The USA is the Smartest Country in the Intelligence Capital Index (ICI)

The United States of America ranks number 1 in the Intelligence Capital Index (ICI), created to measure which nations are most likely to foster the big ideas of tomorrow.

In the ranking of the world’s smartest countries, the United Kingdom (UK) comes second followed by Germany in the third place. Australia is fourth followed by Singapore, Sweden, Switzerland, Canada, Finland and Denmark to complete the top 10 smartest countries, says Kai L. Chan, Distinguished Fellow, INSEAD Innovation & Policy Initiative, writing in the INSEAD Knowledge blog

He says the U.S. is the only country that gets an overall A+ on the ICI. Its dominant position is a result of its exceptional performance in terms of quality of education (at the elite level). It is home to a majority of the world’s leading institutions of higher learning and has earned an outsized number of Nobel prizes and Fields medals.

Chan argues that given the proper environment, education and creativity can give rise to transformative innovation in the global knowledge economy. He cites the example of Russian-born American computer scientist Sergey Brin, co-founder of Google and President of Alphabet.

Brin’s sharp mind would have excelled anywhere, but it was the intellectual and entrepreneurial environment of Stanford that enabled his full talent to blossom. Incidentally, it was at Stanford that he met Larry Page and they went on to build one of the world’s most valuable brands, he adds.

The UK ranks high in both the quality of education and elite cognitive skills. With a score nearly identical to that of U.K., Germany is in a strong position with regard to quality of education. It also ranks well for creativity and openness to foreign talent.

Australia gets a place in the top ten owing to its top scores for elite cognitive skills and openness to immigration. Singapore is well known for its high scores on standardised tests (e.g. PISA) and its ability to attract top foreign talent. Its performance is outstanding given that some ICI indicators (e.g. the number of top 500 universities) explicitly favour big countries (as large countries are better able to create clusters of excellence).

Sweden, Switzerland, Canada, Finland and Denmark found a place in the top 10 on account of high scores on the aspects of creativity and attractiveness for immigrants.

Chan says economies are highly complex and require many different skills. Not everyone will be or should be a STEM graduate or pursue a university education. But brains are indeed needed for economies that are growing ever more complex. The ICI is focused on human capital with an emphasis on “smarts”.

However, it is just one dimension of human capital, which should also include emotional intelligence (EQ), cultural intelligence (CQ) and social networks, etc. Notwithstanding that, smarts is what will propel the knowledge economy, so countries that perform well in the intellectual capital will be best prepared for the knowledge revolution embodied in the rise of Big Data, cloud computing, artificial intelligence, etc., he points out.

“The Knowledge Revolution upon us will stress unskilled labour markets as many of these jobs will be lost to automation. At the same time, the rewards to knowledge have and will continue to grow. This will further exacerbate inequality and social divides, and potentially generate even more political division,” he adds.

Policy makers embracing the Knowledge Revolution will need to ensure inclusive growth. In this context, it is worth noting the gaps between elite and average. For example, India ranks 76th on average but 51st on elite skills. Given the symmetric/normal nature of distributions in academic performance, this implies a left-tail that is being left far behind.

Likewise, although the USA has by far the highest number of elite universities, it ranks just 22nd in terms of share of national universities in the global top 500; i.e. most Americans do not have access to globally leading tertiary education.

For the ranking of 128 countries, the ICI had taken into consideration the education outcomes both in terms of quantity and quality, while emphasising quality. It measured cognitive skills at different stages of the human lifecycle, again with an emphasis on top (elite) performance. It also included migration as an important external channel for countries to acquire and develop human capital.