Dubai Innovation Index Report 2019-2020
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Dubai Innovation Index Report 2019-2020
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Foreword
The period 2020-2021 has been tough on the lives and livelihoods of people everywhere. Governments with sufficient fiscal space have been able to stimulate their national economies early, as restrictions are gradually lifted. Similarly, governments adept in innovative technologies have been able to contain, monitor and address the situation more effectively than others. Businesses with innovative ideas have been able to create new products and services, and new business models, not only to mitigate the adverse economic impact but also to grasp new opportunities arising from the disruption.
H.E. HAMAD BUAMIM
PRESIDENT AND CEO
DUBAI CHAMBER OF COMMERCE & INDUSTRY
Foreword
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Innovation is as much about people as it is about technology and digitalisation. The successful organisations of the future will be those that begin by placing trust at the centre of all they do and working to rebuild that trust throughout society. This year’s Index reflects this thinking: we have messages to share about society, attractiveness and the need to consistently invest in people and infrastructure, as well as in improving the regulatory environment for businesses and people
DR. ANIL KHURANA
GLOBAL INDUSTRIAL MANUFACTURING AND AUTOMOTIVE LEADER
PwC
RAMI NAZER
EMEA GOVERNMENT AND PUBLIC SECTOR LEADER
PwC
Key Takeaways
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Digitalisation underpins the transformation and success of the most innovative cities across all pillars of the innovation ecosystem
Spurred by the pandemic, collaboration has accelerated innovation by offering innovators enhanced opportunities for knowledge sharing, funding and market access
Governments in leading innovative cities now do more to promote innovation than just set policies, oversee regulations and provide incentives
While North America and Europe remained the leading regions for innovative cities in the 2019-2020 Dubai Innovation Index, cities in other regions have been closing the gap, especially those in the Asia-Pacific region
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Government and city leaders with keen foresight saw the potential offered by new digital technologies and encouraged the development of digital infrastructure which allowed for the successful adoption of new ways of working and supplying goods and services.
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Smart cities set about transforming the way they serve citizens and visitors, replacing paper and service counters with a growing array of online portals and services that allow citizens, visitors and companies to interact with them remotely and more efficiently.
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The Covid-19 pandemic threw into stark relief the advantages of robust digital networks and connected populations, enabling many businesses and public services to continue functioning effectively despite lockdowns and other restrictions.
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Another overriding lesson of the pandemic was the importance of agility to effective digital transformation, both in terms of keeping up with advances in technology and in providing the regulatory flexibility necessary to allow new solutions to be adopted in response to changed circumstances.
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Collaboration across individuals, businesses and governments, has been a key tool in supporting innovators across all stages of the value chain, from ideation to creation and commercialisation.
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The most prominent areas for collaboration between sectors involve the provision of knowledge, funding and market access.
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Investment collaboration allows for risk sharing regarding the downside risk of investing in new intellectual property (IP) and preliminary proof of concepts (PoCs).
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Collaboration is also key across borders, as hub-to-hub networks and alliances increasingly form at a city level, benefitting from competitive locations, the transfer of knowledge, and increased scaling opportunities of new businesses by making it easier for them to develop internationally.
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Cultivating an innovative mindset and entrepreneurial spirit within cities’ societies as well as developing talent with the right skill levels and skill types, is essential in unlocking innovation potential. Youth entrepreneurship programmes have helped achieve further this objective through promoting entrepreneurship as a viable career path.
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Public authorities overseeing successful innovation ecosystems have measures in place to encourage young people to pursue STEM subjects, since these skills contribute to innovation performance.
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Public safety and security are also important ingredients for a successful business culture, in terms of attracting and retaining talent as well as encouraging collaboration, all of which lead to increased levels of entrepreneurship and innovation.
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Many public-sector entities have been supporting high-potential businesses by becoming consumers of their new products or services, helping them showcase what their innovations can achieve and further generating investor interest.
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Singapore secured first place in the 2019-2020 Dubai Innovation Index, maintaining its lead in both years, with Hong Kong in second place in 2019 and 2020.
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Overall, North American and European cities remain among the most innovative worldwide, taking eight of the top 10 places in 2019 and seven in 2020. The best-placed European city in 2020 was Stockholm, in third place, followed by Zurich (fourth) and Copenhagen (fifth). In North America, New York is placed sixth and Toronto is in 10th place.
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Cities in the Asia-Pacific region have consistently been improving and catching up, particularly Tokyo (ninth), Seoul (15th), Beijing (23rd) and Kuala Lumpur (25th).
