Chart of the Day: The Most Innovative Country in the World Is…

light-bulbPatent applications are one way economists can measure how innovative a country is — a new paper by Ana Maria Santacreu from the Federal Reserve Bank of St. Louis does exactly that. In The New World Leader in Innovation, Santacreu tracks patent applications by residents of countries to find out which ones are innovating at the fastest rate.

While the world is becoming more innovative according to her numbers (between 2000 and 2015 the number of new patent applications rose from 824,055 to 1,862,548) there has been a startling shift in where those patent applications are coming from.

Back in 2000, Japan was the world leader in innovation, accounting for 47% of all new patent applications by residents, followed by the U.S. (20%) and the EU (14%). Collectively, those three countries accounted for 81% of all new patent applications.

Fast forward to 2015 and the landscape has changed markedly.

The biggest innovator using patents as a measure is China by a long shot – it is now responsible for 51% of all new patent applications worldwide while applications in the previous three innovation leaders have fallen steeply — Japan sits at 14%, the U.S. at 15% and the EU is at a lowly 5%.

The chart is below – you can read the full paper here.

Santacreu doesn’t see this trend slowing down – in its latest Five-Year Plan, China has put innovation front and centre once again, setting out a firm target of 12 patent applications per 10,000 people.