A Nobel idea

Innovation is the way to build a more prosperous society. South Africa should take note.

Did you know that not a single tech hub in South Africa, according to the recently announced World Intellectual Property Organization (WIPO) Innovation Cluster Ranking 2025, falls within the top 100 innovation hubs globally?

In fact, there is only one such hub in Africa: Cairo, which ranks 83rd on the list. As expected, two countries dominate the list: China, with 24 clusters, and the US, with 22, with their main hubs in Shezhen-Guanzhou and San Jose-San Francisco. But aside from China, only seven other middle-income economies have clusters among the top 100: India (with four), Malaysia (with two), and Brazil, Egypt, Iran, Mexico and Turkey with one each.

That there are so few developing countries – and none in sub-Saharan Africa – should not come as a surprise. As you will see from the figure above, innovation is highly correlated with economic prosperity; rich countries are the ones that tend to innovate, and it is innovation that makes us rich. It is this second fact that, in short, is what Monday’s Nobel Prize was all about: Joel Mokyr, Philippe Aghion and Peter Howitt won the award ‘for having explained innovation-driven economic growth’, according to the Nobel committee, the simple but profound idea that ideas make us rich.

How do we build a society that tests and rewards ideas that make us more productive? In a recent chapter, Mokyr, an economic historian at Northwestern University, proffered an answer: institutions that ‘provide incentives for the inventors and entrepreneurs, and make sure that they have the technical and financial wherewithal to carry out their designs’. But it is not that simple, because there are many competing interests, and not all are eager for new technologies to disrupt the status quo. Let’s make this concrete: TymeBank, South Africa’s first fully digital bank, has upended the financial sector by allowing customers to open accounts and transact entirely online, with no need for physical branches. That innovation threatens not only the large incumbents built on costly legacy systems, but also the thousands of bank employees, branch managers, and property owners whose livelihoods depend on the traditional bricks-and-mortar model. If we want more ideas like these to flourish, we need institutions that do not just protect the old ways of working, but reward those willing to build the new.

We also need a culture of progress. Studying the Industrial Revolution, Mokyr argues for two things: technical skills and networks that transcended class boundaries. The growth of the artisanal class was an important reason England could benefit from new technologies. It was not just basic skills, however. ‘What mattered’, writes Mokyr, was ‘above all the high-level capabilities and sophistication of the ones in the upper tail’.

Combine that knowledge with networks. England, he argues, was a country of societies:

Membership in clubs, societies, academies, and various other spontaneous private-order organisations became a dominant feature of middle-class England. Many of these associations, of course, had little to do with the dissemination of useful knowledge. They were social gatherings, eating and (mostly) drinking clubs, sports and musical organisations, and so on. The significance of these associations was not so much in what they did, but in the creation of networks underlying the civil economy, in which economic agents met and exchanged information.

In short, what caused the remarkable transformation in England during the eighteenth century was not just invention itself, but the people and institutions that sustained it – skilled artisans and engineers who could turn ideas into practice, and networks of clubs and societies that allowed knowledge to circulate freely across social divides. These ties fostered collaboration and trust, and with them, a shared confidence that improvement was both achievable and desirable. Beneath the machinery and markets lay something deeper: a cultural belief in progress that made innovation not only possible, but inevitable.

Do we have a culture of progress in South Africa? The figure above suggests that we’re not doing too badly, but drilling down into the subcategories that make up the composite measure exposes where we can still improve substantially. The WIPO index is comprised of seven pillars: five inputs – Institutions, Human Capital and Research, Infrastructure, Market Sophistication, and Business Sophistication – and two outputs – Knowledge and Technology Outputs and Creative Outputs. Each pillar is further divided into three sub-pillars, and together they are built from 78 individual indicators. These range from traditional measures such as R&D expenditure as a share of GDP or patent applications per capita to newer indicators like venture capital deals, university–industry collaboration, and mobile app creation. The result is a detailed snapshot not only of how well countries generate ideas, but how effectively they transform those ideas into innovations that create value.

Viewed through Mokyr’s lens, the graph highlights precisely where South Africa’s weaknesses lie. His two pillars of progress – skills and a culture of progress – are both reflected here. On the one hand, South Africa invests heavily in education, ranking among the top five globally for spending. Yet those resources translate poorly into results: the pupil–teacher ratio is among the worst, and the share of graduates in science and engineering – the very artisans and engineers who powered England’s industrial ascent – remains low.

Equally concerning is the second pillar: the institutions and norms that sustain innovation. Indicators such as policy stability for doing business, entrepreneurship policies and culture, and operational stability for firms all sit well below our overall rank. Without a predictable and enabling environment, few entrepreneurs will take risks or invest in new ventures, a pattern also visible in our weak gross capital formation.

If Mokyr is right, South Africa’s next leap will come where skills meet dense local networks. The obvious launchpads are the Cape Town–Stellenbosch corridor and the Johannesburg–Sandton–Pretoria belt. Grow the pipeline of engineers and applied scientists; tighten university–industry links; and lock in a predictable, pro-entrepreneur policy regime that lowers entry barriers and raises confidence. Do that, and investment will deepen, firms will cluster, and knowledge will spill over in the way WIPO’s rankings show matters most: the world’s top 100 clusters concentrate roughly 70% of global patent filings and venture deals, and about half of publications. South Africa may not yet have a top-100 cluster, but every novel idea born in a lab in Stellenbosch or a startup in Braamfontein brings a prosperous future for all a little closer.

An edited version of this article was published on News24. Support more such writing by signing up for a paid subscription. The image was created with Midjourney v7.