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Cities in the Middle East, Africa and Latin America still need more targeted improvements to close the gap with the leaders, however certain cities have showcased improvements across several pillars. For example, between 2019 and 2020, Dubai went up three rankings in Business Environment, while Johannesburg went up one ranking in Funding and twp in Infrastructure.
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Dubai's Past, Present and Future
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TECHNOLOGY
SCIENCE
RESEARCH
INNOVATION
Pursuing a diversified, productive and competitive knowledge-based economy
Dubai and its leadership strongly recognise the importance of innovation and its prominent role in contributing to the country’s sustainable socio-economic development. The city places innovation, research, science and technology at the heart of its pursuit of a diversified, productive and competitive knowledge-based economy.
Innovation has always been running through Dubai’s veins. Its importance in boosting the city’s economic status has long been apparent, causing its leaders to make it a strategic priority.
Dubai's Past, Present and Future
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That year also marked the birth of the Dubai Innovation Index (DII), a first-of-its-kind city-level innovation report generating insights from leading innovation hubs across the globe.
In late 2014, the National Innovation Strategy (NIS) was launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai, aiming to position the UAE among the most innovative nations in the world. Shortly afterwards, His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE, announced that 2015 would be the “Year of Innovation” in the UAE – testament to the country’s commitment to innovation.
2014
Dubai's Past, Present and Future
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These initiatives have helped embed a culture of innovation in Dubai and cement the city’s growing status as an innovation hub – nurturing and attracting talent and educating all members of the community, including individuals, companies and governments, on innovation’s importance and role in strengthening cities’ competitiveness.
For more than five years, the DII has influenced the development of a plethora of strategies, policies and initiatives
PRIVATE PARTNERSHIPS
ARTIFICIAL INTELLIGENCE
ROBOTICS
BLOCKCHAIN
3D PRINTING
Global City Rankings
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New City to DII
When the Dubai Innovation Index (DII) Report was launched by the Dubai Chamber and PwC in 2015, it quickly gained traction as one of the first reports to focus on innovation from a city, rather than country, perspective.
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Framework
Building capability for the future
DII YEARLY THEMES
2015
Strengthening public and private sector collaboration
2016
Developing skills & talent for
sustainable innovation
2017
The Road to Recovery Through Resilience and Innovation
2019 - 2020
Innovation as an enabler…
in easy and difficult times
2018
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The Index embraces 39 cities, up from 32 in the previous edition
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cities
The micro-level analysis was revamped, complementing our yearly Innovator Survey with an Ecosystem Analysis and a City Sentiment Analysis when available
The analysis of cities seeks to identify trends over time
The micro-level analysis incorporated input from three more cities – Berlin, Warsaw and Mumbai – in addition to Dubai to enable hubs to be compared
The report included a city case study in each of our five pillars, provided by Dubai, Paris, Warsaw, Berlin and Singapore
Framework
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Framework
As innovation in cities arises from the interaction of several important elements, this year's report examines cities’ performance in five key pillars:
hover over each pillar to discover more
The use of agile methods and the adoption of an experimental approach in all aspects of cities’ governments
The state of cities’ general infrastructure, digital infrastructure and ecological sustainability
The different types and means of funding available from organisations and governments to finance innovation across all sectors of the urban economy
The overall business landscape, taking into consideration factors such as market conditions, labour market regulations and partnerships
The strength of cities’ institutions and human capital, as well as the quality of life they offer residents and visitors
SOCIETY
PILLAR
INFRASTRUCTURE
PILLAR
AGILE GOVERNMENT
PILLAR
FUNDING
PILLAR
BUSINESS ENVIRONMENT
PILLAR
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3rd
4th
5th
Pillar 1: Agile Government
Innovation is a highly iterative process. Governments must create an environment that both enables and drives innovation within cities. To do this, they must ensure city governance recognises emerging needs and adapts to serve them. Governments should also innovate to better serve their citizens and stimulate innovation in the private sector.
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In 2020, cities on average performed best in terms of e-government, scoring more highly by that measure than the other components of agile government that we analysed (Figure 1.1). Larger disparities between cities can be seen in the government effectiveness and integrity indicators, as well as in the regulatory quality score.
