Khóa luận tốt nghiệp: Factors influencing global innovation index in developing countries and policy implications For VietNam

VNU UNIVERSITY OF ECONOMICS AND BUSINESSFACULTY OF DEVELOPMENT ECONOMICS FINAL THESIS FACTORS INFLUENCING GLOBAL INNOVATION INDEX IN DEVELOPING COUNTRIES AND POLICY IMPLICATIONS FOR VIET

VNU UNIVERSITY OF ECONOMICS AND BUSINESS

FACULTY OF DEVELOPMENT ECONOMICS

FINAL THESIS FACTORS INFLUENCING GLOBAL INNOVATION INDEX IN DEVELOPING COUNTRIES AND POLICY IMPLICATIONS

FOR VIETNAM

Supervisors: Assoc Prof Dr Le Dinh Hai Student: Tran Ha My

Student ID: 20051306 Class: QH-2020-E KTPT CLC 2

Ha Noi, 2023

VNU UNIVERSITY OF ECONOMICS AND BUSINESS

FACULTY OF DEVELOPMENT ECONOMICS

FINAL THESIS FACTORS INFLUENCING GLOBAL INNOVATION INDEX IN DEVELOPING COUNTRIES AND POLICY IMPLICATIONS

FOR VIETNAM

Supervisors: Assoc Prof Dr Le Dinh Hai

Student: Tran Ha My

Student ID: 20051306 Class: QH-2020-E KTPT CLC 2 Faculty: Development Economics

Ha Noi, 2023

TABLE OF CONTENTS

TABLE OF CONTENTS - LH HH TH TH TH TH TT TH Hà HH ngà 1HACKNOWLEDGEMENTTS - - 0 HS HH TH TH HH nu TH TH nh ng nh viLIST OF ACRONYMS AND ABBREVIATIONS ce cceceeseseceeeteceeceseceeceaeeeeeeseeseeess viiIb309)9.9)05101177 Ö villLIST OF FIGURES 2 ccc ec cecssceececeeececseeseeseceececeeessecsessessessessessesaceaeeceesaeesessesaeeaeeaees ixINTRODUCTION 8 TTĐ1a x

1 Background and research prObÌÏ€m - - s6 E123 911991 9v 9 1 ng rớt X

2 Research aims and ODJ€CfIV€S - 5 1 1v HH ng tư XI

2.1 Research aim ce e 5 XI2.2 Specific research ODJ€CfIV€S 5< 11H HH HH kh XI

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1.1.1.2 Innovation Output Sub-Index 0 eee eeceeseeseeeeeenececeeeeeeeeseeeeeeaeeeeeeaeeneeeaeens 5

1.1.2 Factors influencing GII of some developing countries in the world 7

1.2 The GII situation of countries throughout the World - 5+ <+s<+sxxsss+ 10 1.2.1 The GII situation of countries throughout the worÌd - «<<-£+e<+s 10 1.2.2 Lessons for VI€fTIATT ĩ0 5 x11 v9 TH ng ng HH ng 13 1.2.3 Con 14

CHAPTER 2: RESEARCH METHODS - St S2 SH HH HH HH hy 15 2.1 Research model of factors affecting GIÏÏ - - s6 + + E+EskEssesiesseesersee 15 2.2 Research process nh 18

2.3 Research mme€tÏO CS - - 121125121191 91 1 91 H1 019g ng HH ngàng 18 2.3.1 The method of data colÏ€CfIOTI - -ĩ- G1 1199 ng ng nnriệc 18 2.3.2 The method of data processing and analySis - 5 5+ +s<++vxssessersses 19 2.3.2.1 Method of data processing Q.1 v SH HH ng gnvey 19 2.3.2.2 Methods of data annaÏyS1S - cv vn TH TH HH ey 19 CHAPTER 3: RESEARCH RESULTS AND DISCUSSION 23

H ,Ỏ 23 BLD - 23

3.1.2 Economic indicators 1 Ầ 24

3.1.3 Social Indicators ec 26

3.1.4 Political indicators 0 27

3.3.1 Define nods and cut-point SfAf 2G + E21 k* v9 ng re, 3l3.3.2 Predict the ultimate state of GII in developing Countries - - -‹ 32

3.4 General assessment of factors affecting GII of developing countries in the world 343.5 The current status of most influencing factors to GII in Vietnam - 35

