This article is a part of Poland Unpacked. Weekly intelligence for decision-makers
The World Intellectual Property Organization (WIPO) has published the latest edition of its Global Innovation Index, placing Poland 39th worldwide – exactly the same position it held ten years ago. Despite the country's rapid economic growth over the past decade, its innovation performance has shown little improvement. Why? Does the problem lie in how innovation is measured, or has Poland genuinely failed to make progress?
Innovation below Poland's potential
Interactive chart The latest edition of the Global Innovation Index covers 139 economies. Poland ranks 35th in terms of GDP per capita but four places lower on innovation. This suggests that the country is punching slightly below its economic weight.
Most Central and Eastern European economies perform worse on innovation than their income levels would suggest. Croatia ranks 46th in the innovation index, eight places below its position in the GDP per capita ranking. The gap is seven places for Romania, five for Slovenia, and four each for Czechia and Slovakia.
Four economies in the region buck this trend. One is Estonia, the region's innovation champion. Despite having an income level comparable to Poland's, it ranks 17th in this year's innovation index. Another is Bulgaria, the EU's poorest member state, which ranks 37th and has consistently outperformed Poland for years. Hungary and Latvia also fare better relative to their income levels, although the difference is less striking, at seven places each.
Western European economies, by contrast, tend to perform considerably better on innovation than their wealth levels would suggest. Sweden and Finland stand out in particular, both ranking among the world's top ten innovators despite placing around the second and third dozen, respectively, in terms of GDP per capita. France, Germany and Portugal also perform relatively well. Overall, however, there is a fairly strong correlation between a country's wealth and its position in the innovation index.
What does the innovation ranking actually measure?
Economists regard innovation as a highly complex process whose success depends on a wide range of factors. The Global Innovation Index reflects this complexity. It incorporates dozens of different indicators, ranging from conventional measures such as research and development spending, education expenditure, patents relative to GDP and high-tech exports to less obvious metrics, including the valuation of unicorns (startups worth at least USD 1bn) relative to the size of the economy and the number of GitHub users per million inhabitants.
Some indicators measure not innovation itself but the broader economic environment, including government effectiveness, the rule of law, low-carbon energy sources and access to credit. All indicators are grouped into seven categories.
Given this exceptionally broad methodology, the results should be taken with a pinch of salt. A comparison between Poland and Bulgaria illustrates why. As noted earlier, despite having a lower GDP per capita, Bulgaria ranks two places ahead of Poland.
Interactive chart The comparison above highlights six indicators in which Poland clearly outperforms Bulgaria and six in which Bulgaria has the upper hand. One could say that Bulgaria wins on certifications, while Poland excels in science and education. In the OECD's international PISA assessment of student performance, Poland ranked 14th, compared with Bulgaria's 51st. Poland also enjoys substantial advantages in global university rankings, scientific publication citation indices and research and development spending.
Bulgaria, meanwhile, performs better in implementing ISO standards, registers more trademarks and utility models relative to GDP, and exports more ICT services. It also receives a substantial boost to its overall score from its low-carbon energy sector.
There is certainly room for debate over which factors matter most when assessing a country's innovation performance. This is, after all, a perennial problem with such rankings. Their results are therefore best treated as a useful reference point rather than a definitive verdict, particularly when assessing where a country stands in the global innovation race.
Poland's strengths
Poland's greatest strength in the index is its human capital. School enrollment rates, female labor force participation, employment in knowledge-intensive sectors and the aforementioned PISA results are all identified as major assets.
Contrary to popular belief, Poland also performs relatively well when it comes to private-sector funding of research. Businesses finance 55% of the country's research and development (R&D) expenditure, placing Poland 20th globally, while 56% of researchers work in the private sector, the 19th-highest share in the world.
Macroeconomic factors are another advantage. Poland ranks among the world's leading economies in terms of economic diversification. It also scores highly on the complexity of its production and exports, as well as the share of high-tech products in total exports.
Where Poland falls short
Poland's weakest area is its business environment, which ranks 100th globally. The assessment is based on surveys of business executives, with Poland ranking 92nd for the stability of policies affecting businesses and 69th for entrepreneurship policies and culture. These scores largely reflect perceptions, but they are grounded in the country's frequent and poorly communicated regulatory changes.
Financing is another major weakness. Credit to the private sector amounts to less than 34% of GDP, placing Poland 88th globally. The venture capital market also performs poorly, ranking 58th in terms of deal value and 64th for investments made by domestic funds. This is compounded by a very low investment rate of just 17.8% of GDP, putting Poland in 109th place.
University-industry collaboration also receives a poor score (77th), as does the share of graduates in science and engineering (91st). Polish businesses also spend relatively little on software, ranking 57th globally.
Some of Poland's weaker scores, however, have little to do with innovation itself. The country is penalized, for example, for its aging population (127th in the demographic dividend indicator) and its reliance on coal-fired power generation.
Defense spending could be a major opportunity
One can question the inclusion of certain indicators in the Global Innovation Index. Removing some of those mentioned above would probably improve Poland's ranking somewhat. Nevertheless, there is little doubt that Poland still has considerable ground to make up on the world's most advanced economies when it comes to innovation. Closing this gap may prove more difficult than catching up in terms of income per capita alone.
Defense spending presents a major opportunity. Several factors are working in Poland's favor. The country needs cutting-edge technologies developed and manufactured domestically, and it is committing enormous resources to this effort. Moreover, much of the defense industrial ecosystem is still being built or expanded, creating an opportunity to design it in a way that supports domestic companies. If Poland is to become a genuinely innovative economy, it cannot afford to miss this opportunity.
Key Takeaways
- Poland continues to lag behind on innovation. In the latest WIPO ranking, the country placed 39th – exactly where it stood a decade ago, despite rapid economic growth. The result suggests that Poland's economic potential has yet to translate fully into innovation, while the gap with Western Europe's innovation leaders remains substantial.
- Poland has strong foundations but faces significant obstacles. Its strengths include human capital, strong educational outcomes, private-sector funding of research, sophisticated manufacturing and high-tech exports. However, innovation is held back by an unstable business environment, low investment levels, limited access to financing and insufficient collaboration between universities and businesses.
- Defense spending could provide a major boost to innovation. Although the ranking's methodology has its limitations, it highlights genuine challenges facing the Polish economy. Substantial defense expenditure could stimulate the development of domestic technologies and companies, provided the system is designed to support Polish industry and innovative solutions.