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Pillar 1: Agile Government
*For more information on the full list of these indicators, please see Appendix III in the full report
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Pillar 1: Agile Government
The past year has accelerated the shift to providing e-government services, helping private companies carry on business as usual during the pandemic and enabling citizens to fulfil their administrative obligations
Innovation in public services extends beyond digitalisation: innovative governments take advantage of emerging technologies to rethink their processes, redesign the ways they interact with the public and reimagine how they design and implement their policies
Governments with successful innovation ecosystems have started to recognise the importance of embedding innovation by fostering an experimental culture and a nimble, iterative approach to formulating policies and regulations
Effective governance through targeted policies and efficient processes enables policy-makers to respond appropriately to the external environment and protect the business ecosystem within cities, especially in times of disruption
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Pillar 1: Agile Government
The past year has accelerated the shift to providing e-government services, helping private companies carry on business as usual during the pandemic and enabling citizens to fulfil their administrative obligations
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On average, cities have witnessed a consistent rise in their e-government performance since 2015. However, this increased performance was exacerbated between 2019 and 2020 as cities nearly doubled their performance increase in the e-government development index.
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Although the digitalisation of public services is a long-standing priority for many cities, the process accelerated in 2020 as governments strove to maintain business as usual during abnormal times and enhance the quality and reach of services despite travel restrictions and other constraints affecting populations.
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North America had the highest e-government development index score in 2020 (Figure 1.2), with Europe a whisker behind, marking impressive progress in both regions. Cities and regions with lower e-government scores to begin with achieved the biggest average increase in performance between 2019 and 2020.
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Pillar 1: Agile Government
Innovation in public services extends beyond digitalisation: innovative governments take advantage of emerging technologies to rethink their processes, redesign the ways they interact with the public and reimagine how they design and implement their policies
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The 2020 DII Ecosystem Analysis shows that government innovation has had a great impact on the private sector. Half of the public entities surveyed said that governments and public authorities are among the biggest drivers of innovation within the ecosystem.
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Governments can speed innovation by using and investing in emerging technologies. According to the 2020 DII Innovator Survey, 84% of innovators say that technology and communication investments helped improve their firm’s innovation activity, innovation process and product development cycle in 2020, up 9% from 2019.
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In recent years, governments responsible for leading innovation ecosystems have prioritised the adoption of frontier technologies such as artificial intelligence (AI) and blockchain.
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Governments have also used digital technologies to improve the transparency of what they do and hence increase public trust.
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Pillar 1: Agile Government
Governments with successful innovation ecosystems have started to recognise the importance of embedding innovation by fostering an experimental culture and a nimble, iterative approach to formulating policies and regulations
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As innovation by definition develops new ways of doing things, it introduces regulatory challenges that may not easily be addressed by traditional approaches to policy-setting. Creating new regulatory frameworks requires government entities to shift their approach.
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A more agile approach to defining regulations and policies that encourage innovative solutions is to introduce a ‘sandbox’, a special regulatory test-bed for live innovations.
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Governments can support and enable innovation, collaborating closely with innovators, operators, regulators and end users to co-create legislation which strikes the best balance between the interests of stakeholders.
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Cities with more agile governments also tend to have higher scores on human development indicators (Figure 1.5). Government regulations and interventions directly affect the quality of life in a city.
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Pillar 1: Agile Government
Effective governance through targeted policies and efficient processes enables policy-makers to respond appropriately to the external environment and protect the business ecosystem within cities, especially in times of disruption
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The quality of governments’ policy formation and implementation – and their credibility – are a crucial indicator of their effectiveness.
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Technological advances have enabled government entities to collaborate and coordinate as never before. This enables them to work more efficiently and makes life easier for those using government services.
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The integration of citizen data between different governmental databases greatly improves efficiency.
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Singapore has consistently ranked the highest of all selected cities in terms of government effectiveness as well as enterprise conditions (Figure 1.6), confirming the role of policy-makers in shaping cities’ business environments.
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Government responsiveness also depends on governance structure and the number of stakeholders involved in designing, issuing and implementing innovation-related policies.
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The link between government agility and new business density. Singapore, which led the Government Agility score in 2019 and 2020, has increased its new business density by 20% since 2015. Seoul has improved on the Government Agility ranking since 2015 – and recorded a 30% increase in its new business density.
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A responsive political environment and simplified interfaces with government reduce the challenges faced by entrepreneurs and newly established businesses.
