>a nation with more educated people does not innovate more than others

based on the chart you are dead wrong -- Russia was and still is one of the key competitors of US in innovation, albeit in the sectors outside of the semiconductors and IT (which I assume you know best). Russia is an innovator in space, weapons, nanotech and other industries, so i wasn't surprised to see them in the upper 10%. I must admit seeing them at #1 was surprising.

Going from right to left, Japan certainly makes sense as an innovator (e.g. manufacturing), Korea (electronics), Nordic countries(telcom), etc.

On the other hand, countries from Peru and on down are hardly innovators on anyone's list.

3 countries out of 30 make an exception, not a rule. i am not saying these countries are not innovative, but to my knowledge France, Denmark, Norway, Ireland, Korea, Japan and Canada are not more innovative than the US.they may be more advanced in one field like telecom, or medecine, or car manufacturing, but as a whole these nations are not more innovative then the US or India, therefore a more educated nation does not mean it will innovate more.

India is a bad example -- it suffers from a huge, uneducated population and the fact that top minds usually leave the country (until recently) and spend their most productive years abroad. Do you have any examples where India can claim world-class innovations that weren't created elsewhere?

There's a very interesting point. Both China and India have nearely same population (1.32B and 1.12B people accordingly), and same education level as per the graph. Aslo it seems both countries are on same level of innovation, yet, China's GDP is almost 3 times higher than GDP or India ($10.12T to $4.12T). So, I won't call India an exception. The question is what makes China so productive or what India lacks ? The answer is mentality: Chinese ppl got used to work, whence Indians are not. And I think GDP does not corelate with level of edication and innovation.

Concerning this point, it is not necessarily just the mentality. It is worth noting that China has had a government imposed and subsidized industrialization program in place for some time now. India, which is a democracy, is not forcing its people to work in factories when they might be happier living in a village. This might explain the difference in GDP?

China's non-democratic system means it invests in infrastructure before other more immediately demanded things. I think it has a better education system from primary to secondary, as outside of Kerala a lot of teachers are habitually absent.

India has higher barriers to entry in damn near everything because of the "Licence Raj" and <i>insane </i> employment legislation. Its almost impossible to fire people once your enterprise has more than 100 employees.

China has been experiencing the demographic dividend (falling birthrate means the dependency ratio drops, and you get a bulgein the population pyramid in the working age population, more taxes, fewer pensions and childcare)

well maybe they did not innovate in the sense of creating something new (although we heard of stories that claim that a few British mathematical and scientific discoveries originated from Indians). But they are one of the leading countries in IT services. to me using someone else innovation to become a leader in that field, makes you as innovative as the creator. The point i am trying to make is " Education does not make one country better (economically, politically) than another".

There are less people in all of those countries you mentioned. Maybe you should compare them to US states.

Thanks for this comment - I had a lot to say about each of these comments but they all take too long to compose correctly. This is dead on - a smaller country with a less diverse population can improve itself generally, while the US is too big, too populous, and too democratic to make the same general improvement in its population.

Some decent comparisons (size, population, economies, demographics) are:

Finland/Sweden/Denmark to Minnesota: single digit millions, high levels of education, good technology base, lots of forests, water, and timber, homogeneous population (with recent immigration base). [Norway is similar but distorted by its huge oil wealth]

France to California: similar sized economies and land area, economies include tech/science, manufacturing, shipping, and agriculture, heavyweights in their region, diverse populations (with some tension, little integration).

Russia - Great Lakes region: great universities, high levels of education, but economies not performing like they used to due to deindustrialization. Exports scientists and engineers to more economically vibrant regions. [Also distorted by Russia's oil wealth]

Not sure about what to compare China/India/Korea to. China-Sun Belt might work (recent boom fueled by investment in logistics, infrastructure, distribution; manufacturing as opposed to high tech/innovation; real estate boom; success due to shift in macroeconomic values as much as anything else)

The Upper Midwest-Eastern Europe (Romania, Bulgaria, etc) might be a decent match too - slow economy due to agricultural focus, shrinking population due to few economies, etc.

[GAH! Do you see why I didn't want to respond to any of the comments!]

I'm not sure that GDP per capita is the right measure for assessing correlations between average income and education, which is what I presume you're trying to get at. After all GDP per capita is often skewed by the very rich. Take for example some stats from the US in 2004:

GDP per capita: $39,934 (Source: http://www.econstats.com/weo/V015.htm)

Median income per household member: $23,535 (Source: http://pubdb3.census.gov/macro/032005/hhinc/new02_001.htm)

Obviously a major discrepancy there. The median income per householder is determined via a sample census survey and would more accurately reflect average income than GDP per capita, which is constructed by dividing GDP by the population. Probably of more interest would be median income per householders over 18 to exclude all the kids. Then you could check the correlations between income and education.

Notwithstanding, I'm not that convinced there would be a very strong correlation across countries, in part because of the multitude of other factors that would influence income. There are also other factors to consider regarding the construction of the statistics, such as purchasing price parity, the definitions each country has used for education level, etc. Trying to attain ceteris paribus (all things being equal) for this would be a nightmare.

my unproven theory is that it can actually be bad for an economy in general if a vast majority of the population has a college degree. salaries will plunge, competition for positions will increase, degrees will loose their value, physicists will flip burgers, an emigration will increase drastically. off course that is until the nation can find a way to sell its talent to other countries. think India selling its IT services to the US and Europe.

GDP havily depends on population itself. With its 1B of under-paid ppl, China has a lof of workers who produce VALUE, hence increase GDP. You know what was the greatest achievement of Chinese communist government ? It was the idea to let their ppl work and get paid for their work. The rest was done en masse :-).

GDP per capita has the same denominator as the graph: it is the populatin itself, which is why i did not bother looking at the GDP only but the per capita.

Yes, but have you heard about gravitational collapse ? I think something similar is happining in China's economics when more workers produce more value, hence attract more capital and so on.

whenever this topic comes up i always think of the people who never finished college. bill gates, jobs, eminem, etc. i don't think people like that are very rare

in the US it's not a big deal if you go to college or not. more important is whether you have ability

in one of pg's "creating a silicon valley elsewhere" essays he mentioned it may be more acceptable in the US for a PhD to start a startup than it would be in the UK. i think that sort of free-form climate is necessary for innovation

in fact those essays are pretty relevant here

http://www.paulgraham.com/siliconvalley.html

http://www.paulgraham.com/america.html