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Innovation scoreboard: Summaries of Member States results

European Commission - MEMO/06/5   12/01/2006

Other available languages: none

MEMO/06/5

Brussels, 12 January 2006

Innovation scoreboard: Summaries of Member States results

Innovation performance observed in the 25 Member States is extremely diverse. The following abstracts for each country are extracted from the innovation strengths and weaknesses thematic report accompanying the European Innovation Scoreboard.[1]

Innovation is a non-linear process and the EIS indicators are distributed among five categories that cover different key dimensions of innovation performance:

  • Innovation drivers measure the structural conditions required for innovation potential,
  • Knowledge creation measures the investments in R&D activities,
  • Innovation & entrepreneurship measures the efforts towards innovation at the firm level,
  • Application measures the performance expressed in terms of labour and business activities and their value added in innovative sectors, and
  • Intellectual property measures the achieved results in terms of successful know-how.

Table 1 - EIS 2005 Indicators

INPUT - Innovation drivers
1.1
S&E graduates per 1000 population aged 20-29
EUROSTAT
1.2
Population with tertiary education per 100 population aged 25-64
EUROSTAT, OECD
1.3 NEW
Broadband penetration rate (number of broadband lines per 100 population)
EUROSTAT
1.4
Participation in life-long learning per 100 population aged 25-64
EUROSTAT
1.5 NEW
Youth education attainment level (% of population aged 20-24 having completed at least upper secondary education)
EUROSTAT
INPUT – Knowledge creation
2.1
Public R&D expenditures (% of GDP)
EUROSTAT, OECD
2.2
Business R&D expenditures (% of GDP)
EUROSTAT, OECD
2.3 NEW
Share of medium-high-tech and high-tech R&D (% of manufacturing R&D expenditures)
EUROSTAT, OECD
2.4 NEW
Share of enterprises receiving public funding for innovation
EUROSTAT (CIS)
2.5 NEW
Share of university R&D expenditures financed by business sector
EUROSTAT, OECD
INPUT - Innovation & entrepreneurship
3.1
SMEs innovating in-house (% of all SMEs)
EUROSTAT (CIS)
3.2
Innovative SMEs co-operating with others (% of all SMEs)
EUROSTAT (CIS)
3.3
Innovation expenditures (% of total turnover)
EUROSTAT (CIS)
3.4
Early-stage venture capital (% of GDP)
EUROSTAT
3.5
ICT expenditures (% of GDP)
EUROSTAT
3.6
SMEs using non-technological change (% of all SMEs)
EUROSTAT (CIS)

OUTPUT – Application
4.1
Employment in high-tech services (% of total workforce)
EUROSTAT
4.2 NEW
Exports of high technology products as a share of total exports
EUROSTAT
4.3
Sales of new-to-market products (% of total turnover)
EUROSTAT (CIS)
4.4
Sales of new-to-firm not new-to-market products (% of total turnover)
EUROSTAT (CIS)
4.5
Employment in medium-high and high-tech manufacturing (% of total workforce)
EUROSTAT
OUTPUT - Intellectual property
5.1
EPO patents per million population
EUROSTAT
5.2
USPTO patents per million population
EUROSTAT
5.3 NEW
Triadic patent families per million population
EUROSTAT, OECD
5.4 NEW
New community trademarks per million population
OHIM[2]
5.5 NEW
New community designs per million population
OHIM

Austria

Austria’s overall innovation performance, based on the European Innovation Scoreboard, is above average for the EU-25, ranking in 5th place out of the 25 EU member states but near the average when limited to the EU-15. Austria has an evenly balanced set of strengths and weaknesses that are near or slightly above the EU average. Austria’s trend results are generally positive, with however below average trends for ICT investment and broadband penetration.

