Asia Gets Ready To Compete On Innovation


Panos Mourdoukoutas

September 26, 2016

Asia is catching up with the western world in a very important metric: university education, which provides the most important source of competitiveness in a global economy: talent.

That’s good news for countries like China as they try to compete on innovation rather than on imitation. And eventually good news for investors in the Asian economies.

There was a time Asian universities barely made it to the world’s top university rankings, as many Asian countries lacked the resources to attract and retain world-class researchers.

In recent years, this has changed.

Asian universities are rising, together with the rise of Asian economies. The 2016-17 Times Higher Education Ranking, for instance, includes 289 Asian universities from 24 countries which make the overall list of 980 institutions. And an elite group of 19 are in the top 200, up from 15 last year. 

As expected, the primary driver behind Asia’s rise in this ranking is China, which has been aggressively trying to upgrade its higher education institutions, as it tries to make the great leap forward from imitation to innovation. China’s Peking University made the top 30, in 29th place, up from 42nd last year; while Tsinghua made the top 40 in 35th place, up from joint 47th. Hong Kong’s six representatives make the top 200. 

Then there is Singapore, which comes in on top on all five of the pillars underlying the ranking. The Indian Institute of Science, which is moving closer to the top 200, claiming a spot in the 201-250 band, its highest ever position. And even half dozen of Pakistani universities made it onto the list.

China’s climb up the list of top universities has already begun to pay off, as its companies are getting smarter, beating their Japanese and Korean counterparts and catching up with their American counterparts.  

According to recent MIT Technology Review’s annual listing of the 50 smartest companies, two Chinese companies made it to the top of the 2016 list—Baidu in the second position and Huawei in the 10th position–versus three in 2015, and none in 2014.

Still, the pay-off deriving from China’s educational progress has yet to reach the shareholders of Chinese corporations, as evidenced by the performance of China’s exchange, which lags behind that of Pakistan in recent years.

Index/Fund 12-month Performance 5-year Performance
Global X MSCI Pakistan (NYSE:PAK) 20% 332%*
IShares China (NYSE:FXI) 9.80% 16.00%
iShares S&P India 50 (NASDAQ:INDY) 12.77% 33.0%

iShares MSCI Emerging Markets  (NYSE:EEM)

5.38% 1.52%

*KSE Index in PKR.

Source: Yahoo. Finance and Karachi Exchange 9/5/2016

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This article was written by Panos Mourdoukoutas from Forbes and was legally licensed through the NewsCred publisher network.

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