2024 Draper Innovation Index (DII) Annual Overview

How Both the DII U.S. and DII Global Have Evolved in 2024

2024 has been a transformative year for the Draper Innovation Indices (DIIs) because it’s been a transformation year for the global economy. The DII Global has reflected significant economic, social and political change experienced worldwide, most notably the increasing tensions in the Middle East, Russia’s war in Ukraine, worldwide inflationary pressures, economic uncertainty in Europe and political change in the United States. Despite economic optimism following the US election, uncertainty remains regarding the depth of future policy shifts and their potential impacts on the global economy and financial markets.

The year also saw many reasons for optimism. The United States economy remains the world’s strongest and most resilient, while Argentina’s Milei administration has pushed the country out of its longstanding inflationary malaise into economic growth and job creation. Technological advances – including artificial intelligence (AI), machine learning (ML), and further integration of Bitcoin and other cryptocurrencies into the global economy and financial systems – promise to fuel future innovation and economic opportunities.

In response to these changing circumstances, the Draper Innovation Index has made a number of advancements and enhancements to both its data inputs and algorithms. For example, to better reflect current economic trends, both the DII US and DII Global now integrate total monthly and annual investment growth in artificial intelligence/machine learning industries into its algorithm. LLMs and Generative AIs such as ChatGPT, Gemini, Perplexity, Notebook LM, and Deep Mind have captured the attention of everyone from high school students to Fortune 500 CEOs, promising the potential to supercharge innovation, operational efficiency, and cost savings across the global economy.

Cryptocurrency is also a growing part of the global economy; to reflect this, the DII Global has replaced Chainanalysis’s Crypto Adoption Index datasets with Triple-A’s Cryptocurrency Ownership Data, which ranks countries and territories based total cryptocurrency ownership. These datasets help the DII better reflect the positive efforts taken by many governments to increase cryptocurrency adoption.

For the DII US, the US News Opportunity Scores (previously used to measure a state’s social environment) have been replaced by Social Progress Imperative’s Social Progress Index, which grades state performance across 50 different indicators in three primary categories: Basic Human Needs, Foundations of Wellbeing, and Opportunity. While monthly indicators continue to track overall investment growth, cryptocurrency/blockchain-related investment growth and monthly Business Formation Statistics, additional metrics are constantly being evaluated for their potential inclusion.

DII Global Shifts in Top 20 Ranks

The DII Global has seen significant change in terms of rankings over the past year. While the top three countries remained the same, Norway fell completely out of the Top 10 and Australia fell to 8^th place. Canada and Sweden rose to 4^th and 5^th place, respectively, while Denmark rose from 8^th place to 6^th. Singapore and Finland each rose by two places, with the latter breaking into the Top 10. New Zealand remained in 10^th place.

DII Global Notable Movements

Norway, ranked 4^th on the list in December 2023, was the only country to fall out of the Top Ten; this drop was primarily due to ramifications and fall out regarding its newly adopted wealth tax.
Estonia and Malta both rose due to significant improvements in their Economic, Social and Innovation scores, while China fell from 52^nd place to 60^th due to economic uncertainty and a poor Government Quality score.
Turkey fell by 45 places, more than any other country, because of catastrophic inflation. On the other hand, Saudi Arabia enjoyed a notable rise in the DII rankings.
Gibraltar fell out of the Top 20, and Ireland, South Korea, and Chile dropped in the Top 20. The Netherlands, Germany, Iceland, France, and Japan all improved their rankings in 2024.
Ecuador, El Salvador, and several other South American countries also benefitted, while high Venture Capital Momentum, start up deals, and investment growth in AI/Machine Learning pushed up Saudi Arabia from 143^rd to 117^th.
Russia remained near the bottom of the ranking due to declines across a wide range of factors.

Shifts in DII US Top 20 Ranks

The DII US Top 10 has also remained fairly consistent during 2024, with Utah overtaking Texas for second place and North Carolina and Colorado swapping places at 4^th and 5^th, respectively.

Arizona, Virginia and Nevada all rose up the rankings, with Nevada breaking into the Top 10 after finishing 15^th in December 2023.
Delaware, Virginia, Washinton, Arizona, and Michigan also climbed in the Top 20.
South Dakota experienced the year’s largest decline, falling from 6^th place to 18^th primarily due to declines in its Social and Innovation scores.
New Hampshire fell from 7^th place to 9^th but remained in the Top 10, and Tennessee also dropped

DII US Largest Gains and Declines

Massachusetts and Wyoming, which both fell by 8 places, tied for the second largest decline after South Dakota.
Massachusetts dropped due to falling Tax Climate and Small Business Environment rankings as well as poor business formation scores, while Wyoming scored poorly in innovation and both overall and cryptocurrency/blockchain-related venture capital investments.
On the other hand, Idaho, Indiana, and Missouri have all risen further into the DII Top 20, with Idaho right behind Nevada at 11^th, thanks to increasing overall venture capital investments and strong business formation trends.
California remained in 17^th place while New York rose slightly from 37^th place to 36^th.

The Draper Innovation Index (DII) will release monthly updates to continually reflect the latest developments in global innovation and entrepreneurship, available here.

About BizWorld

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