3.5.1 Framework for a practical proposal :ccceceesceeceseeeeeeseeseeeseeeeeseeseeeseeseeeees 35

3.5.2 Policy implications for the development of the GII in Vietnam based on researchò0 e 36

3.5.2.1 Improving the GDP per C4Ia - 5 G1119 1 2v vn ngư 373.5.2.2 Lengthening the compulsory eduCafIOII -.- 5 55 + £+s£svsseeseesse 38

3.5.2.3 Promote Index of Economic Freedom ee eceeceseesesseseeseeceeeeeeeneeneeseens 393.5.2.4 Reducing population ØTOW(H 5 + + 9191111111111 1 111 1 11g nh ry 40

09)90615I90)012 42

REFERENCES HH ng TH TT it 44

ACKNOWLEDGEMENTS

First of all, I would like to express my deep gratitude to the professors andlecturers of the Faculty of Development Economics, University of Economics, VNU forimparting me to valuable knowledge and creating the best conditions to complete thisresearch

In particular, I would like to express my deepest gratitude to my supervisor, Assoc

Prof Dr Le Dinh Hai His enthusiastic instructions helped and imparted to me the

extremely useful knowledge and made valuable contributions during the implementation

LIST OF ACRONYMS AND ABBREVIATIONS

ASEAN The Association of Southeast Asian Nations

FDI Foreign Direct Investment

FTE Full-time Equivalent

GDP Gross Domestic Product

GERD Gross domestic expenditure on research and experimental

development

GII Global Innovation Index

ICTs Information and Communication Technologies

IEP Institute for Economics and PeaceISO The International Organization for Standardization

MOSTI Ministry of Science, Technology and Innovation (Malaysia)

MSME Ministry of Micro, Small & Medium Enterprises

NITI Aayog National Institution for Transforming India

PCT Percent CompletePISA Program for International Student Assessment

PPP Purchasing power parity

QS Quacquarelli SymondsR&D Research and Development

TLDs Top-level Domain

WIPO World Intellectual Property Organization

Table 1.

Table 1

Table 1

Table 1

Table 1

Table 1

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Table 2

Table 2

Table 3

Table 3

Table 3

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Table 3

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LIST OF TABLES

1 The institutions pillar of GH] input 5555 5£ 3+ *+s+seeeeeereereseresrs 2

2 The human capital and research pillar of GII input ‹ -‹ «: 2

3 The infrastructure pillar of GI 1nput -. 5 5c + Ss + +exsesereerseeesers 3 4 The market sophistication of GI] InpUE - 55555 *+<++e+sexseeseexsez 4 5 The business sophistication of GI] Input - - + «++sss+s+sex+e+sexzsss 5 6 The Knowledge and technology outputs of GÏÏ +-«++<<<<xess+ 5 7 The Creative outputs Of GÏÌ - - +c + +13 ESEEEEESkEkkrekrrkrrerevre 6 9g ui0iïi 8600 7

1 Description of factors influence ïÏÏ - - «+ + *+sEsvEsseeseesserseesee 15 3 The sources Toà) 18

1 GII value is divided by income levels eee eeceesseeneeteceeeeeceeeeseeeeeeneeneees 23 2 Economic indicators in low income and lower middle Income 24

3 Economic indicators in high income and upper middle 1ncome 24

4 Social indicators in low income and lower middle income 26

5 Social indicators in high income and upper middle income 26

6 Political indicators in low income and lower middle Incorme 27

7 Political indicators in high income and upper middle Income 28

8 Correlation between the dependent variable independent variables 29

9 Summary of FEM model of factors affecting GIÏ - «+-s<<<+ 30 10 Description of the state of variables in BBNs - sccS<csc<se 31 11 Rank the importance of factors affecting the GIÏ « -«++s<++ 33 12 The state of the nodes predicts the highest GII status as expected 34

13 Rank the importance of influencing factors - - +55 + 5< se +ssrsess 35

LIST OF FIGURES

Figure 1 1 The inputs and outputs Of GÏÏ - - ¿55+ +23 3£ +EE*EEveeerEreeeerreereres 1

Figure 2 1 Hypothesized factors affecting GID cecceeceeseceseeeeceeeeeceaeeeseeeeeeeeaeeeaes 15Figure 2 2 Research DFOC€SS - - G1 1S 11111119111 111 TH TH HH 18Figure 2 3 Simple structure of BBN in the research of factors affecting GII 22

Figure 3 1 The BBNs model predicts the impact of factors affecting the GII 33Figure 3 2 The BBNs model predicts the highest probability of the GII through policy