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Pillar 1: Agile Government
Overall, the impact of government agility on inciting and sustaining innovation is substantial. To build an environment that welcomes innovation, governments and cities should
Enhance the quality and efficiency of public services, removing hurdles for innovators and entrepreneurs by leveraging ICT and prioritising the introduction of e-government
Encourage and incentivise private-sector participation, of both sector leaders and innovative SMEs, in government transformation efforts and adopt private-sector best practices within the public domain where possible
Create frameworks, platforms and processes which allow the co-creation of policies and regulatory tools that best serve innovators
Increase the quality and efficiency of government processes by investing in emerging technologies like AI and blockchain, setting an example and creating a base that helps the private sector follow suit
Anticipate and respond quickly to the needs of the ecosystem, especially in times of disruption, by embracing iterative and nimble approaches to formulating policies and regulations
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Case Study 1 : DUBAI
Smart Dubai – the key to the city’s smart transformation and government agility
A decision to digitalise government in Dubai was announced by His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai, in 2000. The goal was to create a government that uses technology to make processes more efficient and convenient for the Dubai population.
Governments around the world have been energetically exploring how they can invest to create more connected cities that best serve the needs of residents and businesses. The Fourth Industrial Revolution has blurred the boundaries of traditional industrial practices, while emerging technologies have the power to revolutionise everything we do. As governments rush to become more agile, connected and efficient, Dubai has emerged among those cities leading the way.
Pillar 2: Infrastructure
In recent years, it has become increasingly evident that more innovation happens in places that have good infrastructure. The Covid-19 outbreak has forced both the public and private sector to rethink their planning, operating and monitoring models – reinforcing the need for governments to invest in the provision of high-quality infrastructure in their cities.
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Generally, the DII’s most innovative cities in 2020 had the highest scores in computer software spending and logistics performance, showcasing the contribution of the two to their stellar performance. The highest averages in this pillar are observed in logistics, ICT and healthcare (Figure 2.1).
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Pillar 2: Infrastructure
*For more information on the full list of these indicators, please see Appendix III in the full report
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Pillar 2: Infrastructure
Using emerging technologies and mobile data helps cities address current and future urban challenges
The Covid-19 pandemic and the increased frequency of extreme weather events confirm the importance of developing cities that are better able to withstand economic shocks
Investing in digital infrastructure is a prerequisite for economic progress, since it boosts productivity and propels innovation
The most innovative cities provide business support services such as incubators, accelerators and co-working spaces to help start-ups and early-stage firms grow and innovate
Academic institutions, including universities and R&D centres, can boost innovation by sharing their resources with start-ups and entrepreneurs throughout the innovation value chain: from early-stage research to the development and commercialisation of new products
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Investing in digital infrastructure is a prerequisite for economic progress, since it boosts productivity and propels innovation
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The world’s most innovative cities are embracing the critical role that digital transformation plays in their economic competitiveness and have launched initiatives to develop their digital infrastructure.
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Leading Middle Eastern cities achieved the biggest improvements in ICT access from 2019 to 2020 (Figure 2.2) with Riyadh, for example, increasing by three rankings in the indicator. African cities also showed big improvements led by Nairobi, which achieved a rise of 8.6% in its ICT access score.
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The top performing cities this year include Singapore, Zurich and Amsterdam, which have all invested in becoming smart cities.
Pillar 2: Infrastructure
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Using emerging technologies and mobile data helps cities address current and future urban challenges
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The pandemic showed the importance of strong digital infrastructure to allow many everyday business activities to move online.
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Providers have been seeking more effective and cheaper ways to deliver their services. In our Innovator Survey, 84% of respondents said that technology and communication helped improve their firm’s innovation activity, innovation process and product development cycle in 2020, compared with 63% in 2019.
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The use of population data available from digital infrastructure has helped shape policies to manage the pandemic, to model its development and predict potential outbreaks (Figure 2.3). Cities lacking strong digital capabilities fell behind.
Pillar 2: Infrastructure
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The most innovative cities provide business support services such as incubators, accelerators and co-working spaces to help start-ups and early-stage firms grow and innovate
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Many cities encourage start-ups and other firms in particular industries to locate in clusters because this can promote creativity and innovation.
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London, for example, is home to over 100 accelerators and incubators. In New York co-working spaces are widely available and are very popular among entrepreneurs and startup employees. As for Berlin, the city had a total of 170 co-working spaces in 2020 and around 1-2 incubators and accelerators per 1000 new start-ups according to our 2020 Ecosystem Analysis.
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Dubai has reinforced its start-up support infrastructure by setting up a new-economy Dubai Future District, which includes a research centre, incubators and accelerators and an innovation space for future economy pioneers.
Pillar 2: Infrastructure
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Leveraging existing institutions’ research capabilities and databases can greatly facilitate the development and commercialisation of innovations.