Austria’s performance is weakest for innovation drivers, where it ranks 12th, due to below average levels of tertiary education and science and engineering graduates, although the trend for tertiary education over the past five years has been improving. Nevertheless, Austria could face a demographic limit on its ability to increase the supply of science and engineering graduates to meet its needs, due to the comparatively small size of its 15-19 year-old cohort, which ranks 17th in the EU. Austria ranks in 4th place for knowledge creation, but much of this is due to exceptionally good performance on one indicator: the percentage of firms that receive some public support for innovation. On the two key indicators for public and private R&D, Austria’s performance is slightly above the EU average, and but it reaches only 62% of the EU average for the percentage of university R&D that is funded by business.

Belgium

Belgium’s overall innovation performance is above the average for both the EU-25 and EU-15, ranking in 6th place out of the 25 EU member states. Belgium’s strengths are in innovation drivers, knowledge creation and innovation & entrepreneurship. Its weakest performance is for innovation applications, where it ranks 13th out of 25 EU countries. In terms of trend performance, Belgium is falling behind on over half of the indicators, suggesting problems in the future. The greatest concern is for public R&D, business R&D, new S&E graduates, ICT expenditures, and venture capital. Although falling below the trend, the results for broadband penetration rates and triad patents are of less concern because Belgium performs far above the EU average for these two indicators. Belgium’s best trend performance is for the share of university R&D funded by business.

Up until 2001, Belgium had rapidly increasing business expenditures on R&D. This positive trend has since been reversed, with the share of GDP due to business R&D falling from 1.6% in 2001 to 1.33% in 2003, which is only 6% above the EU average. The main challenge for Belgium is to turn its improving performance on innovation drivers, knowledge creation, and entrepreneurship into more applications. The second challenge for Belgium is to address declining relative performance as shown by the trend results.

Cyprus

The innovative performance of Cyprus is well below the EU average, ranking 17th out of the 25 EU member states. Although the overall ranking of Cyprus is well below the EU average, there are a few areas of strength. Cyprus is above the EU average for tertiary education, percentage of innovative firms that receive public support for innovation, and community trademark applications. Cyprus is also performing particularly well on innovation among SMEs. The vast majority of trends are also above the EU average, with the exception of new S&E graduates. Cyprus faces multiple challenges, particularly in terms of knowledge creation, with exceptionally low business R&D and low investment in public R&D. This partly explains the poor performance on innovation applications. The innovation drivers, most of which cover education, are generally closer to the EU average, with the exception of very low rates of new S&E graduates.

These characteristics suggest that two main challenges are to reverse the negative trend and to increase the supply of S&E graduates and to substantially improve knowledge creation inputs. An increase in business R&D could depend on significant improvements to both the amount of public R&D, currently at 39% of the EU average, and in the quality of public R&D. Cyprus is also underperforming on innovation diffusion, as shown by low sales shared for both new-to-firm and new-to-market products.

Czech Republic

The Czech Republic ranks well below the EU average on the Summary Innovation Index, with a rank of 20th out of 25 EU Member States. It performs relatively poorly on innovation drivers and intellectual property rights. The relative strength of the Czech Republic is in the innovation applications slightly below the EU average. This good performance could be the result of foreign investment and technology transfer, plus the diffusion of products onto the Czech market. This could also explain why the Czech Republic performs relatively well on applications even though its performance on innovation inputs (knowledge creation, innovation drivers and innovation & entrepreneurship) is well below the EU average.

The overall trend performance for the Czech Republic, however, is poor. For most indicators, trends are either very close to the EU average or below the EU average, which suggests that it will take a long time for the Czech Republic to catch up with other countries. The Czech Republic faces three main challenges: improve educational inputs (part of innovation drivers), improve the links between business and universities, and address possible bottlenecks in financing innovation.

Denmark

Denmark is one of the most innovative countries within the EU, as shown by third place performance on the EIS out of the 25 EU member states (for innovation drivers 3rd, IPR 4th and applications 4th). However, it is below the expectations of its performance peer group for knowledge creation, where it ranks 10th. Denmark’s trend performance is particularly good for venture capital and for business R&D. The worst trend performance is for the broadband penetration rate.