In 1086i103390 10177 - 34

INTRODUCTION

1 Background and research problem

Innovation has become one of the most concerning aspects across the globe To

evaluate the innovative attainment of one country, there is an urgent need for a newmeasurement Therefore, Global Innovation Index (GII) was created in 2007, with an

aim to measure agenda and engage in an important aspect of economic policymaking, itcontributes to design policy and improve the innovation performance (WIPO, 2020)

However, there are numerous adversities that each country has to encounter toachieve national innovation Both the cost and availability of funding have a detrimentalimpact on productivity, but a shortage of competent staff mostly affects high-

productivity enterprises, resulting in low innovation effectiveness (Coad, Pellegrino, &Savona, 2016) According to (Bano, 2023) shortage of qualified workers will be a global

issue in 2023, with an expected inflation rate of 77% compared to 35% in 2013 In terms

of funding, despite growing pressure to increase green R&D, one-third of 850 enterprisesfrom 17 countries lack the financial means to innovate Four out of ten struggle to affordneeded significant initial expenses for launching sustainable innovation, a critical firststep in the upcoming green transformation (Ayming, 2023) In developing countries,

especially in India, some issues include low demand for innovations in the market andorganizational rigidities when recorded by 71.23% and 69.28% of respondents,

respectively According to the National Manufacturing Innovation Survey 2021-22, just

25.01% of the 8,074 MSME and big enterprises were determined to be innovative (Soni,

2023)

Although it achieved some innovative attainments while ranked at 46th place ofGHI in 2023, Vietnam still shares the same innovation limitations with other developingcountries According to the Ministry of Science and Technology, 97% of Vietnamese

firms in 2023 are small and medium-sized that have not developed significantly in order

to stay up with technological advances (Khue, 2023) Several issues such as the labor

the change in GII value of some developing countries and apply some solutions for

By analyzing the factors affecting GII of some developing countries across the

globe, thereby implying policies that contribute to the successful attainment of reaching

the GH of Vietnam to the very high level in the coming years

2.2 Specific research objectives

e Systematizing the theoretical and practical state of GII of some developing

countries in the world;

e Analyzing the current situation of GII of some developing countries in the world;

e Determining the factors affecting the GII of some developing countries in the

world through Bayesian Belief Networks models (BBN);

e Implicating policies that contribute to the successful attainment of raising

Vietnam's GII value in the coming years.

3 Research subjects

Factors influencing GII of 70 nations worldwide throughout the five-year period

of time from 2016 to 2020; Implications of policies contributing to the effective

execution of Vietnam's GII in the coming years

4 Study scope

4.1 Content scope

e Theoretical and practical status for GII

e The current status of GII in many developing countries in the world

e Factors influencing GII in many developing countries throughout the world by

using Bayesian Belief Networks (BBNs)

e Policy implications contributing to the effective execution of Vietnam's GII in the

e What is the status of GII of some developing countries in the world?

e What factors significantly affect the GII of some developing countries in the

world?

e What policies need to be implemented for the effective execution of Vietnam's

GII in the coming years?

6 Thesis structures

Aside from the Introduction and Conclusion, the study report is divided into threemajor chapters:

Chapter 1: Theoretical and practical status of factors influencing GII of somedeveloping countries in the world

Chapter 2: Research process and methodology

Chapter 3: Research results and discussion

CHAPTER 1: THEORETICAL AND PRACTICAL STATUS OF FACTORS

INFLUENCING GIT OF SOME DEVELOPING COUNTRIES IN THE WORLD

1.1 Theoretical and practical framework for GII of some developing countries in

the world

1.1.1 Definition of GI

GII is an annual assessment of nations based on their potential and success in

innovation, published by WIPO (WB, 2010) It was founded in 2007 by INSEAD andWorld Business, a British publication It was a collaboration product of WIPO combineswith Cornell University, INSEAD, and other organizations and institutions until 2021 It

is based on both subjective and empirical data gathered from a variety of sources,including the International Telecommunication Union, the World Bank, and the WorldEconomic Forum

The overall GII assessment is based on two sub-indices, the Innovation Input Index and the Innovation Output Sub-Index, which are both equally in giving an overallview of innovation More specific, the average value of the Input and Output Sub-Indices

Sub-is used to determine the total GII score

Global Innovation Index

2 Regulatory ucati infrastructure 5.2 Innovation

environment 4.3 Trade, linkages

eopatel 3.3 Ecological diversification,

3 Business \ sustainability and market scalg | 5.3 Knowledge

Note: Number in (_) indicate of Rank and Score compared to 132 country/economy

Figure 1 1 The inputs and outputs of GH (Source: Malaysian Science and

Technology Information Centre)