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To succeed, partnerships need strong universities with the right resources and capabilities to help corporations and governments innovate and experiment. Leading universities are centres of research and development as well as education.
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Our Innovator Survey shows that respondents in Berlin are much more likely to collaborate with academic institutions than those in Dubai. The strong research performance of Berlin universities may explain the difference.
Pillar 2: Infrastructure
Academic institutions, including universities and R&D centres, can boost innovation by sharing their resources with start-ups and entrepreneurs throughout the innovation value chain: from early-stage research to the development and commercialisation of new products
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The growing impact of human activity upon our planet, including climate change, has encouraged policy-makers to seek more sustainable paths for cities.
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In terms of energy efficiency, European cities are the leaders. Yet it is Hong Kong, in the Asia-Pacific region, that tops our ranking. Its government has rolled out many initiatives to promote efficient use of energy.
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The Covid-19 pandemic has shown that robust healthcare infrastructure can also be essential to business continuity during disruptive events.
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The pandemic has also badly affected some global supply chains, putting pressure on them to become more resilient. All regions experienced a decline in their logistics performance in 2020, after steady improvements in previous years.
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Cities with stronger logistics performances tend to have better enterprise conditions, because efficient supply chains benefit business performance.
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The quality of city infrastructure correlates with the city’s investment environment (Figure 2.7). Cities with stronger innovation-enabling infrastructure therefore have better investment environments, which ultimately leads to greater investor confidence and appetite.
Pillar 2: Infrastructure
The Covid-19 pandemic and the increased frequency of extreme weather events confirm the importance of developing cities that are better able to withstand economic shocks
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Pillar 2: Infrastructure
Overall, building robust and resilient infrastructure is essential to support and stimulate innovation within cities. Cities should
Develop their ICT infrastructure and facilitate the adoption of emerging technologies and smart solutions
Invest in academic institutions’ R&D capabilities and encourage more university-industry partnerships
Develop and promote environments that are conducive to entrepreneurship, such as accelerators, incubators and co-working spaces
Mitigate the detrimental effects of healthcare crises by ensuring their healthcare infrastructure is resilient
Enhance their self-sufficiency by encouraging the adoption of sustainable development practices and optimising domestic supply chains
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Case Study 2 : PARIS
Housed in a former rail freight depot, Station F is physically the world’s largest incubator. It is home to the European hubs of Microsoft, Facebook and Amazon, as well as hundreds of start-ups.
Located in Paris, the capital of France, Station F is ideally positioned for start-ups that want to use France as their launchpad to compete in European markets. Under the leadership of President Emmanuel Macron, a strong advocate of entrepreneurship and innovation, France has made big strides in fostering start-ups and encouraging innovative companies to tackle France’s social and economic challenges and create lasting jobs and prosperity.
Station F – the start-up supporting start-ups
Case Study Supported by Station F
Pillar 3: Funding
Funding is one of the most critical factors in enabling innovation and entrepreneurship. It supports high-potential innovative businesses by facilitating research and development (R&D) and allowing the transformation of ideation to tangible creation. The importance of funding on innovation was emphasised in 2020, as the Covid-19 pandemic triggered budget constraints in both private and public-sector entities.
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Despite the challenges faced, innovative cities’ strong performance across the board in venture capital availability and investment environment suggests that these are focal points for cities looking to provide robust funding offerings in the ecosystem (Figure 3.1).
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Pillar 3: Funding
*For more information on the full list of these indicators, please see Appendix III in the full report
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Pillar 3: Funding
Successful ecosystems evolve their provision of funding to the innovation space through more versatile and timely support mechanisms
Funding needs are evolving and governments are putting greater emphasis on utilising funds to facilitate deals and market access for start-ups, in co-operation with the private sector
Governments in leading innovative cities lean towards shifting from pure risk-mitigation models to risk-sharing approaches
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Successful ecosystems ensure that appropriate funding is available to companies at different stages in their lifecycle, contributing to an environment that breeds and sustains innovation and entrepreneurship.
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In the 2020 DII Innovator Survey, 72% of businesses said it was “challenging” to access innovation funding 2019 and 2020, within which 61% said it was “very challenging”.
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There is a clear positive correlation between a city’s venture capital availability and the entrepreneurial outputs and innovation in said city (Figure 3.2).
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The high performance of cities in VC availability is due to government incentivisation - such as tax incentives and public-sector investment matching - and the support of new to market and existing global VCs.
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Innovators do not just need access to money: they need enough money to innovate effectively.