Denmark is only at the EU average for two leading indicators for innovation drivers: the supply of new S&E graduates and the youth education attainment level. Improvements to the education system could be required to motivate an increase in the supply of S&E graduates. The next area of weakness, although only relative, is in innovation & entrepreneurship, due to average performance for the percentage of SMEs that innovate in-house and for ICT expenditures, and below average performance for the percentage of firms that have introduced non-technological change, such as organizational innovations.

Estonia

Estonia is a mid-ranking country on the EIS, coming 13th out of 25 EU countries. It is one of the best performers among the ten new Member States. However, the cluster analysis classifies Estonia in the “losing ground” category because of its negative trend. The explanation for the anomaly between Estonia’s good standing in innovation performance and its classification among the laggards is because Estonia’s strengths are highly skewed, with very good performance on innovation & entrepreneurship and good performance on innovation drivers, but poor performance on IPR, applications, and knowledge creation. Estonia is among those countries that are relatively weak at transforming their innovation assets into innovation results (sales of new products, high tech employment, patents, etc).

Estonia’s weakness in knowledge creation is due to insufficient levels of business R&D. Although this increased from 0.11% in 1998 to 0.28% in 2003, it is still well below the levels observed in Slovenia at 0.90%. Public expenditures have also increased from 0.47% in 1998 to 0.53% in 2003, but are still only 80% of the EU average. As of 2000, only 2.4% of firms received public support for innovation. These figures could be one reason why Estonia performs badly on both applications and IPR. These results suggest that Estonia has already benefited from picking ‘the low-hanging fruits’ and needs to invest substantially more in developing more advanced innovative capabilities, in particular to improve the supply of S&E graduates.

Finland

Finland is one of the EU’s two star performers on innovation, a position that it shares with Sweden. It ranks second out of the 25 EU countries. Finland ranks among the top three countries for each of the six EIS composite indices with the exception of applications. Consequently, Finland has no readily identifiable weaknesses, with above average results for all EIS indicators except one: the youth share of the Finnish population is 18.6%, which is below the EU country mean of 20.7%.

The trend results are below the EU average for many indicators, but this is often due to Finland’s good performance. Although Finland is one of the EU innovation leaders, the country presents below average static economic performance. Finland’s per capita GDP is below that of the majority of countries in the intermediate innovator group. More discouragingly, its labour productivity per hour worked in 2003 was only 92.6% of the average for the EU-15. However, the GDP growth rate is significantly higher than EU average (65% above EU-15 average on average between 1996 and 2004). It can therefore be expected that the return on investment in innovation will be a long term one. Taking full advantage of this long term investment will be the key challenge for Finland.

France

France is an intermediate performing country, ranking 9th out of the 25 EU members. Its relative strengths are in knowledge creation, innovation drivers, and applications. Its greatest weakness is in innovation & entrepreneurship, where it ranks 11th out of 23 countries. Its good performance on innovation drivers is due to a far above average supply of new S&E graduates. On knowledge creation France performs at or above the EU average. Its weakness in innovation & entrepreneurship is primarily due to a low percentage of firms that introduced non-technological change, plus slightly below average investment in ICT and an average share of SMEs that cooperate on innovation.

Superior performance on innovation drivers is not feeding through into above average results for knowledge creation and entrepreneurship. A key bottleneck could be insufficient linkages between the public and private research systems, with France performing at only 44% of the EU average for the percentage of university R&D financed by business. A challenge, for a relatively good-performer on innovation, is to increase the share of sales from new-to-market product sales, which is currently very close to the EU average. This could require greater efforts to improve innovation diffusion, so that innovations reach new markets throughout France.

Germany

Germany is one of the EU leaders in terms of innovation performance, ranking fourth out of 25 EU Member States. Germany’s strengths are in knowledge creation, innovation & entrepreneurship, applications, and IPR. Surprisingly, these strengths, particularly in both classes of innovation outcomes, are built upon below average performance in innovation drivers. This might raise questions about the capacity for Germany to continue to provide skilled workforce to innovative companies, with a negative trend in both S&E graduates and the youth education attainment level. These are both indicators where Germany is already performing below the EU average, and they could be key bottlenecks for Germany’s future competitiveness on innovation. Conversely, the trend performance for life long learning has improved, with relative performance increasing from 65% of the EU average in 2003 to 75% in 2004.

