A Two-Step Approach for Identifying the Optimal Innovation Policy Direction Using the Global Innovation Index

This paper investigates the plausibility of the practice of equal weighting in the Global Innovation Index from a policy perspective. On this basis, we examine the discrepancies in innovation efficiency arising from an endogenous weighting approach and investigate the feasibility of policy recommendations arising from the official approach. The results highlight significant differences for low-income countries, for which conclusions derived from the Global Innovation Index may not be feasible. A novel approach is proposed to monitor the degree to which countries divert from equal weighting, should this be deemed a desirable long-run objective.