The United Arab Emirates dropped below Saudi Arabia, ranking second among the Gulf countries on the 2015 edition of global innovation index.
The UAE ranked 47nd in the index while the kingdom stood at the 43rd place, the survey showed.
The index, published by Cornell University, business school INSEAD and the World Intellectual Property Organization, surveyed 141 economies around the world and used 79 indicators to gauge their innovative capabilities.
In the Middle East- which is categorised under Northern Africa and Western Asia- Israel emerged at the top place as it ranked 22nd in the global index. It was followed by Cyprus and Saudi Arabia at the 34th and 43rd place respectively.
The UAE, on the other hand, saw a substantial fall in rankings from the 36th position in 2014. The report, however, did not reveal any reasons for the UAE’s fall in rankings.
Despite a decline in the overall index rankings, the Gulf Arab country ranked 26th in terms of political stability and 33rd in providing a favorable business environment. The country also ranked high in terms of providing information and communications technology infrastructure.
However, the UAE still has a long way to go in terms of knowledge creation, a section measured by the number of patent applications and technical documents that are produced by its residents.
In order to improve its innovation, the UAE introduced a number of initiatives over the last year.
Last year, the Emirates launched a national innovation strategy that aimed to make the country the most innovative nation in the world within the next seven years. The strategy will focus on bringing innovation into seven sectors namely renewable energy, transport, education, health, technology, water and space.
In order to further this goal, the UAE’s cabinet also declared 2015 as the year of innovation.
But the country faces practical difficulties in encouraging innovation, research shows.
Another study, conducted by PA Consulting Group, among companies in the UAE, Qatar and Saudi Arabia showed that these countries were not big risk takers when it came to innovation and just 27 per cent of firms strove to be pioneers or pursued risky but high potential innovations.
One of the barriers limiting innovation in these countries is the inability to measure an innovation’s return on investment to a company, the study noted.
Almost 67 per cent of the respondents in the Gulf countries said that less risky innovations delivered more value to them than breakthroughs. Around 38 per cent of firms in the region also said that innovation has, at times, proved a costly failure.