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Speedy evaluation of funding requests and rapid disbursement of funds are critical to providing effective support to innovation. A robust digital infrastructure can also help this process.
Pillar 3: Funding
Successful ecosystems evolve their provision of funding to the innovation space through more versatile and timely support mechanisms
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Funding needs are evolving and governments are putting greater emphasis on utilising funds to facilitate deals and market access for start-ups, in co-operation with the private sector
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Investment by private-sector entities in innovation and R&D continues to be a stark differentiator between leading innovative cities and developing ones (Figure 3.3).
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A government contract can allow a new business to showcase the viability of its products or services, provides access to a market and ultimately offers market validation.
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Governments looking to stimulate innovation in their cities are also creating physical spaces that combine co-working facilities with innovation support and advice, and facilitate collaboration between innovators and a wider pool of investors.
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The visible increase in CVC investments between 2019 and 2020, will further perpetuate participation by the private sector in early-stage funding, as corporates witness first-hand the additional benefits to early-stage engagement with entrepreneurs to drive the creation of innovative solutions.
Pillar 3: Funding
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Governments in leading innovative cities lean towards shifting from pure risk-mitigation models to risk-sharing approaches
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Governments have historically taken on greater risk by funding the exploration stages, providing private players with subsidised returns when they invest in the growth stages. This is beginning to change as governments realise the benefits of longer-term co-operation in reducing funding risks and increasing rewards.
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Co-investment mechanisms reduce public-sector transaction costs and enrich the quality of deal opportunities by leveraging the private sector’s investor networks and experience and improving the investment offering for start-ups.
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The continuation of public-sector funding participation helps ensure that start-up activities are aligned to the needs of the city and its citizens.
Pillar 3: Funding
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Pillar 3: Funding
Overall, cities can aid innovation by creating a comprehensive funding ecosystem. They should
Offer a variety of funding options targeting the different needs of start-ups at various stages of maturity
Enhance the chances of business success by providing additional funding support services such as mentoring, networking and market access opportunities
Move towards a risk-sharing model, enhancing investment opportunities for both entrepreneurs and investors by encouraging the adoption of more Public-Private Partnerships (PPPs)
Boost investor confidence by offering high-potential businesses PoC opportunities and government contracts, so that the government buys the products or services of the business it is financing
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Case Study 3 : BERLIN
Yet in more recent decades, cheap rents and ample availability of industrial space drew creative people of all stripes, spurring the development of an off-beat and creative culture that has drawn in many entrepreneurs.
Germany’s capital has a population of 3.8 million within the city limits and a thriving start-up scene. The roots of its emergence as a centre of digital and technical innovation lie partly in the city’s unique history. After the reunification of the Federal Republic of Germany and its eastern neighbour, the German Democratic Republic, in 1990, the run-down eastern districts of Berlin suffered population outflow.
Strong backing from the city’s business and technology support agency helped a pioneering healthcare consumables company sustain the five-year effort needed to perfect its product
Case Study Provided by Berlin Partner
Pillar 4: Business Environment
To facilitate business recovery and hiring, due to the pandemic, cities have sought to promote entrepreneurship and innovation, providing additional support to promote economic competitiveness and improving local business environments to help nurture new businesses and their founders.
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Across the innovative cities included in the DII, key areas of higher performance with respect to business environments in 2020 were: GDP per capita change, creative goods exports, and labor force participation (Figure 4.1).
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Pillar 4: Business Environment
*For more information on the full list of these indicators, please see Appendix III in the full report
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Leading innovative cities are shifting the focus of their incentivisation schemes from attracting to retaining companies, to ensure that their investments in innovation flow back into the ecosystem
Providing effective networking spaces aids cross-border and cross-sector collaboration and fuels innovation
Cities that lead in innovation grasp the opportunities offered by emerging technologies to enhance enterprise conditions, streamlining processes and minimising bureaucratic demands on entrepreneurs
Pillar 4: Business Environment
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Leading innovative cities are overhauling their incentives to support the long-term retention of talent and businesses and ramping up their early-stage assistance, to go alongside the funding and financial incentives.
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National entrepreneurship programmes are especially common in developing innovative cities; giving local youth entrepreneurial skills and anchoring start-ups within the local ecosystem through government support.
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Business licensing policies are increasingly leveraged to attract and retain foreign entrepreneurs, for example, the increase in 100% foreign ownership of local businesses.
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Leading innovative cities are finding creative new ways to benefit from developing digital infrastructures.
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Tallinn has a strong ICT cluster which helped it make its way to a top 3 position in our 2019 Business Environment ranking (Figure 4.2), a position attributable to the government’s introduction of an e-residency programme.
