selected developing East Asian countries is conducted. The exercise draws from the 2017 Global Innovation Index (GII) data set<sup>2</sup> which covers 127 countries; the only developing East Asian countries covered are the following: Cambodia, China, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. This data set captures overall innovation capacity through a mix of indicators encompassing both innovation enabling factors (called as “inputs”) as well as innovation outputs. It has a multi-level structure with two sub-indices and 7 pillars which are then divided into three sub-pillars, each of which is composed of individual indicators of different types (composite indicators, survey questions and hard data indicators),<sup>3</sup> totaling 81 indicators. Scores (of index, sub-index, pillars and sub-pillars) are normalized in the 0-100 range. Figure 4 below displays the indicator schemata. Despite its drawbacks – particularly regarding the lack of comparability over time – this database provides a single source of information that allows the comparison of performance of national innovation systems across economies in a given year.

According to this data set structure, the innovation enabling factors encompass five main pillars. The _Institutions_ pillar captures the institutional framework of a country and measures the extent to which this framework is conducive to attract private sector business by providing good governance and the correct levels of investment protection. The _Human capital and research_ pillar reflects both the standard and level of education and research activity, which are prime determinants of a country’s capacity to innovate. The _Infrastructure_ pillar measures the extent to which a country is served with good and ecologically friendly communication, transport and energy infrastructures; all these factors are key facilitators to production and exchange of goods and services and ideas. The _Market sophistication_ pillar reflects the underlying market conditions that are relevant for business operation and innovation activities; it includes availability of credit; conditions to support investment and access to international markets. The _Business sophistication_ pillar measures the extent to which firms are conducive to innovation activity; it measures the employment of qualified workers by firms, the presence of innovation linkages and public/private academic partnerships in the economy, and the capacity of firms in the country to absorb knowledge. From the output side, the results of innovative activities within the economy are captured by two main pillars. The _Knowledge and technology outputs_ pillar comprises the traditional fruits of innovation, and includes measures of knowledge creation, impact and diffusion. Finally, the “ _Creative outputs_ ” pillar captures the extent to which the country makes use of intangible assets, the country’s capacity to produce creative goods and services and online creativity.<sup>4</sup>

> 2 See Global Innovation Index (2017) for further details.

> 3 See Global Innovation Index (2017), Annex 1 for further methodological details.

> 4 It is worth highlighting the connections between the extended approach of national innovation system displayed in Figure 2 and the measurement scheme applied by the GII data set, displayed in Figure 4. The supply and demand dimensions of innovation as well as the markets where knowledge accumulation takes place – highlighted in Figure 2 - are somehow captured across the innovation enabling pillars displayed in Figure 4. For instance, the set of external factors that influences the firm’s incentives to innovate highlighted in Figure 2 (macro context, the competitive structure and trade regime) are somehow captured by the _Market sophistication_ enabling pillar in Figure 4. The same happens with the supply of human capital highlighted as one of the supply side factors in Figure 2, which is captured by the _Human capital and research_ pillar in Figure 4.

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