The answer from many in the West could well be: “probably not.” There is a deeply held Western belief that a potent mix of political liberalism, economic entrepreneurship, social freedom and a culture of individualism is needed to ignite innovation. By contrast, Asian cultures have been associated with despotism or feudalism, social conservatism and conformity, all of which combine to stifle the spirit of innovation.

It will therefore come as a great shock for the West to learn that the epicenter of innovation has begun to shift to Asia. In one of the major shifts that sometimes happens silently, the culture of innovation and entrepreneurship has begun to spread successfully all around Asia. Some social scientists have begun to take note and measure the spread.

The US is ranked… last?

The Information Technology and Innovation Foundation (ITIF), headed by Robert Atkinson, recently published a report using 16 indicators to examine the innovation-based competitiveness of 40 nations.

• In the top five were two Asian nations, Singapore and South Korea.
• The US was ranked sixth and, amazingly, ranked last among 40 nations in progress made towards an innovative economy in the last decade.
• Among Asian nations, China made the most progress followed by Singapore (second), Japan (10th), India (14th) and South Korea (17th).

All of this is counterintuitive. Surely the US leads the world in absolute innovation? Yes, it does. Size matters. But others are catching up fast.

In a recent Harvard Business Review article, John Kao notes that “China, currently the world’s center of outsourced manufacturing, will be the next hub of brute force innovation.” He adds that “The Chinese automobile industry offers a glimpse of the brute force model in action. Thanks to an outpouring of educated innovators from Chinese universities, there are now an estimated 50 car companies in China, producing a Precambrian explosion of new business models and automobile designs.”

Many heads will shake in disbelief. Those who do so should remember one fact. Twenty years ago, it seemed almost inconceivable that the dominance of the US automotive industry could be challenged. The inconceivable has happened.

Asia is catching the US in more ways…

Still, many in the West will make a distinction between product innovation and intellectual innovation. Beginning with the Japanese, Asians have excelled in product innovation for decades. Yet, when it comes to big breakthroughs, creating giant new companies like Microsoft or Google, Amazon or eBay, America leads the world. This is true. No Asian society has produced a Silicon Valley to match California’s.

The success of Indians and Chinese in North America has led to a powerful reverse brain drain. As a consequence, [Asian countries] have created enabling environments, which have allowed both innovation and entrepreneurship to thrive.

Yet, it is also true that Silicon Valley has become “Asianized.” Some people quip that the IC industry stands for Indians and Chinese. Indeed, there are stories that Californian venture capitalists have turned down startup funding for companies that had no Indians or Chinese in their teams.

Equally important, the success of Indians and Chinese in North America has led to a powerful reverse brain drain. As a consequence, China and India, Japan and South Korea, Taiwan and Singapore have created enabling environments, which have allowed both innovation and entrepreneurship to thrive.

John Kao adds that “Singapore has made an impressive commitment to scientific research.” The 2 million square feet Biopolis will house 4,000 biomedical researchers and nearby Fusionopolis will house another 6,000 scientists in fields such as materials science, clean technology and digital media. As a consequence, the journal Science named Mr. Lim Chuan Poh, head of A*STAR Singapore, as one of the research world’s top eight people to watch in 2009.

… and beginning to lead innovation in new fields

It is vital to emphasize here that innovation in Asia has spread across a wide range of fields. The biggest challenge humanity faces today is global warming. There is global interest in developing alternative energy products.

Remarkably, Asian countries are among the top five in a wide range of new products. And consider:

• The nonprofit company Grameen Shakti currently leads the world in the installation of solar panels for the rural poor. From 1996 to 2009, Grameen Shakti installed 750,000 solar home systems in Bangladesh to provide emissions-free electricity to more than 2 million people.
• China operated the world’s most successful improved cook stove program from 1983 to 1998, in which they doubled the efficiency of rural energy consumption by distributing safer and cleaner stoves to 185 million households.
• In Singapore, regulators are developing an innovative Electricity Vending System to give 1.2 million consumers real-time price signals so that they can learn to conserve electricity during peak periods.

Despite these successes, the big question remains: how did Asian societies reach the frontiers of innovation so quickly? There is no simple answer. However, some key facts need to be absorbed. From the year 1 A.D. to 1820 A.D., China and India were consistently the two largest economies. It took massive underperformance by both societies for them to fall so far behind. This era of underperformance is over.

Education will fuel the future

There is another new feature of the global landscape which we have not fully understood. When the Asian mind is fused with Western education, there is an explosive burst of creativity. There has always been an intense culture of learning in Asian societies. But this culture of learning was side-tracked by the emphasis on rote learning, especially in Confucian societies in previous centuries.

Western education, therefore, arrived as a huge gift to Asia. W.B. Yeats wisely advised us that education is not about filling a bucket; it is about lighting a fire. The simple story about Asia is that the fire has been lit. The culture of innovation and entrepreneurship has been ignited. Since Asian societies will naturally produce the largest number of new people, and therefore the largest new pools of brainpower for the world, it is only natural the epicenter of innovation and entrepreneurship will shift to Asia.