Most German trends are at or below the EU average with the positive exception of several indicators linked to good performance in high tech sectors. The best trend indicator for Germany is for life long learning.

Greece

Greece’s economic development appears to be weakly linked to innovation. The country ranks 23rd out of 25 EU countries. It ranks 23 out of 25 countries for innovation applications, a crucial output measure. The trends for two key indicators for future innovation, ICT investment and public R&D expenditures, are negative and business R&D is static at a very low level of 0.20% of GDP.

Nevertheless, Greece’s overall bleak performance masks several strengths, due to large variations in performance in individual indicators. For instance, performance on youth education and tertiary education are near the EU average. In knowledge creation, Greece is slightly above the EU average for the percentage of university R&D funded by business, although this could be a reflection of the low ability of Greek firms to innovate in-house, forcing them to contract out innovation projects. Among the innovation & entrepreneurship indicators, Greece performs well below the EU average for venture capital, well above the EU average for non-technical change, and near the average for innovation expenditures and ICT investment. The results for applications are consistently very low, with the exception of new-to-firm product sales, which is slightly better. However, this might reflect the most basic form of innovation through adoption.

Hungary

Hungary ranks 15th on the summary innovation index out of the 25 EU. Its weakest performance is on innovation drivers and IPR, while its best performance is on knowledge creation. Poor performance on innovation drivers is due to low levels of S&E graduates, broadband penetration, and lifelong learning. The indicators for knowledge creation are mostly near the EU average, with the exception of much better performance on the percentage of university R&D funded by business (a similar characteristic of many of the new member states) and very low performance on Business R&D. On applications, Hungary performs above average on employment in medium-high and high tech manufacturing and in high tech exports, both linked to foreign investment. Conversely, Hungary underperforms in the percentage of new-to-market and new-to-firm sales from innovative products.

Hungary is more successful in innovation diffusion than in creative innovation, possibly due to the activities of foreign firms in bringing new technology to Hungary. The main challenges, therefore, consist of reducing some of the bottlenecks for innovation diffusion. These may include low rates of lifelong learning (46% of the EU average), below average total innovation expenditures (20% of the EU average), and low levels of sales from new to firm and new-to-market product innovations (30% and 18% of the EU average, respectively). The other main challenges are to increase the supply of new S&E graduates (currently 39% of the EU average) and to continue to support increasing levels of business R&D, which have grown from 0.26% of GDP in 1998 to 0.36% in 2003. Early stage venture capital, which could play an important role in encouraging spin-offs from foreign affiliates, also needs to be increased from its current very low level of 6% of the EU average.

Ireland

Ireland’s overall innovation performance based on the EIS, results in an 11th place rank out of 25 EU member states. Ireland mixes above average and below average performance in many of the indicator groups, with however data missing for indicators related to firm activity. Its good performance is due to high tech export shares that are 68% above the EU average. Ireland performs well on the innovation drivers, ranking in 8th place. This is due to excellent performance on the supply of new S&E graduates and above average results for tertiary education.

Most worryingly, business R&D shows both an absolute and relative decline over time, falling from 0.90% of GDP in 1998 to 0.77% in 2004. This decline is not matched by an increase in public R&D, which has grown only modestly, from 0.35% of GDP in 1998 to 0.40% in 2004. Ireland must make the transition from an economy where foreign investment played a large role, particularly in the ICT sector in order to serve the EU market, to an economy based on innovation. Many indicators point to serious difficulties in making this transition. The share of exports from high technology products has fallen by 25% between 2001 and 2003. The consistent decline in business R&D is also a major challenge, coupled to the decline of the share of university R&D funded by the business sector. Venture capital supply has also fallen from 136% of the EU average in 2000 to 92% of the average in 2003. These developments suggest that Ireland could be entering a difficult transition phase towards developing domestic R&D and innovation capabilities.