Leading innovative cities are shifting the focus of their incentivisation schemes from attracting to retaining companies, to ensure that their investments in innovation flow back into the ecosystem
Pillar 4: Business Environment
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The most innovative cities facilitate cross-sector and cross-border collaboration, benefiting both themselves and the global innovation ecosystem.
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International technology exhibitions and trade fairs are a strong means of aiding innovation through collaboration. More than 70% of respondents to the 2020 DII Innovator Survey believe exhibitions helped their firm access new ideas for innovation in 2019 and 2020.
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Copenhagen’s hosting of regional and global collaboration events, bringing in experts in the Science and Technology fields has undoubtedly contributed to its consistent ranking as the European leader and subsequently global leader (Figure 4.3) in ranking of scientific and technical articles.
Providing effective networking spaces aids cross-border and cross-sector collaboration and fuels innovation
Pillar 4: Business Environment
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Digitalisation of government and the adoption of emerging technologies such as blockchain and artificial intelligence (AI) are enabling governments to simplify their dealings with companies, so they become less intrusive and time-consuming and even aid entrepreneurs to achieve their goals.
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Cities in the DII, which have been leveraging digitalisation and emerging technologies, such as AI, have seen increased and leading performances in overall enterprise conditions throughout their business environments.
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In recent years, Middle Eastern and Asia-Pacific cities have been enhancing their enterprise conditions at rates which have allowed them to now level-peg with European cities, with notable improvement by Middle Eastern cities between 2019 and 2020 alone (Figure 4.4).
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A key problem in the cities ranking lowest for enterprise condition, is the high bureaucracy with regards to attainment of the necessary paperwork and approvals.
Cities that lead in innovation grasp the opportunities offered by emerging technologies to enhance enterprise conditions, streamlining processes and minimising bureaucratic demands on entrepreneurs
Pillar 4: Business Environment
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Adopt retention-based incentive schemes for businesses rather than attraction-based schemes and focus on aiding local entrepreneurship
Facilitate collaboration across sectors and borders by hosting exhibitions and other events that enable experts, academics, aspiring and existing entrepreneurs and government officials to get together and network
Take advantage of emerging technologies and digitalisation to streamline government processes and reduce obstacles to doing business (especially making it easier to get permits and register patents)
Pillar 4: Business Environment
Overall, cities can propel innovation by creating an enabling business environment. To do so, they should
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Case Study 4 : WARSAW
One of these initiatives is co-operation with PACTT, an association of Poland’s major universities, including technology and medical universities
Warsaw is the capital of Poland and an important academic and research centre. It is here that some of the best universities in the country are located, attracting students from around the world. In recent years, the city has emerged as one of Europe’s leading creative and technology hubs, drawing more and more talent and creators. One of Warsaw’s development priorities is to ensure its municipal ecosystem of innovation and entrepreneurship has the best possible conditions for creating, testing and developing innovative business, scientific, artistic and social ideas, drawing upon co-operation between various entities and institutions.
Close ties with universities have helped Warsaw emerge as a Petri dish for growing academic ideas into successful businesses.
Case Study Provided by PACTT
Pillar 5: Society
People are at the heart of innovation. To unlock their potential, cities need to pay attention to the quality of their workforce and quality of life. The softer societal components within cities are important in shaping the environment within which innovation and entrepreneurship take place.
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In 2020, cities averaged stronger performances on human development and social networks and weaker performances in human capital and education, especially with regard to technical subjects (Figure 5.1).
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Pillar 5: Society
*For more information on the full list of these indicators, please see Appendix III in the full report
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The quality of talent is critical to cities’ innovation success, so leading cities focus on developing their existing workforce while filling any skills gaps through targeted immigration policies
Cities that embrace cultural diversity and uphold social tolerance create a favourable environment for a proactive and well-connected society, leading to higher levels of innovation
Safety and security are intrinsic to the level of trust between individuals in cities and underpin their appetite for entrepreneurship
Cities with proactive communities and vibrant entrepreneurial cultures are more innovative
Pillar 5: Society
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The more skilled labour and highly qualified professionals available, the more sophisticated the city’s business ecosystem. Growth today is driven by science, engineering and innovation, so knowledge and skills in these disciplines has become critical.
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Asian and Pacific cities typically have a larger proportion of graduates in these fields than those in other regions (Figure 5.2). Kuala Lumpur topped our ranking in 2020, recording a 8.7 percentage point increase in the proportion of graduates with degrees in science and engineering since 2019.