1.1.1.1 Innovation Input Sub-Index

There are five input pillars capture parts of the national economy that support

creative activity: Institutions, Human capital and research, Infrastructure, Marketsophistication, and Business sophistication

e Pillar 1: Institutions

It is critical to innovation to establish an institutional framework that attractsindustry and supports development by providing effective governance and theappropriate levels of protection and incentives The Institutions pillar describes acountry's institutional system There are 8 indicators are mentioned when discussingabout the institution of one nation

Table 1 1 The institutions pillar of GH input

1.1 Political 1.1.1 Political stability and safety

environment 1.1.2 Government effectiveness

1.2.1 Regulatory quality

1.2 Regulatory 1.2.2 Rule of law

environment 1.2.3 Cost of redundancy dismissal, salary weeks

1.3.1 Ease of starting a business 1.3.2 Ease of resolving insolvency

1.3.3 Ease of paying taxes

(Source: Global Innovation Index report 2016)

1.3 Business

environment

e Pillar 2: Human capital and research

The degree and grade of education and research activities in a country are majordrivers of a country's innovation capability This pillar attempts to assess countries'human capital There are 12 indicators are mentioned when discussing about the humancapital and research of one nation

Table 1 2 The human capital and research pillar of GU input

2.1.1 Expenditure on education, % GDP 2.1.2 Gov’t expend on edu./pupil, secondary 2.1 Education 2.1.3 School life expectancy, years

2.1.4 PISA scales in reading, maths & science 2.1.5 Pupil-teacher ratio, secondary

2.2.1 Tertiary enrolment, % gross

2.2.2 Graduates in science & engineering, %

2.2 Tertiary

education 2.2.3 Tertiary inbound mobility, %

2.3.1 Researchers, FTE/mn pop

2.3 Research and 2.3.2 Gross expenditure on R&D, % GDP

(RED) 2.3.3 Global R&D firms, avg exp top 3, mn $US

2.3.4 QS university ranking, average score top 3

(Source: Global Innovation Index report 2016)

e Pillar 3: Infrastructure pillar

The third pillar is divided into three sub-pillars: information and communication

technologies (ICTs), general infrastructure, and environmental sustainability Good and

environmentally friendly communication, transportation, and energy infrastructuresencourage the development and exchange of ideas, services, and goods, and nourish intothe system of innovation by a rise in efficiency and productivity, lower transaction costs,

improved market access, and long-term growth There are 10 indicators are mentionedwhen discussing about the infrastructure of one nation

Table 1 3 The infrastructure pillar of GI input

3.1 Information 3.1.1 ICT access

and 3.1.2 ICT use

communication 3.1.3 Government’s online service

technologies

(ICTs) 3.1.4 E-participation

3.2 General 3.2.1 Electricity output, kWh/cap

3.2.2 Logistics performance

LTE 3.2.3 Gross capital formation, % GDP

23 !ngdimjanl 3.3.1 GDP/unit of energy use, 2005 PPP$/kg oil eq

ers 3.3.2 Environmental performance sustainability

3.3.3 ISO 14001 environ certificates/on PPP$ GDP

(Source: Global Innovation Index report 2016)

e Pillar 4: Market sophistication

Credit availability and an investment-friendly climate, access to the worldwidemarket, competition, and market scale are all necessary for firms to thrive and develop

innovation The Market sophistication pillar is divided into three sub-pillars based on

market circumstances and overall transaction volume There are 10 indicators arementioned when discussing about the market sophistication of one nation

Table 1 4 The market sophistication of GH input

4.1 Credit

4.1.1 Ease of getting credit 4.1.2 Domestic credit to private sector, % GDP 4.1.3 Microfinance gross loans, % GDP

4.2 Investment

4.2.1 Ease of protecting minority investors

4.2.2 Market capitalization, % GDP 4.2.3 Total value of stocks traded, % GDP

4.2.4 Venture capital deals/bn PPP$ GDP

4.3 Trade,

competition, and market scale

4.3.1 Applied tariff rate, weighted mean, % 4.3.2 Intensity of local competition

4.3.3 Domestic market scale, bn PPP$

(Source: Global Innovation Index report 2016)

e Pillar 5: Business sophistication

The last enabling pillar attempts to capture the level of business sophistication in

order to measure how open organizations are is new ideas The Human capital and

research pillar (pillar 2) argued that accumulating human capital via education,particularly higher education, and prioritizing R&D activities is a necessary prerequisite

for innovation to occur This rationale is carried a further step here, with the statementthat hiring highly skilled experts and technicians helps organizations boost theirproductivity, competitiveness, and innovation potential There are 15 indicators arementioned when discussing about the business sophistication of one nation