Italy

Italy is one of the poorest performing countries out of the original EU-15, ranking in 12th position on the EIS out of the 25 EU Member States. Italy is particularly weak in innovation drivers (ranking 21st out of 25 countries) and for innovation & entrepreneurship (20th). Poor performance on innovation drivers is due to low performance on tertiary education and lifelong learning. There is also a poor supply of new S&E graduates, although the trend is positive, increasing from 55% of the EU average in 1999 to 65% in 2002. The causes of Italy’s below average performance on innovation & entrepreneurship is due to very low levels of innovation cooperation among SMEs (23% of the EU average), a collapse in venture capital supply (20% of the EU average), and slightly below average levels of investment in ICT.
Italy’s best performance is for knowledge creation and applications. Both public and business expenditures in R&D have been growing since 1998, albeit too slowly. In terms of applications, Italy performs well above the EU average for the sales of new-to-market products and close to the average for new-to-firm-products. This could reflect innovation methods that are not adequately covered by R&D indicators or reflect the adoption of technology developed by other firms. Italy is among those countries that are relatively good at transforming their innovation assets into innovation results (sales of new products, high tech employment, patents, etc), which may be partly explained by a robust demand for innovative products and services by Italians.

Latvia

Latvia ranks 24th out of 25 EU countries on its overall innovation performance, based on the EIS. Latvia has a highly skewed distribution of strengths and weaknesses. Its only relative strength is for innovation & entrepreneurship, where it ranks 13th out of 23 countries, and for innovation drivers, where it ranks 16th. It comes close to the bottom for innovation outcomes, ranking 24th for applications and in last place for IPR.

Fortunately, most of the trend indicators for Latvia are above the EU average, with the notable exceptions of public R&D and ICT expenditures. A major weakness is that public R&D expenditures have been steadily falling from already very low levels of 0.32% in 1998 to 0.25% in 2003, whereas business R&D remains at only 11% of EU average. The trend for education indicators is generally positive, but only slightly above the EU average. The best consistent trend performance is for applications, with increases in employment in high tech services, high tech exports, and employment in medium-high and high-tech manufacturing. All three improvements could be due to foreign investment. Compared to several other lagging countries, Latvia performs reasonably well on innovation drivers, but it needs to invest in education to improve trend performance, which is largely static.

Lithuania

Lithuania ranks 19th out of 25 EU countries. Its average performance masks large differences by category. It performs slightly above the EU average for innovation drivers, due to good performance on all education indicators except for life-long learning, and it has relative strengths in innovation & entrepreneurship, where it ranks 16th. However, Lithuania suffers from extremely low levels of business R&D, which is partly compensated by excessive levels of university R&D funded by business (at 235% the EU average).

Trend results are generally favourable, except for ICT investment and employment in high tech services. The main challenge for Lithuania is whether or not to strongly encourage innovation diffusion or to encourage both creative innovation and innovation diffusion. The educational performance of Latvia leaves both options open, although a decision to support creative innovation would require an improvement in the supply of S&E graduates and a massive increase in business R&D. Neither of the trends for these two indicators are stable and positive, suggesting that there is no in-built momentum for improvements over time. A concerted policy effort to improve both would therefore be required in order to develop creative innovation capabilities. The alternative is to stress innovation diffusion. Several indicators are positive, including close to average levels of ICT investment and total innovation expenditures, and above average performance on several education indicators. The greatest current weaknesses are in cooperation by SMEs and in broadband penetration rates.

Luxembourg

Luxembourg ranks 10th out of the 25 EU countries. Luxembourg’s best performance is in IPR, which could be linked to above average performance in business R&D. Its performance in applications ranges from very poor for new-to-market product sales and for employment in medium-high and high tech manufacturing to far above the EU average for high tech exports. Many of the trend indicators are missing, but Luxembourg’s trend performance on most available indicators is at or below the EU average. The exceptions are a rapid increase in the broadband penetration rate and high tech exports.