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A lack of talent or inadequate skill sets is increasingly viewed as restricting companies’ and individuals’ ability to innovate. The 2020 DII Innovator Survey shows that in 2019 and 2020 a majority (60%) of firms struggled to find and retain the talent they need to make innovation happen.
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Attracting outside talent has been critical to fill cities’ skill gaps and enable them to acquire specific skill sets in innovative sectors.
Pillar 5: Society
The quality of talent is critical to cities’ innovation success, so leading cities focus on developing their existing workforce while filling any skills gaps through targeted immigration policies
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There is a positive correlation between social tolerance and interpersonal trust (Figure 5.3). This suggests that the higher the level of tolerance in a city, the more comfortable individuals feel when interacting with strangers and those outside their social sphere.
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Toronto, Singapore and Sydney, which are all among the top five cities for social tolerance, all consider tolerance as part of their identity and have rolled out multiple initiatives to promote social cohesion.
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The link between interpersonal trust and enterprise conditions is strong. Cities in the top 10% on both of these indicators are also among the top five in the 2020 Dubai Innovation Index.
Pillar 5: Society
Cities that embrace cultural diversity and uphold social tolerance create a favourable environment for a proactive and well-connected society, leading to higher levels of innovation
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The level of security people in cities feel stems not only from their trust in each other, but also from their trust in institutions, which translates into better innovation performance.
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Cities that rank in the top 20% in the overall Dubai Innovation Index for 2020 have consistently had much higher levels of institutional trust than the bottom 20%. But the gap is narrowing: although top performers are still well ahead, their performance declined in 2020, perhaps as a result of the pandemic.
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Safety and security have surged in importance because the Covid-19 pandemic has accelerated the digital transition, increasing opportunities for cybercrime. Cybersecurity, resilience and technological innovation therefore go hand-in-hand.
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Order and security reduces crime and conflict and builds trust, and is a precondition for social networking among city dwellers, underpinning their desire to start businesses and remain residents (Figure 5.6).
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Security is also critical to attracting investors. Entrepreneurs must be able to exchange information and feedback and take in diverse views and opinions, if their new ventures are to succeed.
Pillar 5: Society
Safety and security are intrinsic to the level of trust between individuals in cities and underpin their appetite for entrepreneurship
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One factor often overlooked by those involved in business ecosystems is happiness, although it plays a vital role in motivating residents to work and be creative.
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Physical social networks can be a good proxy for how inhabitants feel in their cities, showing how easy it is for individuals to connect with others and to feel respected. Cities in North America and Latin America score highest on average.
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Entrepreneurship is also encouraged in societies where experimentation and collaboration are commonplace and failure is readily accepted. These characteristics were deemed essential for the development of an innovative culture by 83% of the 2020 DII Innovator Survey respondents.
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Leading cities have also been promoting entrepreneurship by seeking to equip young people with the necessary skills and talents from an early age.
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Encouraging entrepreneurship can help combat youth unemployment. This has been further pronounced as job insecurity looms after the pandemic.
Pillar 5: Society
Cities with proactive communities and vibrant entrepreneurial cultures are more innovative
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To encourage innovation and entrepreneurship, cities must nurture their societies. They should
Equip their homegrown workforce with the necessary skills to innovate by encouraging young people to study science, technology, engineering and maths (STEM) subjects and equip teachers to teach them well
Build community culture by supporting and spreading awareness of networking and collaboration opportunities and backing events where they can happen
Promote inclusivity and social cohesion by organising cultural events and initiating dialogues that build tolerance
Nurture youth entrepreneurship through investments in targeted initiatives in schools and universities
Ensure that individuals feel safe and secure by providing effective law and order and responding to emerging risks arising from changes (such as data security risks)
Pillar 5: Society
Create an entrepreneurial culture by promoting social norms that encourage experimentation, tolerate failure and leverage collaboration
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Case Study 5 : SINGAPORE
A government agency, Enterprise Singapore (ESG), helps develop and support small and medium enterprises. ESG works to develop the creativity, capabilities and internationalisation of emerging firms through various channels and programmes - most notably, via the Startup SG platform, which was set up in 2017
Singapore’s performance on our Society pillar remains exemplary. Its outstanding strength in this domain stems partly from numerous government initiatives tailored to address the human and social aspects of innovation. In particular, the city’s close attention to developing talent and multiple routes to entrepreneurship contributes substantially to the success of its innovation ecosystem.
Case Study Supported by Enterprise Singapore