China joined the ranks of the world’s 25 most-innovative economies, while Switzerland, Sweden, the United Kingdom, the United States, Finland and Singapore lead the 2016 rankings in the Global Innovation Index, released Aug. 15. The annual ranking of nations’ innovation capability and results is co-authored by Soumitra Dutta, dean of the Cornell College of Business, in partnership with Cornell University, INSEAD and the World Intellectual Property Organization.

China’s top-25 entry marks the first time a middle-income country has joined the highly developed economies that have historically dominated the top of the Global Innovation Index (GII) throughout its nine years of surveying the innovative capacity of 100-plus countries. China’s progression reflects the country’s improved innovation performance as well as methodological considerations such as improved innovation metrics in the GII.

Despite China’s rise, an “innovation divide” persists between developed and developing countries amid increasing awareness among policymakers that fostering innovation is crucial to a vibrant, competitive economy.

Innovation requires continuous investment. Before the 2009 financial crisis, research and development (R&D) expenditure grew at an annual pace of approximately 7 percent. GII 2016 data indicate that global R&D grew by only 4 percent in 2014. This was a result of slower growth in emerging economies and tighter R&D budgets in high-income economies.

Among the most innovative nations, four economies – Japan, the U.S., the UK, and Germany – stand out in “innovation quality,” a top-level indicator that looks at the caliber of universities, number of scientific publications, and international patent filings. China moves to 17th place in innovation quality, making it the leader among middle-income economies for this indicator, followed by India, which has overtaken Brazil.

“Investing in improving innovation quality is essential for closing the innovation divide,” said Dutta. “While institutions create an essential supportive framework for doing so, economies need to focus on reforming education and growing their research capabilities to compete successfully in a rapidly changing globalized world.”

Published annually since 2007, the Global Innovation Index ranks 128 nations on their innovation capability and results, noting strengths and weaknesses, on 82 indicators.