1. Executive Summary

1. Executive Summary

This is the second edition of the Innovation Union Scoreboard (IUS). Based on the previous European Innovation Scoreboard (EIS), the tool is meant to help monitor the implementation of the Europe 2020 Innovation Union [1] flagship by providing a comparative assessment of the innovation performance of the EU27 Member States and the relative strengths and weaknesses of their research and innovation systems.

The IUS includes innovation indicators and trend analyses for the EU27 Member States, as well as for Croatia, Iceland, the Former Yugoslav Republic of Macedonia, Norway, Serbia, Switzerland and Turkey. It also includes comparisons based on a more reduced set of indicators between the EU27 and 10 global competitors.

The IUS 2011 distinguishes between 3 main types of indicators and 8 innovation dimensions, capturing in total 25 different indicators (cf. Figure 1)

Figure 1: Framework of the Innovation Union Scoreboard (click to enlarge)

The Enablers capture the main drivers of innovation performance external to the firm and cover 3 innovation dimensions: ‘Human resources’, ‘Open, excellent and attractive research systems’ as well as ‘Finance and support’. Firm activities capture the innovation efforts at the level of the firm, grouped in 3 innovation dimensions: ‘Firm investments’, ‘Linkages & entrepreneurship’ and ‘Intellectual assets’. Outputs cover the effects of firms’ innovation activities in 2 innovation dimensions: ‘Innovators’ and ‘Economic effects’.

The 25 indicators better capture the performance of national research and innovation systems considered as a whole [2]. While some of the indicators of the IUS (such as public R&D expenditure) can be more easily influenced by policy intervention than others (such as SMEs innovating in-house), the overall ambition of the Innovation Union Scoreboard is to inform policy discussions at national and EU level, by tracking progress in innovation performance within and outside the EU over time.

The IUS uses the most recent statistics from Eurostat and other internationally recognised sources as available at the time of analysis. International sources have been used wherever possible in order to improve comparability between countries. The IUS 2011 may not fully capture the impact of the economic and financial crisis on innovation performance as there is a delay in data availability where data refer to 2009 or 2010 for 14 indicators and to 2007 or 2008 for 10 indicators. The current composite indicator consists of 24 individual indicators since the last indicator on “High-growth innovative enterprises as a percentage of all enterprises” is being developed.

Note: Average performance is measured using a composite indicator building on data for 24 indicators going from a lowest possible performance of 0 to a maximum possible performance of 1. Average performance in 2011 reflects performance in 2009/2010 due to a lag in data availability.

Performance groups

Based on their average innovation performance, the Member States fall into four performance groups (see section 3.1):

 

  • The performance of Denmark, Finland, Germany and Sweden is well above that of the EU27 average. These countries are the ‘Innovation leaders’.
  • Austria, Belgium, Cyprus, Estonia, France, Ireland, Luxembourg, Netherlands, Slovenia and the UK all show a performance close to that of the EU27 average. These countries are the ‘Innovation followers’.
  • The performance of Czech Republic, Greece, Hungary, Italy, Malta, Poland, Portugal, Slovakia and Spain is below that of the EU27 average. These countries are ‘Moderate innovators’.
  • The performance of Bulgaria, Latvia, Lithuania and Romania is well below that of the EU27 average. These countries are ‘Modest innovators’.

Bulgaria, Estonia, Romania, Portugal and Slovenia are the growth leaders with an average annual growth rate well above 5%. There continues to be a steady convergence, where less innovative Member States have – on average – been growing faster than the more innovative Member States. This convergence process however seems to be slowing down (see section 3.2). While the Moderate and Modest innovators clearly catch-up to the higher performance level of both the Innovation leaders and Innovation followers, there is no convergence between the different Member States within the Moderate innovators. Convergence between the Member States does take place within the Innovation leaders, Innovation followers and Modest innovators.

Figure 3: Country groups: innovation performance per dimension

What do innovation leaders have in common?

Countries at the top of the ranking for the composite innovation indicator share a number of strengths in their national research and innovation systems with a key role of business activity and public-private collaboration.  While there is not one single way to reach top innovation performance, it is clear that all innovation leaders, Finland, Sweden, Denmark and Germany, perform very well in Business R&D expenditures. Most of the innovation leaders also perform very well in other innovation indicators related to firm activities The top EU innovator Sweden dominates in three out of 8 innovation dimensions: Human resources, Finance and support, and Firm investments; while Germany and Denmark perform best in two innovation dimensions each.

 

All of the innovation leaders have higher than average scores in Public-private co-publications per million populations, which suggests good linkages between the science base and enterprises. All European top innovators also excel in the commercialisation of their technological knowledge, as demonstrated by their good performance on the indicator License and patent revenues from abroad.

The overall good performance of the innovation leaders reflects a balanced national research and innovation system. It means that the innovation leaders as well as the innovation followers have the smallest variance in their performance across all the 8 innovation dimensions.

While each country has its own specificities, policy responses should attempt not only to address relative weaknesses in national research and innovation systems, but also to have more balanced performances across all categories of indicators.

It is evident that the moderate and modest innovators are characterised by an unbalanced research and innovation systems. This is particularly clear in the ‘Innovators’ dimension with very low shares of SMEs introducing product or process innovations as well as SMEs introducing marketing and organisation innovations. At the same time, the growth rates of most of the modest and moderate innovators are the highest among the EU27 which indicates a convergence process with Bulgaria as a EU catching-up leader, followed by Romania and Estonia.

 

International comparison

A comparison with other European countries not belonging to the European Union shows that Switzerland is the overall Innovation leader continuously outperforming all EU27 countries. Iceland is part of the Innovation followers, Croatia, Norway and Serbia of the Moderate innovators and the Former Yugoslav Republic of Macedonia and Turkey of the Modest innovators. For Croatia, Serbia and Turkey growth has been well above the EU27 average.

 

Comparing the EU27 with a selected group of major global competitors shows that the US, Japan and South Korea have a performance lead over the EU27. This lead has been increasing for South Korea, has remained stable for the US and has been decreasing for Japan. The global innovation leaders US and Japan are particularly dominating the EU27 in indicators capturing business activity and public-private cooperation: ‘R&D expenditure in the business sector’, ‘Public-private co-publications’, ‘License and patent revenues from abroad’ and ‘PCT patent applications’. South Korea which is increasingly outperforming the EU27 is again having its biggest lead in R&D expenditures in the business sector.

The EU27 has a performance lead over Australia, Canada and all BRICS countries (Brazil, Russia, India, China and South Africa). This lead has been increasing compared to Canada, Russia and South Africa, has remained stable to Australia and has been decreasing to Brazil and in particular to China and India. China has been closing the innovation gap to Europe continuously in the last few years.