South Korea's economic outlook for the year is bright and shiny. Photo: Tom Coyner

South Korea is the world’s most innovative economy, largely due to its intensive patent activity, its high spending on R&D and its customary strength in manufacturing, a study has found.

Rounding out the top 5-ranked nations in the influential Bloomberg Innovation Index, published on Wednesday, was Singapore in second place, Switzerland in third, Germany in fourth and Sweden in fifth.

The remaining top 1o slots were largely filled out by Western European nations, with Denmark sixth, Israel seventh, Finland eighth, the Netherlands ninth and Austria 10th.

The world’s largest economy, the US, dropped out of the top 10, managing only 11th place. The world’s second-largest economy, US arch-rival China, managed 16th place.

The annual index ranks the world’s 60 most innovative countries. It grades them by a range of criteria including research and development expenditure as a percentage of GDP, productivity, patent activity, the concentration of researchers engaged in R&D per million citizens, the concentration of high-tech companies and the efficiency of tertiary education.

South Korea, which scored top of the board in patents, boasts a world-class manufacturing portfolio populated by global brands such as Samsung, Hyundai, LG and SK. Sectorally, the country is a global leader in semiconductors, digital devices and ships, and a significant player in autos, consumer electronics, petrochemicals and even popular culture products.   

Its sparkling, up-to-date and extensive national infrastructure is leveraged by a highly educated, tech-friendly population. Armed with world-class telcos, it was the first country to roll out a nationwide G5 wireless network and is home to a surging startup scene underwritten by vibrant liquidity. The government traditionally takes a hands-on approach in backing industry, with strong industrial policies championing target sectors.

South Korea has been the top dog for seven of the nine years the index has been published, Bloomberg noted. Last year, Germany had been in first place.

Second-placed Singapore has been funding workers and companies as they transition to digital and also won high scores in manufacturing and higher education, Bloomberg reported.

Meanwhile, Switzerland’s muscle in financial and biological technology put it in the upper ranks of the index’s research categories, while slipping Germany lacks strategies for the adoption of next-gen technologies.