Methodology

The inaugural edition of CTA’s International Innovation Scorecard evaluates 38 countries, plus the European Union. It includes most of the G-20, most countries that have trade agreements with the United States and emerging markets that are driving new tech innovations.

In total, the International Scorecard is a comparative analysis of 25 indicators across 12 categories. Our measurements determine which countries create the most welcoming environments for innovation, economic growth, and social progress, and suggest strategies other countries might emulate if they wish to enjoy similar benefits.

Some of the factors we consider relate to a country's populace, while others include the percentage of college graduates it produces in STEM fields, the ratio of women to men in its workforce, and its people’s ability to start new businesses. Other factors reflect the legislative and regulatory environments surrounding disruptive technologies, such as drones, short-term housing rentals, ridesharing, and self-driving vehicles. All third-party sources and federal policy inputs reflect the latest information available at the time it was gathered. We welcome your comments and feedback by email at scorecard@CTA.tech.

Eligibility of Countries

With this first edition of the International Innovation Scorecard, CTA considered a range of indicators to determine the final roster of countries. The scorecard highlights countries for which:

  • Publicly available, verifiable and independent third-party data exists;
  • Comparable data across nations exists; and
  • Governments can influence public policy.

In the second edition, CTA looks forward to expanding the scope of the Scorecard and including more countries.

European Union

Since CTA did not evaluate all 28 European Union member countries for the 2018 International Scorecard, grading the EU in its entirety presented special challenges. For seven categories — Diversity, Freedom, Broadband, Human Capital, Tax Friendliness, R&D Investment, and Entrepreneurial Activity — CTA scored all 28 EU member countries on the respective indicators in each category. Then CTA weighted each member state’s indicators in accordance with its share of the EU’s total population, and averaged them together. Accordingly, the EU’s grades in these categories reflect data from all EU member states, including the 12 EU member states that do not actually appear in this year’s Scorecard.

For the remaining five categories — Drones, Ridesharing, Short-Term Rentals, Self-Driving Vehicles, and Environment — CTA evaluated the legislative and regulatory actions taken in European Union bodies themselves, such as the European Parliament or the European Court of Justice.

Categories

Diversity measures the concentration of various ethnic groups within a country based on United Nations immigration data, using an adaptation of the Herfindahl-Hirschman Index (a method most commonly used to measure corporate concentration within a given industry); and also the ratio of female participation in the workforce to male, among people ages 25-54, drawing on the World Economic Forum’s Global Human Capital Report 2017.

Freedom represents the degree to which a country grants its citizenry certain civil and political freedoms. The grades are derived by equally weighting select components of CATO Institute’s Human Freedom Index (freedom of movement, religious freedom, and freedom of association, assembly and civil society) and scores from Freedom House’s Freedom in the World 2017.

Broadband measures a country’s average fixed broadband speed, average mobile broadband speed, fixed broadband cost per month (in USD PPP to adjust for the varying levels of income and purchasing power across countries), and pre-paid mobile broadband cost per month for both 500 MB data plans (in USD PPP) and 1 GB data plans (in USD PPP). This category draws on Akamai’s State of the Internet Report Q1 2017 for broadband speed data and on ITU’s Measuring the Information Society Report 2016 for broadband costs.

Human Capital evaluates a country’s educated workforce by weighting equally (50 percent each) the percentage of jobs that require a tertiary degree (high-skilled employment) from the World Economic Forum’s Human Capital Report 2017 and National Science Foundation data on the percentage of first university degrees that are conferred in STEM-related disciplines.

Tax Friendliness ranks the competitiveness of a country’s tax system based on two indicators: its top corporate tax rate according to KPMG (which constitutes 70 percent of a country’s grade in the category), and the imposition of taxes on video streaming services (30 percent of the grade).

R&D Investment measures the gross expenditure (regardless of the source of funds) on R&D operations as a percentage of national GDP using data from the Global Entrepreneurship and Development Institute’s Global Innovation Index.

Entrepreneurial Activity captures the ease of starting a new business in a country based on four indicators, each weighed equally (25 percent each): the Global Entrepreneurship and Development Institute’s Global Entrepreneurship Index, the World Bank’s “Doing Business: Entrepreneurship” report, the yearly rate of new businesses created per 1,000 people aged 15-64 and the number of “unicorn” business per 10 million people in population, drawing on data from Pitchbook, CB Insights and Crunchbase. (A unicorn is a domestic company that has achieved an actual or implied market valuation of at least US $1 billion.)

Drones assesses federal laws and regulations on consumer and commercial use of drone technologies. CTA evaluates whether a country has:

  • Permanent rules for commercial operations that support innovation and economic growth;
  • Favorable rules for recreational and hobbyist operators;
  • Consistent drone policy framework at different levels of government; and an
  • Organized and welcoming approach to drone-related research, development and testing.

Ridesharing assesses federal laws and regulations affecting ridesharing services. A country fares well if it allows ridesharing services to operate free of burdensome federal, provincial or municipal regulations.

Self-Driving Vehicles assesses federal laws and regulations on self-driving vehicles (SDVs). CTA evaluates whether a country allows SDV testing or operation, and has taken some action to clear the way or encourage their development. CTA also notes whether or not a country is a signatory to the 1968 Vienna Convention on Road Traffic, as amended in 2016, which requires that SDVs allow human drivers to take back control when they wish.

Short-Term Rentals assesses federal laws and regulations affecting short-term housing rental services. As in the Ridesharing category, a country fares well if it allows housing rental services to operate free of burdensome federal, provincial or municipal regulations.

Environment uses World Health Organization data to measure the quality of a country’s air and drinking water.