The annual Bloomberg Innovation Index for 2020 has just been released, and Germany takes the lead, narrowly surpassing South Korea, which was on a six-year streak.

The Bloomberg Innovation Index

In order to create the ranking, the Bloomberg Innovation Index takes into consideration a variety of factors that contribute to an innovative economy. These include spending on research and development, productivity of manufacturing, efficiency of tertiary education, high-tech density, patent activity, and many more. 

All of these factors taken together reveal a score that indicates the ability of an economy to innovate.

What makes Germany innovative?

Germany, which came out on top in the final ranking, also ranked in the top five for value-added manufacturing, high-tech density and patent activity. It was able to (narrowly) overtake South Korea due to the latter’s slight decrease in productivity this year. Furthermore, according to chief economist Carsten Brzeski, the manufacturing sector, which is highly productive and competitive, is a large source for innovation in the country.

However, despite scoring highly on manufacturing and production, Germany falls behind by a large margin on its service sector innovation. A large proportion of its resources are spent on the automobile industry. While car manufacturing is a major driver in the German economy, recent concerns over climate change and sustainable development have the potential to disrupt this.

Germany also spends most of its funds on the manufacturing industry, leaving the tertiary sector somewhat neglected. This could be dangerous within a global economy that is shifting towards the service sector.

Top 10 most innovative countries in 2020

This year’s rankings came as a surprise, with unexpected countries moving up higher on the list, and known veterans such as the U.S. falling behind. Below is a list of the top 10 most innovative countries according to the Bloomberg Innovation Index.

• 1. Germany (88.21 points)
• 2. South Korea (88.16 points)
• 3. Singapore (87.01 points)
• 4. Switzerland (85.67 points)
• 5. Sweden (85.50 points)
• 6. Israel (85.03 points)
• 7. Finland (84.00 points)
• 8. Denmark (83.22 points)
• 9. U.S. (83.17 points)
• 10. France (82.75 points)

You can find the full ranking, along with details on how the scores are calculated, on the Bloomberg website.