Table 1 5 The business sophistication of GH input

5.1.1 Knowledge-intensive employment, %

5.1.2 Firms offering formal training, % firms

5.1.3 GERD performed by business, % GDP

5.1.4 GERD financed by business, %

5.1.5 Females emp w/adv degrees, % tot emp 5.2.1 University/industry research collaboration 5.2.2 State of cluster development

5.2.3 GERD financed by abroad, %

5.1 Business

sophistication

5.2 Innovation

linkages 5.2.4 JV-strategic alliance deals/bn PPP$ GDP

5.2.5 Patent families filed in 2+ offices/on PPP$ GDP

5.3.1 Intellectual property payments, % total trade

5.3.2 High-tech imports less re-imports, % tot trade

oa —- “ 5.3.3 ICT services imports, % total trade

absorption

5.3.4 FDI net inflows, % GDP 5.3.5 Research talent, % in business enterprise

(Source: Global Innovation Index report 2016)

1.1.1.2 Innovation Output Sub-Index

The outcomes of innovative actions inside the economy are known as innovationoutputs Despite having only two pillars like knowledge and technology outputs; creative

outputs, the Output Sub-Index has the same significance in determining the total GIIscores as the Input Sub-Index

e Pillar 6: Knowledge and technology outputs

This pillar encompasses all factors that have historically been regarded to be the

result of inventions and/or advances There are 14 indicators are mentioned whendiscussing about the knowledge & technology outputs pillar of one nation

Table 1 6 The Knowledge and technology outputs of GII

6.1.2 PCT patent applications/bn PPP$ GDP

6.1.3 Utility models by origin/bn PPP$ GDP

6.1.4 Scientific & technical articles/bn PPP$ GDP

6.1.5 Citable documents H index

6.1 Knowledge

creation

6.2.1 Growth rate of PPP$ GDP/worker, %

6.2.2 New businesses/th pop 15-64 6.2.3 Computer software spending, % GDP

6.2.4 ISO 9001 quality certificates/bn PPP$ GDP

6.2.5 High- & medium-high-tech manufactures, %

6.3.1 Intellectual property receipts, % total trade

6.3 Knowledge 6.3.2 High-tech exports less re-exports, % total trade

diffusion 6.3.3 ICT services exports, % total trade

6.3.4 FDI net outflows, % GDP

(Source: Global Innovation Index report 2016)

6.2 Knowledge

impact

e Pillar 7: Creative outputs

In innovation assessment and policy discussions, the significance of creativity ininnovation is still widely misunderstood The GII has always prioritized quantifyingcreativity as part of its Innovation Output Sub-Index since its establishment The lastpillar, on creative outputs, is divided into three sub-pillars There are 13 indicators arementioned when discussing about creative outputs pillar of one nation

Table 1 7 The Creative outputs of GIT

7.1.1 Trademarks by origin/bn PPP$ GDP

7.1 Intangible 7.1.2 Industrial designs by origin/bn PPP$ GDP

assets 7.1.3 ICTs & business model creation

7.1.4 ICTs & organizational model creation 7.2.1 Cultural & creative services exp., % total trade

7.2 Creative 7.2.2 National feature films/mn pop 15-69

goods and 7.2.3 Global ent & media market/th pop 15-69

services 7.2.4 Printing & publishing manufactures, %

7.2.5 Creative goods exports, % total trade 7.3.1 Generic TLDs/th pop 15-69

7.3 Online 7.3.2 Country-code TLDs/th pop 15-69

creativity 7.3.3 Wikipedia monthly edits/mn pop 15—69

7.3.4 Video uploads on YouTube/pop 15-69

(Source: Global Innovation Index report 2016)

The GH, published annually, includes performance measurements and rates 132

economies based on their innovation ecosystems The Index is based on a large dataset

of 81 variables gathered from international public and commercial sources It growsbeyond traditional measurements of innovation as the meaning of innovation has been

expanded The GII selects the top 100 research and technology clusters in the globe.Overall, GII is still considered one of the most potential and comprehensive indexeswhen there is an expanding number of governments carefully examining their yearly GII

results and implementing policy responses to enhance their performance because GII hasaltered the innovation measurement agenda and become a cornerstone of economicplanning

1.1.2 Factors influencing GII of some developing countries in the world

Based on the review, there are 12 factors affecting GII, which are aggregated as

shown in the table below:

