• «The implementation of ambitious tasks will require the active and coordinated work of ministries and departments, since most of such indicators as the Global Innovation Index or the Global Competitiveness Index are composite indicators consisting of numerous sub-indicators», – mentions economist Rauf Salakhodzhaev in his article, written specifically for CABAR.asia. 

Why should Uzbekistan strive to improve its position in these ratings?

Uzbekistan, like many other countries, is actively working to enter and improve its positions in international rankings such as the Global Innovation Index (GII) and the Global Competitiveness Index (GIC), and others.

Despite the fact that Uzbekistan is showing significant progress in such indices as Doing Business, it has fell out of the GII and GIC ratings, due to the lack of necessary country statistics. At the same time, the country’s leadership has set an ambitious task not only to return to these indicators, but also to strengthen the position of Uzbekistan in international ratings.

Each of these indices evaluates the quality and effectiveness of institutions, the state of innovation or changes in the business environment. Entrance and improvement in such indices are necessary for any developing country, since independent indicators are barometers of the country’s socio-economic development, and are often taken into account by large international investors when deciding to invest in the economy of a particular developing country.

International studies has shown that improvements in such ratings are often accompanied by an increase in FDI ликвидности inflows and increased satisfaction with the life among the population.

Often, most of these indices are calculated and consist of many sub-indicators that display various areas of a country’s social or institutional development. For example, the global innovation index is composed of 80 indicators that measure the legal system, human capital, development of information and communication technologies and the quality of education.

GII has a close positive relationship with the level of economic development of countries and the rate of economic growth. On the one hand, more developed countries have more economic leverage to stimulate innovation, but on the other hand, macroeconomic studies show that innovation is a fundamental factor in economic growth.

What is the Global Innovation Index?

The Global Innovation Index 2019 report contains information on innovation activities in 129 countries. For the assessment, 80 parameters are used that give a complete picture of innovative development, including an overview of the political situation, the state of education, the level of development of infrastructure and business. The Global Innovation Index is a study of the country’s innovative climate, which has been conducted by the INSEAD business school since 2007, as well as the World Intellectual Property Organization and Cornell University (USA). In the 2019 report, Switzerland is first in the ranking of world leaders in innovation development, followed by Sweden, the United States of America (USA), the Netherlands and the United Kingdom. The report also indicates that the leaders in their regions were India, South Africa, Chile, Israel and Singapore, and China, Vietnam, and Rwanda topped the rankings in the corresponding categories of countries, grouped by income.

Similarly, the 2019 Global Innovation Index (GII) report summarizes that:

  • In recent years, a significant innovation transformation has taken place in the world, during which there has been structural changes in the scientific, technical and innovative landscape. The role of developing countries in innovative development is growing, and their share in the total number of international patents within the framework of the WIPO international patent system is also growing;
  • Rising Research and Advanced Development costs are slowing down in developed countries, while in developing countries the role of the state in stimulating scientific and innovative activity is strengthening;
  • The authors of the report are concerned about the growth of protectionism policies in the world, since this policy has an extremely negative effect on the pestilential diffusion of innovations, which negatively affects the end users of innovative products;
  • For many years, a very limited group of countries inevitably remains the world leaders in inovative development;
  • Most of the leading scientific and technical clusters are located in the USA, China and Germany; Brazil, India, Iran, the Russian Federation and Turkey also appear in the top hundred of these clusters. The first five lines in this ranking are occupied by the following clusters: Tokyo – Yokohama (Japan); Shenzhen – Hong Kong, China (China); Seoul (Republic of Korea); Beijing (China); San Jose – San Francisco (USA).

What should Uzbekistan do in order to strengthen its position?

Uzbekistan has set an ambitious goal of entering the top 50 countries on this indicator by 2030, as part of the Innovation Development Strategy  implementation.[4]

The implementation of this task will require the active and coordinated work of ministries and departments, since most of the GII indicators relate to various areas of the country’s socio-economic system. For example, GII includes such indicators as education spending (in% of GDP), capital market development, reduction in energy intensity of GDP or improvement of logistics infrastructure – have a positive effect on the dynamics of GII.

Thus, an analysis of the gap between the Republic of Uzbekistan and the countries that are in the top 50 of the GII index showed that the largest gaps are noted in such areas as:

  • Higher education (the share of foreign citizens in universities, admission to universities);
  • Science (number of scientific publications, citation of scientists, number of scientists per 1 million people);
  • Capital market development and FDI inflows;
  • ICT sector (coverage of the population with LTE networks, access to the Internet and ICT, etc.)

