Innovation disparity across Europe

Editor’s Blog: Produced in collaboration with the EU Buzz team 

If Europe is to grow, sustainably, and succeed on a global platform, it must be innovative and demonstrate it understands and facilitates innovation, not just amongst European businesses, but in the way it works as a whole. Europe is not one of the most innovative blocs and must learn from others as many of its Member States and regions fail to comprehend the importance of innovation.  

To achieve a high level of innovation facilitation, nations need a balanced innovation ecosystem. This means public and private sector investment in education, research, skills development, effective innovation partnerships among companies and with academia, as well as an innovation-friendly business environment, including strong digital infrastructure and skills. So how is Europe performing? 

Each year, with indicators based around the ecosystem for effective innovation facilitation, the European Union produces a European Innovation Scoreboard (EIS). The EIS presents a comparative assessment of research and innovation performance of the EU and its Member States allowing policy-makers to assess relative strengths and weaknesses, track progress, and identify priority areas to boost innovation performance.

To gauge the European Union benchmark against comparative data from other countries, the EIS also records information from Bosnia and Herzegovina, Iceland, Israel, Montenegro, North Macedonia, Norway, Serbia, Switzerland, Turkey, Ukraine and the United Kingdom. Additionally, on a more limited number of globally available indicators, the EIS compares the EU with Australia, Brazil, Canada, China, India, Japan, the Russian Federation, South Africa, South Korea, and the United States.

European Member States fall into four performance groups: Innovation Leaders, Belgium, Denmark, Finland, and Sweden, where performance is above 125% of the EU average; Strong Innovators, Austria, Estonia, France, Germany, Ireland, Luxembourg, and the Netherlands where performance is between 100% and 125% of the EU average; Moderate Innovators, Cyprus, Czechia, Greece, Italy, Lithuania, Malta, Portugal, Slovenia, and Spain, where performance is between 70% and 100% of the EU average; and Emerging Innovators, Bulgaria, Croatia, Hungary, Latvia, Poland, Romania, and Slovakia with a performance level below 70% of the EU average. 

At a regional level, the most innovative regions are typically in the most innovative countries, these include Stockholm in Sweden, followed by Etelä-Suomi in Finland, and Oberbayern in Germany. Hovedstaden in Denmark is in fourth place, and Zürich in Switzerland is in fifth place. 

It is interesting to note that the Innovation Leaders and most Strong Innovators are from Northern and Western Europe, and most of the Moderate and Emerging Innovators are in Southern and Eastern Europe. Nevertheless, comparing the EU average to its global competitors, South Korea out shines Europe by 36% above the score of the EU in 2014 and 21% above the EU in 2021. Canada, Australia, the United States, and Japan also have performance leads over the EU.

The main measurement framework of the EIS 2021 is composed of 32 performance indicators, distinguishing between 12 innovation dimensions in four main categories. Framework conditions capture the main drivers of innovation performance external to the firm and cover three innovation dimensions: human resources, attractive research systems, and digitalisation. Investments capture funding made in both the public and business sector differentiates between three innovation dimensions: finance and support, firm investments, and use of information technologies. Innovation activities capture different aspects of innovation in the business sector and differentiates between three innovation dimensions: innovators, linkages, and intellectual assets. Impacts capture the effects of enterprises’ innovation activities and differentiates between three innovation dimensions: employment impacts, sales impacts and environmental sustainability. 

The EIS 2021 also includes a number of additional contextual indicators, complementing those from previous editions and covering economic structure and performance, business and entrepreneurship, demography, and governance and policy framework in a series of country profiles.

On a positive note, the EIS 2021 shows us that the EU has experienced a 12.5% improvement between 2014 and 2021 and especially Cyprus, Estonia, Greece, Italy and Lithuania improved by 25%. Performance has improved in the digitalisation sector most due to significant improvements in high speed internet access. Other indicators showing strong growth include venture capital expenditures, resource productivity, innovative SMEs collaborating with others, job-to-job mobility of human resources in science and technology, and product innovators. However, on the negative, sadly and inexplicably, intellectual assets performance decreased due to lower performance in both patent and design applications – This has been a continual barrier to innovation in Europe for almost a generation and remains unaddressed by the European Commission and by Member States. 

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