Table 1 8 Factors affects GIT

Name of | Description Explaining Expected Sources

variables | of variables sign

Economic indicators

Inflation Inflation, Inflation, as measured by (-) Chu et al, (2019);

GDP the yearly growth rate of the Chu et al, (2017);

deflator GDP implicit deflator, Ramzi & Wiem,

(annual %) shows the degree of price (2019); Andrade

increases in the whole Rocha et al, (2021);

economy as well Evers et al, (2020);

Demirhan &

Masca, (2016)

GDP GDP per | GDP per capita is calculated (+) Vukoszavlyev,

capita by dividing the total of gross (2019); Alshamsi & (current value produced by every Azam, (2015);

US$) producer who lives in the Okafor et al,

economy plus any taxes or (2017); Epaphra &

subsidies on goods, not Massawe, (2017);

included in output Etale et al, (2016);

assessment and divide mid- Lin & Cheng,

year population (2019)

Name of | Description Explaining Expected Sources

variables | of variables sign

Economic indicators

FDI Foreign Foreign direct investment is (+) Khachoo &

direct defined as net inflows of Sharma, (2016);

investment, investment to acquire a Loukil, (2016);

net inflows long-term management Behera & Sethi,

(% of GDP) stake in a company (2022); Nyeadi &

operating in an economy Adjasi, (2020);

other than the investor's Hakizimana, (2015)

Assets Bank assets | Bank assets are the property (+) Kalkabayeva et al,

(% of GDP) | created by the bank using (2020)

mobilized money to

generate income In essence,

they are bank's money

deployment to generate income and earnings.

Free Econ Index of An index evaluates (+) Zhu & Zhu, (2017);

Economic jurisdictions based on Hafer, (2013);

Freedom criteria such as trade liberty, Lehmann & Seitz,

tax responsibility, legal (2017); Badri &

efficiency, and others as Sheshgelanib,

well (2017); Ghazalian

& Amponsem, (2019); Tag &

Degirmen, (2022);

Economou, (2019)

Export Exports of The value of all (+) Etale et al, (2016);

goods and commodities and other Aghion et al, services (% | market services given to the (2018); Melitz &

of GDP) rest of the world is Redding, (2014)

represented by exports of

goods and services.

Name of | Description Explainin Expected Sources

variables | of variables P 8 sign

Social indicators

Edu Compulsory | The amounts of years that (+) DeAngelis & Dills,

education, | children are legally required (2020); Akcigit et duration to attend school is referred al, (2017); Ritchie

(years) to as the duration of & Tucker-Drob,

obligatory education (2018); Jackson et

al, (2015); Bell et

al, (2019);

Oluwatobi et al, (2016); Kato et al, (2015); You et al,

(2021); Dakhli &

De Clercq, (2004)

Population | Population The rise in the number of (-) Coccia, (2014);

Growth growth members in an entire Adewole, (2012)

(annual %) population or scattered

group is referred to as

population growth.

Internet Internet Internet users are defined as (+) Qiu, (2023); Lee et

users (% of those who connect to the al, (2015)

population) Internet from any place,

divided by the total

population.

Political indicators

Corruption | Corruption | The Corruption Perceptions (+) Wen et al, (2020);

Perceptions Index (CPI) published by Paunov, (2016);

Index Transparency International, Sacio-Szymanska,

which ranks nations based

on their perceived level of

Lemke, (2014);

Tomaszewski, (2018)

Name of | Description Explainin Expected Sources

variables | of variables P 8 sign

Political indicators

Terrorism Global The Global Terrorism Index (-) Zheng et al, (2021);

Terrorism | is an index that incorporates Uddin et al, (2022);

Index elements connected to Chang et al, (2022)

terrorist acts in order to create a clear picture of the impact of terrorism in order

to demonstrate trends and

give a full database

Political Political An institutional indication (+) Okrah &

Hajduk-stability of a country's Hajduk-stability in Stelmachowicz,

index political and governmental (2020);

concerns Pastarmadzhieva et

al, (2019); Asongu

& Nwachukwu, (2017)

(Source: Compiled by the author)