Financial infrastructure development

A comparison of international data shows that the development of the capital market can become one of the important factors of the country’s innovative growth. Thus, the market capitalization of countries is closely and positively correlated with the country’s place in the GI rating.

Capital market development can be an alternative and important tool to stimulate innovation in the private sector by:

  • Market liquidity growth;
  • The emergence of new financial instruments for financing innovative projects where, by their nature, the traditional banking sector is less active;
  • Attracting institutional investors to the private sector.

Human capital as a factor in the innovative development of Uzbekistan

It should be noted that Uzbekistan, being the most densely populated country in Central Asia, has a significant reserve in innovative development due to investments in human capital: increasing enrollment in education, entry and improvement in global educational ratings (PISA, TIMMS), stimulating scientific and technical activities. For example, according to the World Bank in Uzbekistan in 2017 there were 496 researchers in R&D compared to 672 in Vietnam, 833 in Montenegro or 3,900 in Slovenia (countries that are in the top 50 GII).

However, there is a direct and close relationship between the number of scientists in the country per 1 million people and the rating in GII (figure below).

The correlation between the number of scientists per million people and GII

Consequently, in the next few years, the country will be faced with the task of attracting more youth to science and research. The Ministry of Innovative Development of the Republic is taking certain steps in this direction.

So, for example, under the Ministry, by decree of the President, the Youth Academy is being created without legal entity status. On a competitive basis, teams will be accepted into the academy, consisting of gifted youth and students, as well as scientists and entrepreneurs under the age of 40 who have their own innovative projects and ideas. The leadership of the Youth Academy is entrusted to the First Deputy Minister of Innovation Development. Similarly, the Gifted Youth Support Fund is formed at the Academy of Youth. Legal entities with a state share in the authorized fund (capital) of 50% or more, as well as legal entities in whose authorized fund (capital) of 50% or more belong to enterprises with a predominant share of the state, will annually transfer 10% per annum of all funds to the fund support innovation. The fund will also be replenished through charitable donations from members of the Board of Trustees of the Academy of Youth, grants and loans of international financial institutions and donors, and other sources. The priority areas in which the Youth Academy will carry out projects include artificial intelligence, renewable energy, robotics, mechatronics, pharmaceuticals, biotechnology, programming, industrial design, 3D modeling and other promising areas.

At the same time, it should be noted that while implementing this initiative, it is necessary not to forget about such disciplines as economics, sociology, psychology and others (social sciences). So, according to the statistics of “Scopus” (a tool for tracking the citation of articles published in scientific journals – ed.) out of 1813 articles published for 2016-2018, only about 100 articles were in social sciences.

Consequently, without more ambitious measures, it will be extremely difficult to reduce the scientific lag from other developing countries. For example, in terms of the number of scientific articles published, there is a significant gap between Uzbekistan and other developing countries that are in the top 50 of the GII index.

Measures to attract young people to science and improve the quality of scientific activity include:

  • modification of the traditional centralized model of financing research activities towards decentralization
  • creation of scientific thematic startup incubators;
  • creation of tools for financing independent scientists and research groups on various topics
  • popularization of science among young people through trainings and seminars with the participation of leading local and foreign scientists, as well as in the media (for example, one of the first modern popular science magazines QVANT has already appeared in Uzbekistan in this regard);
  • grant funding for mini research laboratories that study a specific topic (for example, human capital, sustainable development) closely with the private sector and other sectors (ICT), thereby increasing the commercialization of science and attracting investments and grants for further development creating new solutions for the state, business and society.

The implementation of these measures can allow Uzbekistan to make a qualitative scientific breakthrough, which will positively affect the positions in the ranking of State Institutions, allow local universities to enter the list of top 500 QS, increase the prestige of scientific activity, and therefore, will contribute to the innovative economic development of the country.

Summarizing the above mentioned, it can be said that the active attention of the Government of the Republic of Uzbekistan to international ratings and indicators is an important signal of the desire to transfer the economy from resource-oriented economic development to the tracks of innovative economic growth, driven by institutions and human capital. Since the pillars of most international ratings are indicators of the quality of state institutions, indicators of the effectiveness of financial and market institutions, as well as the rate of accumulation of human capital.

At the same time, the implementation of these ambitious tasks will require the active and coordinated work of ministries and departments, since most of the indicators such as the Global Innovation Index or the Global Competitiveness Index are composite indicators consisting of a large number of sub-indicators. However, the achievement of the target parameters for 2030, which are noted in the Strategy for Innovative Development, will significantly increase GDP per capita, create a competitive private sector, and generally shift the flow of foreign investment from the raw materials sector to the real sector of the economy.