangladesh, it does point out the need for overhauling our education system to prioritise and facilitate research application and innovation through academia-industry collaboration and creating the financial and non-financial incentives necessary to both attract FDI and prevent brain drain. 

"Our mindset that we are incapable and the lack of recognition of our efforts to innovate hold us back," Anwar had replied when asked about Bangladesh's challenge to innovate. Academia, industry, the government and investors all need to pull their weight so that we as a nation can realise our potential to innovate.