1.2 The GII situation of countries throughout the world

1.2.1 The GII situation of countries throughout the world

The WIPO's Global Innovation Index 2023 ranked India 40th out of 132economies India has risen steadily in the GII during the last few years, from 81 in 2015

to 40 in 2023 This rise highlights India's constant and significant increase in innovation

over the last eight years India ranked first among the 37 lower-middle-income nationsand first among the 10 Central and South American economies Key metrics, such assubstantial rankings is ICT services exports, venture capital received, science and

engineering graduates, and worldwide corporate R&D investors, which confirms India's

vibrant innovation scene India's development may be ascribed to an abundance of

intellectual capital and a strong Startup Ecosystem, as well as laudable efforts by

governmental and commercial research organizations The Covid-19 epidemic

Malaysia remains 36th out of 132 nations in this year (2023) According to a study

issued by the WIPO, the total score this year increased to 40.9 from 38.7 the previousyear When compared to 2022, progress has been shown in five by the seven elements ofthe GII, with substantial advances in the Institutions category (where Malaysia movedfrom 34th to 29th rank) and Human Capital and Research (from 38th to 32nd) Othercategories significant improved as well, with the country moving from 26th to 18th inMarket Sophistication and from 41st to 36th in Business Sophistication Furthermore,the Knowledge and Technology Outputs category improved, moving from 39th to 37thplace The Ministry of Science, Technology, and Innovation (MOSTI) released a pressoutlining its objectives to be in the top 30 of the GII in 2025, and has outlined many

planned activities targeted at raising Malaysia's position:

e Assisting with the registration of IP rights for potentially commercialized ideas,

particularly those generated by school students

e Creating the National Plan for Planetary Health Action to address human health

concerns as well as the nation's relationship with nature, biodiversity, and climate

change

e Offering market intelligence about the local startup ecosystem to assist Bursa

Malaysia in identifying viable startups for stock market listing

e Proposing the formation of a Special Committee for Science, Technology, and

Innovation Talent for nurturing adaptable capabilities in science, technology, and

innovation

in various areas Thailand is ranked 9 out of 16 nations in East and South-east Asia andremains 3 in ASEAN Thailand's research capabilities coming from its large number ofresearchers capable of developing varied breakthroughs Furthermore, the businesssector is heavily invested in research and development Minister of Higher Education,Science, Research, and Innovation Supamas Isarabhakdi emphasised the necessity ofprivate sector power The government is critical in raising awareness and encouragingcollaboration to move Thailand into achieving an innovation nation, with a GII ranking

of 30 by 2030 Thailand is concentrating on six measures to attain this goal:

e The government as a sandbox and innovation accelerator

e Accelerating innovation investment connected to research utilization

e Encouraging innovation financial markets and technology capital markets

e Increasing the number of creative start-ups in order to overhaul the business

structure

e Increasing the value of products and services by encouraging patent registration

and using patents

e Promoting new ideas and culture, especially in the tourist, cuisine, fashion, and

entertainment industries

The relevance of patent registrations was highlighted by Natchanika Jidnarong,

an industrial property specialist at the Department of Intellectual Property Malaysia andSingapore, both of which have high innovation indexes, have a large number of

registered intellectual assets This demonstrates the importance of entrepreneurs and

inventors in Thailand significantly recognizing intellectual property, reflecting the

country's rise in innovation

1.2.2 Lessons for Vietnam

According to the WIPO, GII 2023 Report released on September 27, Vietnamplaced 46/132 nations and economies, up two ranks from previous year Vietnam is alsoregarded as one of the seven middle-income nations with the highest improvement ininnovation over the last decades

To foster innovation, all stakeholders must invest together from input to output.

According to Deputy Minister Bui The Duy, there are a few indicators that, if updated,will strengthen the status of innovation and Vietnam achieved it Deputy Minister BuiThe Duy stated his expectation that with the help of WIPO specialists, the Ministry willengage with implementing units to assess the amount of innovation, resulting in thecreation of a toolkit That can be able to analyze what innovation is now lacking andwhat is required, particularly for provinces, cities, and localities to have primarydirection, boosting Vietnam's rating in the index

Furthermore, there is a need for solutions to showcase Vietnam's enormouspotential, as well as to encourage technology transfer and the use of innovation in thebrands in markets The Ambassador emphasized that the Permanent Mission of Vietnam,

in collaboration with the United Nations is always supports, links, and cooperatesbilaterally and multilaterally with WIPO and associate organizations in the field of

innovation Innovation and technology transfer can generate products and services that

contribute to Vietnam's more sustainable development

In political aspect, according to Mr Do Thanh Long, Chief of Office of the

Ministry of Science and Information Technology, in the third quarter of 2023, theMinistry has completed and submitted to the Government and Prime Minister 4documents (2 Decree; 1 Decree; Decision and | Directive) It mainly focus on somemissions: regulating the functions, tasks, powers and organizational structure of theMinistry of Science and Technology; detailing a number of articles and measures toimplement the Intellectual Property Law on industrial property; protecting industrialproperty rights, rights to plant varieties and state management of intellectual property;

transfer Hoa Lac High-Tech Park under the management of the Ministry of Science and

