The G20 summit's approaching, and the use and accuracy economical indexes get much exposure. Earlier I discussed the idea of Gross National Happniess vs. Gross National Product. They should seriously take GNH into the G20 discussions for developing an index that has a meaning.

But that's not the topic for now. Here I wanted to explore on innovation indexes. How can innovation be measured?

There is something called the Global Innovation Index (GII). It was created at Insead as a formal model to help formulate the degree to which nations and regions are responding innovation. The methodology is based on something called input and output pillars.

The five Input pillars are

• Institutions and Policies
• Human Capacity
• Infrastructure
• Technological Sophistication
• Business Markets and Capital

The thee output pillars are

• Knowledge
• Competitiveness
• Wealth

The GII results published in January ranks USA #1, Germany #2 and Sweden #3. Finland is not on the top 10.

In April, the Economist's intelligence unit  (EIU) used GII to come up with their own methodology in their report on world's most innovative countries.  EIU built something they call Business Environment Ranking (BER). The BER model relies much on patent filings, but also looks at the environment indicators such as political and economical stability, openness to foreign investment and hiring, and attitudes towards science.

This research ranks Japan #1, Switzerland #2 and Finland #3.

EIU has also issued a comparison on IT innovativeness. Unfortunately I could not find the study online. According to today's Kauppalehti, this index includes business friendliness, mobile phone penetration, IT infrastructure, know-how, legislative environment, R&D environment and R&D expenditure on IT.

Here USA is #1, Finland is #2 and Sweden #3. Sweden has biggest R&D investments in the world, 3,63% of GNP while Finland is second with 3,47%. It would be interesting to dig out from the data why Finland is on top 3 in two indexes, but not even on the chart in one. USA and Sweden appear in top 3 in two studies.

What is a good measure? Spending a lot of money isn't always the best way of getting results. Creative and open environment brings up the best ideas. At this stage, for example the much refered gay friendliness is an indicator of openness. It cannot be a coincidence that San Francisco is both the gay capital and the innovation capital of the world (well... depending on the index used of course).

On the other hand, with no money ideas never get to the demo stage. A demo isn't an innovation unless it becomes useful for someone. Here we need the suitable environment, business potential, stability etc.