Innovation gap with US & Japan

The US and Japan are not included in the main EIS analysis as for both countries data are missing for too many indicators. For the innovation gap comparison, we use a different set of 17 indicators of which 12 indicators are identical to those of the EIS (Table 3). The EIS indicators on S&E and SSH graduates have been replaced with the (EIS 2007) indicator on S&E graduates. Broadband access by firms is replaced by the share of broadband subscribers and the share of researchers [1] has been added as an additional indicator for Enablers [2]. For Firm activities, an additional indicator is PCT patents [3] (to compensate for a possible home advantage in only using European Patent Office registrations) and trademarks is a weighted average of the EIS indicator on Community trademarks and an indicator from the World Development Indicators measuring national trademark applications by residents (also to compensate for a possible home advantage). For the US, data for knowledge-intensive services exports are not available. For Japan, data for venture capital are not available and data for the employment shares in medium-high and high-tech manufacturing and knowledge-intensive services are for 2003.

Table 3: EU27-US-Japan Indicators

The indicators highlighted with an * are not identical to but proxies for the EIS indicators.

Figure 10 shows that the innovation performance of the US and Japan is well above that of the EU27. The EU-US gap has dropped significantly [4], in particular between 2005 and 2006 although the relative progress of the EU appears to have slowed down since then. The EU-Japan gap at first increased but has been declining at a steady rate in the last 4 years.

The US is performing better than the EU27 in 12 indicators, only in S&E graduates, Trademarks, Technology Balance of Payments flows and Medium-high and high-tech manufacturing employment is the EU27 performing better (Figure 11). Overall there is a clear performance gap in favour of the US, with the US showing a better performance in Enablers, Firm activities and Outputs. But the US innovation lead is declining, as its innovation performance has grown at an annual rate of 0.95% while the EU27 is growing at an annual rate of 2.65% [5]. It is striking that the EU outperforms the US in growth performance in all of the indicators except Business R&D, EPO patents and PCT patents. The EU27 is closing the performance gap with the US in Tertiary education, Researchers, Public R&D, Venture capital, Broadband subscribers, Public-private co-publications, Knowledge-intensive services employment and Medium-high and high-tech manufacturing exports. The EU27 is increasing its lead in S&E graduates, Trademarks, Technology Balance of Payments flows and Medium-high and high-tech manufacturing employment. The US is slightly improving its lead in Business R&D, EPO patents and PCT patents.

Japan is performing better than the EU27 in 12 indicators, only in Trademarks, Technology Balance of Payments flows, Knowledge-intensive services employment and Knowledge-intensive services exports is the EU27 performing better (Figure 12). Overall there is a clear performance gap in favour of Japan, with Japan showing a better performance in Enablers, Firm activities and Outputs. The Japanese innovation lead is however decreasing, as its innovation performance has grown at 1.65% while the EU27 is growing at an annual rate of 2.65%. The EU27 is closing the performance gap with Japan in S&E graduates, Tertiary education, Researchers, Public R&D, Broadband subscribers, Public-private co-publications and Medium-high and high-tech manufacturing exports. The EU27 is increasing its lead in Trademarks, Technology Balance of Payments flows and Knowledge-intensive services employment. Japan is improving its lead in Business R&D, EPO patents, PCT patents and Medium-high and high-tech manufacturing employment and Japan is marginally closing the gap in Knowledge-intensive services exports.