Technology to the Hanoi People's Committee for management and developing asynchronous, effective, modern and integrated science and technology market

Finally, in the third quarter, the Ministry of Science and Technology collaboratedwith provincial/city People's Committees to organize events such as the VietnamTechnology and Innovation Connection Event 2023 with the theme "Innovation -Sustainable Development Solid"; the Vietnam Artificial Intelligence Festival 2023(AI4VN 2023) with the theme "Power for Life"; and the 15th National Nuclear Scienceand Technology Conference (VINANST-15)

1.2.3 Research gap

From review, though identifying the factors influencing GII of one country, it stilljust ends at broad research or in-depth examination of an influencing criteria Therefore,their contributions merely add to the theoretical foundation This research ‘Factors

influencing Global Innovation Index in developing countries and policy implications forVietnam” is going to contribute more theoretically to generality and show the importance

of each factor can affect GII of one developing country

CHAPTER 2: RESEARCH METHODS

2.1 Research model of factors affecting GII

There are 12 independent variables and models of influencing GII

Economic indicators

Bank assets Inflation

FDI net inflow GDP per capita

Free Econ

Export.

Social indicators

Compulsory years of schooling.

Figure 2 1 Hypothesized factors affecting GI (source: Author)

Table 2 1 Description of factors influence GIT

Name of | Description Explaining Unit Variable

variables | of variables Type

Dependent variable

GII Global The Global Innovation Index (GIT) point Quantitative

Innovation ranks nations based on their

Index performance and capability for

innovation The WIPO publishes it

once a year.

Name of | Description Explaining Unit Variable

variables | of variables Type

Independent variable

Inflation Inflation, Inflation, as measured by the yearly % Quantitative

GDP growth rate of the GDP implicit

deflator deflator, shows the degree of price

(annual %) increases in the whole economy as

well.

GDP GDP per GDP per capita is calculated by US$ Quantitative

capita dividing the total of gross value

(current produced by every producer who lives

US$) in the economy plus any taxes or

subsidies on goods, not included in output assessment and divide mid-year

population.

FDI Foreign Foreign direct investment is defined as | % of GDP | Quantitative

direct net inflows of investment to acquire a

investment, long-term management stake in a

net inflows company operating in an economy (% of GDP) other than the investor's.

Assets Bank assets | Bank assets are the property created by | % of GDP | Quantitative

(% of GDP) the bank using mobilized money to

generate income In essence, they are bank's money deployment to generate

income and earnings.

Free Econ Index of An index evaluates jurisdictions based point Quantitative

Economic on criteria such as trade liberty, tax

Freedom responsibility, legal efficiency, and

others as well.

Export Exports of The value of all commodities and % of GDP | Quantitative

goods and | other market services given to the rest services (% | of the world is represented by exports

of GDP) of goods and services.

Edu Compulsory | The amounts of years that children are years Quantitative

education, legally required to attend school is duration referred to as the duration of

(years) obligatory education.

Name of | Description Explaining Unit Variable

variables | of variables Type

Population | Population | The rise in the number of members in % Quantitative

Growth growth an entire population or scattered group

(annual %) is referred to as population growth.

Internet Internet Internet users are defined as those who % of Quantitative

users (% of | connect to the Internet from any place, | population

population) divided by the total population.

Corruption | Corruption The Corruption Perceptions Index point Quantitative

Perceptions (CPI) published by Transparency

Index International, which ranks nations

based on their perceived level of corruption in the government Grades

vary between 0 to 100, with 0 indicating significant corruption and

100 corresponding to very little

corruption.

Terrorism Global The Global Terrorism Index is an point Quantitative

Terrorism index that incorporates elements

Index connected to terrorist acts in order to

create a clear picture of the impact of

terrorism in order to demonstrate

trends and give a full database

Political Political An institutional indication of a point Quantitative

stability country's stability in political and

index governmental concerns.

(Source: Compiled by the author)

| Policy implications for Vietnam

Figure 2 2 Research process (Source: Author)2.3 Research methods

2.3.1 The method of data collection

The data of 70 developing countries in 5 years from 2016 to 2020 was collected

in below sources:

Table 2 2 The sources of variables

World Bank GDP per capita; https://data.worldbank.org

Inflation; Foreign

direct investment, net

WIPO https://www.wipo.int/global_innovation_index/en/