MEMO/09/18

Brussels, 22 January 2009

European Innovation Scoreboard 2008: Summary of the situation in the 27 Member States

This memo provides a synopsis of the innovation performance of the different Member States, as measured in the European Innovation Scoreboard 2008 (EIS). Commissioned by the Directorate-General for Enterprise and Industry of the European Commission, the European Innovation Scoreboard is prepared by the Maastricht Economic and social Research and training centre on Innovation and Technology (MERIT), assisted by the Joint Research Centre of the European Commission.

As part of the EU Innovation Policy, the EIS provides since 2001 an annual assessment of innovation performance across the EU. The 2008 report further improves the methodology with a revised set of indicators which give more importance to service sectors, non-technological innovation and innovation outputs. Overall innovation performance is calculated on the basis of 29 indicators covering seven dimensions of innovation, which are grouped in three main blocks, covering enablers, firm activities and outputs (see Table 1 below):

Enablers captures the main drivers of innovation that are external to the firm as:

• Human resources – the availability of high-skilled and educated people.
• Finance and support – the availability of finance for innovation projects and the support of governments for innovation activities.

Firm activities captures innovation efforts that firms undertake recognising the fundamental importance of firms’ activities in the innovation process:

• Firm investments – covers a range of different investments firms make in order to generate innovations.
• Linkages & entrepreneurship – captures entrepreneurial efforts and collaboration efforts among innovating firms and also with the public sector.
• Throughputs – captures the Intellectual Property Rights (IPR) generated as a throughput in the innovation process and Technology Balance of Payments flows.

Outputs captures the outputs of firm activities as:

• Innovators – the number of firms that have introduced innovations onto the market or within their organisations, covering technological and non-technological innovations.
• Economic effects – captures the economic success of innovation in employment, exports and sales due to innovation activities.

Based on performance over a five year period, four main groupings of countries emerge (see Table 2 below):

• Switzerland, Sweden, Finland, Germany, Denmark and the UK are the Innovation leaders, with scores well above that of the EU27 and all other countries.
• Austria, Luxembourg, Ireland, France, Belgium and the Netherlands are the Innovation followers, with scores below those of the innovation leaders but equal to or above that of the EU27. Austria is close to moving from the innovation followers to the innovation leaders.
• Cyprus, Estonia, Slovenia, Iceland, Czech Republic, Norway, Spain, Portugal and Italy are the Moderate innovators with scores below that of the EU27, except for Cyprus. Recent improvements in innovation performance for Cyprus, Estonia, Slovenia and Iceland suggest that these countries could move to the innovation followers in the near future.
• Malta, Greece, Hungary, Slovakia, Poland, Lithuania, Romania, Latvia, Bulgaria and Turkey are the Catching-up countries. Although their scores are significantly below the EU average, these scores are increasing towards the EU average over time with the exception of Greece and Lithuania.
• Independent expert analysis of developments in national innovation policies and governance, building on independent country reports, was published in the Innovation Progress Report 2008, which is available on the internet site of the PRO INNO initiative (http://www.proinno-europe.eu/metrics)

Country performances

Austria

For Austria, among the group of Innovation followers, innovation performance is above the EU27 average. Within this group, it is a growth leader with a rate of improvement just above that of the EU27. Relative strengths, compared to the country’s average performance, are in Linkages & entrepreneurship and Innovators, Relative weaknesses can be seen in Human resources and Finance and support.

Over the past 5 years, Human resources has been the main driver of the improvement in innovation performance, in particular as a result from growth in S&E and SSH graduates (7.9%) and Life-long learning (10.5%). But also Firm investments, Linkages & entrepreneurship, Throughputs and Economic effects have shown a steady and substantial improvement. Performance in Innovators however has slightly worsened.

Belgium

For Belgium, one of the Innovation followers, innovation performance is above the EU27 average but the rate of improvement is below that of the EU27. Relative strengths, compared to the country’s average performance, are in Linkages & entrepreneurship, Innovators and Economic effects. Relative weaknesses are in Firm investments and Throughputs.

Over the past 5 years, Finance and support and Throughputs have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in Venture capital (23.1%) and Broadband access by firms (15.1%). Performance in Firm investments and Innovators has worsened, in particular due to a decrease in Non-R&D innovation expenditures (-8.5%).