The two main challenges are poor performance on education and on public R&D. For an advanced economy, Luxembourg has a lower than expected performance in tertiary education and lifelong learning. The exceptionally low score for the supply of S&E graduates (18% of the EU average) is probably due to the fact that Luxembourg lacked a university until recently, with most citizens receiving a tertiary education abroad. Public R&D expenditures are very low, at only 29% of the EU average.

Malta

Malta ranks last on the EIS for the 25 EU countries. Its best performance is in innovation and entrepreneurship and in applications. The latter is largely due to high-tech exports, which is an anomaly due to one firm within a very small economy. Business R&D is close to non-existent and public R&D is only 28% of the EU average. The good performance for innovation and entrepreneurship is from high total innovation expenditures, most likely capital investment.

As the smallest economy in the EU, Malta’s innovation performance can depend on only one or two firms. This probably explains good performance on innovation expenditures, high technology exports, and ICT expenditures. The challenge for Malta is to create the background conditions for a more broadly based innovation performance, including higher levels of adoption of new technology. Education is a primary key here, with a primary goal of improving all education indicators, which are approximately 50% of the EU average

Netherlands

The Netherlands is an above average performer on the EIS, ranking 8th out of the EU 25. The Netherlands’ best performance is for innovation drivers, IPR, and knowledge creation. Good performance for drivers is due to above average performance on broadband penetration rates, life long learning, and tertiary education. The results for knowledge creation are due to a high percentage of firms that receive public funding for innovation. Another strength is in IPR, due to excellent performance for triadic patents. The Netherlands greatest weakness is in applications, primarily due to poor results on new-to-firm sales share (37% of the EU average) and low levels of employment in medium-high and high tech manufacturing. The trend performance for many of the indicators is near or below the EU average. The worst trend performance is for broadband penetration rates, but this is due to its lead position within Europe. Of greater concern is the declining trend for both public and private R&D. The best trend performance is for EPO patents and community trademarks.

An improvement in applications will require more investment in knowledge creation and in innovation drivers. The most serious challenge is to improve business R&D where expenditures are only at 80% of the EU average and have declined from a high of 1.14% in 1999 to 1.01% in 2003. There is however some sign of a turn around, with business R&D increasing from 0.98% of GDP in 2002 to 1.01% in 2003. The second challenge is to improve the supply of S&E graduates and improve the youth education attainment level.

Poland

Poland ranks 21st out of the 25 EU Member States. Poland exceeds the EU average for only four indicators: the youth education attainment level, where Poland is 17% above the EU average, total firm innovation expenditures (50% above the EU average), ICT expenditures (14% above the EU average), and new-to-firm product sales (42% above the EU average). All are indicators for future success on adopting new technology. By category, Poland’s best performance is for innovation and entrepreneurship and for innovation drivers. The supply of new S&E graduates has been growing consistently since 1998 and the trend is above the EU average. The share of the population with a tertiary education is currently 71% of the EU average but the trend is also favourable. Conditions for knowledge creation, in contrast, are worsening, particularly due to a decline in business R&D, from 0.28% of GDP in 1998 to 0.16% in 2003, although this marks a recovery from a low of 0.13% in 2002. Public R&D expenditures have changed little and were 0.43% of GDP in 2003. The share of university R&D funded by the business sector has also declined, indicating that firms have not turned to outsourcing research to make up for declining R&D expenditures. Partly due to very low levels of R&D, Poland ranks near the bottom in the EU in IPR.

The main challenge for Poland on the short term is to build up capabilities in innovation diffusion, since there is very little that can be done over the short term to develop capabilities in creative innovation. In respect to diffusion, the trends for skills are favourable, total innovation expenditures are well above the EU average, and ICT expenditures are above the EU average. A possible bottleneck is the low percentage of SMEs that collaborate on innovation and the low share of university R&D funded by businesses. The latter could indicate that firms have very few opportunities to outsource necessary research within Poland.

