Global patterns in innovation and their implications for developing economies: a case for Sri Lanka

Abstract

This study examines Sri Lanka’s performance in the Global Innovation Index (GII), focusing on identifying crucial factors of innovation outcomes and the impact of data integrity on its rankings. Despite fluctuating between 98th and 101st positions from 2013 to 2022, and ranking 89th in 2024, Sri Lanka’s innovation ecosystem faces challenges due to economic crises and limited fiscal resources, emphasizing the need for private sector-led growth. The paper carries out a fixed effects panel regression to test the effects of sub-pillars and indicators of knowledge and technology outputs and creative outputs pillars that mostly affect the GII rankings. Results highlight that knowledge impact and intangible assets as the important sub pillars as well as labor productivity, high-tech manufacturing and trademark registrations as indicators. In addition, the study indicates that missing information and outdated data have a strong influence in GII ranking. The paper has recommended policy suggestions involving increasing the labor efficiency with industrial training, stimulating high technology industries through foreign investment and rectifying intellectual property mechanisms to augment innovative products. It is also important to increase data integrity and coordination between agencies at the national level so that they capture the real innovation capacity of Sri Lanka. The study’s novelty lies in its strong emphasis on data integrity and cross-country benchmarking among developing economies. Policy implications extend beyond Sri Lanka, offering a framework that other lower-middle-income nations can adapt to strengthen innovation ecosystems and improve global competitiveness.