Portugal

Portugal’s overall innovation performance, based on the EIS, is below the average for both the EU-25 and EU-15, ranking in18th place out of 25 EU member states. Portugal’s performance is generally below average on all categories with the exception of innovation & entrepreneurship, where it ranks 7th out of 23 countries, due to above average results for most indicators related to innovation activities of firms (innovation in-house, expenditures, ICT, non technological change). Portugal’s worst performance is in innovation drivers, due to well-below average performance on education, although the trends for all of them are consistently positive. The results for applications are skewed, with good performance on new-to-market and new-to-firm sales of innovative products, but very poor performance on high tech indicators (less than 50% of the EU average). Little is expected at this time for patenting, which depends on marked improvements in knowledge creation, particularly business R&D, which is only 21% of the EU average.

With three exceptions, Portugal’s trend performance is above the EU average. Of greatest concern is the decline in public R&D expenditures from 0.58% in 2001 to 0.52% in 2003. In contrast to a fall in venture capital in almost all EU countries, the supply of venture capital in Portugal increased in absolute terms between the late 1990s and 2003. The main challenges for developing innovation diffusion capabilities are the poor performance on innovation demand and poor performance on education. All education indicators are below expectations, ranging from 48% of the EU average for lifelong learning to 67% of the average for the supply of new S&E graduates. All have been improving, albeit slowly for the share of the working-age population with a tertiary education. The largest bottleneck for a country such as Portugal, which needs to rapidly improve skills in order to support the diffusion of new technology, is the poor performance on lifelong learning and the youth education attainment level.

Slovakia

Slovakia ranks in 22nd place on the EIS for the EU countries. Within the EU, it ranks next to last on knowledge creation and last for innovation and entrepreneurship. It performs slightly better on innovation drivers, due to an above average performance on youth education, and substantially better for applications. The latter is explained by above average performance on new-to-market sales of innovative products and employment in medium-high and high tech manufacturing.

Positive trends include an increase in employment in medium-high and high tech manufacturing which is mainly due to foreign investment in the automotive sector, the supply of S&E graduates, tertiary education, and a recovery in public expenditures on R&D, although this has still not reached the level in 1998, and in absolute terms public R&D is very low, at 0.24% of GDP. Several of the negative trends are worrisome, such as the large decline in business R&D from 0.52% of GDP in 1998 to 0.23% in 2004. ICT expenditures have also fallen. Over the short to medium term, the main challenge for Slovakia is to develop its capabilities to innovate via diffusion. It can build on several favourable indicators, including good performance on the youth education attainment level (19% above the EU average), high total innovation expenditures (60% above the EU average), moderate performance on ICT expenditures (5% below the EU average) and sales of new-to-market products (over twice the EU average). There are three main bottlenecks for further developing innovation diffusion. This will require an increase in tertiary education levels (a slow process) from 58% of the EU average and particularly an improvement in life-long learning, which will be essential for retraining current employees to use new technologies. The third challenge is to improve the share of SMEs that collaborate on innovation (currently only 33% of the EU average) and linkages between the public and private research sectors.

Slovenia

Slovenia’s ranks 14th out of the EU 25 Member States. Slovenia is the second-best performers among the ten new Member States, after Estonia, partly because its performance is relatively well-balanced, with no major discrepancies on the different innovation categories, with the exception of IPR. With improvements in several crucial areas and a good foundation in drivers and knowledge creation, Slovenia should be capable of rapid improvements in the future.

Slovenia’s best performance is for innovation drivers and on knowledge creation. The former is due to extensive retraining through life-long learning and above average results for youth education. Broadband penetration rates, while only 50% of the EU average, are also much higher than in many new Member States. Slovenia is one of the few new member states with a solid basis for developing both capabilities in creative innovation and in innovation diffusion. It has a relative good performance on business R&D, at 0.90% of GDP in 2003 (71% of the EU average), which has also increased substantially from 0.72% in 1998. Public R&D are only 9% below the EU average.

There are several challenges for building a national innovation system based on creative innovation. First, the supply of S&E graduates fell between 2002 and 2003 (71% of the EU average), although it is still slightly above the levels of the previous years. The supply needs to increase substantially. The decline in the share of university R&D financed by business, from 77% above the EU average in 1998 to 37% above the average in 2003, might be due to the rapid increase in business R&D, with an increase in in-firm capabilities replacing the need to contract out research. The main bottleneck could be below average levels of ICT investment (83% of the EU average with no sign of improvement) and notably below average levels of total innovation expenditures (61% of the EU average).

Spain

Spain ranks 16th on the summary innovation index for the EU 25 Member States. Spain has a relatively well-balanced performance on each innovation category, with the exception of much weaker performance on innovation & entrepreneurship, where it ranks 22nd. Spain’s relatively good performance on knowledge creation, where it ranks 14th out of 25 member states, is due to apparent good interactions between public and private financing for innovation, where an above average percentage of firms receive government support for innovation and University R&D financed by business is also above EU average. However the business sector lags behind, as shown by business R&D expenditures that are 45% of the EU average and low rates of patenting that are below 20% of the EU average.

The majority of trends are at or above the EU average. The most serious trend weaknesses are for ICT investment and youth education. The best strengths are for both public and business R&D and for USPTO and triad patents. However the global trend remains slightly negative. Spain has the foundation in place for strengthening both innovation diffusion and creative innovation, due to relatively good performance for innovation drivers and applications. The main challenge facing innovation diffusion is to improve the poor results for lifelong learning, where Spain is at only 52% of the EU average, to increase the percentage of SMEs involved in innovation collaboration (38% of the EU average), and to increase total innovation expenditures (69% of the EU average). ICT investment is also 17% below the EU average. The major challenge for building capabilities in creative innovation lies in the low levels of business R&D, currently at 45% of the EU average.

Sweden

With Finland, Sweden is an innovative leader within the EU, ranking first among the EU countries. Sweden has above average performance on all EIS indicators. It ranks in 1st place for innovation & entrepreneurship and IPR and in 2nd place for the three other EIS indices. For individual indicators, Sweden only ranks below the EU average for the share of university R&D financed by business and in high-technology exports as a percentage of total exports. Many of the trend results for Sweden are below the EU average, but this is usually from a starting point well above the average.

Sweden continues to pull ahead of the EU trend for public R&D, but business R&D declined between 2001 and 2003, although still over double the EU average. Although Sweden is one of the EU innovation leaders, the country presents below average static economic performance on productivity or GDP per capita. However, the GDP growth rate is significantly higher than EU average with 20% above EU average between 1996 and 2004). It can therefore be expected that the return on investment in innovation will be a long term one. Taking full advantage of this long term investment will be the key challenge for Sweden.

United Kingdom

The UK ranks 7th on the EIS out of the EU 25 Member States. The UK’s good standing is due to excellent performance on several education indicators, such as S&E graduates and lifelong learning, and mid-range performance in several other categories. The UK performs near average on many other indicators. However, it performs at only 33% of the EU average for new-to-market product sales. The UK performs well above the EU average for venture capital, total innovation expenditures, ICT expenditures, employment in high technology services, and in triadic patents.

The UK’s trend strengths are for broadband penetration rates and venture capital. The latter has declined by half since 2001, but the amount of decline is less than in other EU countries. The UK faces major challenges for knowledge creation. The slow improvement in the R&D base could be a cause of the negative trends for high tech exports and employment in medium-high and high-tech manufacturing, both of which have been declining faster than the EU average. The second challenge for the UK is to improve the innovative capabilities of its SMEs. A below average percentage innovate in-house or are involved in innovation cooperation.
More detailed information is to be found in the European Innovation Scoreboard

http://www.trendchart.org/scoreboards/scoreboard2005/index.cfm


[1] http://www.trendchart.org/scoreboards/scoreboard2005/index.cfm

[2] Office for Harmonization in the Internal Market (Trade Marks and Designs): http://ohim.europa.eu/


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