Bulgaria

Bulgaria is one of the Catching-up countries with an innovation performance well below the EU27 average but the rate of improvement is one of the highest of all countries and it is a growth leader within the Catching-up countries. Relative strengths, compared to the country’s average performance, are in Human resources, Finance and support and Economic effects. Relative weaknesses can be found in Linkages & entrepreneurship and Throughputs.

Over the past 5 years, Throughputs and Finance and support have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in Private credit (25.2%), Broadband access by firms (21.5%), Community trademarks (67.6%) and Community designs (31.0%). Performance in Economic effects has hardly grown, in particular due to a decrease in New-to-market sales (-5.7%) and New-to-firm sales (-3.1%).

Cyprus

Cyprus is a growth leader among the group of Moderate innovator countries, with an innovation performance just below the EU27 average and a rapid rate of improvement. Relative strengths, compared to the country’s average performance, are in Finance and support, Linkages & entrepreneurship and Innovators. However, Human resources and Throughputs are relative weak.

Over the past 5 years there has been strong growth in Finance and support, Linkages & entrepreneurship, Human resources, Throughputs and Economic effects have also been main drivers of the improvement in innovation performance, in particular as a result from strong growth in S&E and SSH doctorate graduates (18.0%), Broadband access by firms (18.5%), Innovative SMEs collaborating with others (12.3%), Public-private co-publications (11.0%), Community trademarks (12.1%), Community designs (30.5%), New-to-market sales (29.1%) and New-to-firm sales (17.7%). Performance in Innovators has worsened (-4.3%).

Czech Republic

The Czech Republic is among the group of Moderate innovators with innovation performance below the EU27 average but the rate of improvement is above that of the EU27. Relative strengths, compared to the country’s average performance, are in Firm investments, Innovators and Economic effects. Relative weaknesses are in Throughputs, Finance and support and Human resources.

Over the past 5 years, Throughputs, Human resources and Finance and support have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in Community designs (26.0%), Technology Balance of Payments flows (13.1%), S&E and SSH graduates (14.1%), Private credit (11.8%) and Broadband access by firms (40.1%). Performance in Innovators has worsened, due to a decrease in SMEs introducing product or process innovations (-2.6%).

Denmark

For Denmark, one of the Innovation leaders, innovation performance is well above the EU27 average. However, the rate of improvement is not only below that of the EU27 but virtually zero. Relative strengths, compared to the country’s average performance, are in Human resources, Finance and support, Throughputs and Linkages & entrepreneurship. Relative weaknesses can be found in Firm investments, Innovators and Economic effects.

Over the past 5 years, Human resources, Finance and support and Throughputs have been the main drivers of a stagnating innovation performance, in particular resulting from strong growth in Private credit (7.5%) and Community trademarks (5.4%). Performance in Firm investments, Linkages & entrepreneurship, Innovators and Economic effects has worsened, in particular due to decreases in Innovative SMEs collaborating with others (-8.0%), SMEs introducing product or process innovations (-5.7%), New-to-market sales (-7.7%) and New-to-firm sales (-8.5%).

Estonia

For Estonia, one of the Moderate innovators, innovation performance is just below the EU27 average but the rate of improvement is above that of the EU27. Relative strengths, compared to the country’s average performance, are in Finance and support, Firm investments, Linkages & entrepreneurship and Innovators. Relative weaknesses are in Throughputs.

Over the past 5 years, Finance and support and Firm investments have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in Private credit (16.8%), Business R&D expenditures (20.0%), Non-R&D innovation expenditures (29.3%) and Community trademarks (17.6%). Performance in Innovators has remained stable.

Finland

For Finland, one of the Innovation leaders, innovation performance is well above the EU27 average but the rate of improvement is slightly below that of the EU27. Relative strengths, compared to the country’s average performance, are in Human resources and Firm investments. Throughputs and Innovators are relative weak.

Over the past 5 years, Linkages & entrepreneurship, Throughputs and Innovators have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in Innovative SMEs collaborating with others (12.4%) and Technology Balance of Payments flows (17.0%). Performance in Economic effects has worsened, in particular due to a decrease Knowledge-intensive services exports (-3.4%) and New-to-firm sales (-1.5%).

France

France is in the Innovation followers group of countries with an innovation performance above the EU27 average but the rate of improvement is below that of the EU27. Relative strengths, compared to the country’s average performance, are in the Enablers (Human resources, Finance and support), and Outputs (Innovators and Economic effects). Firm activities such as Firm investments, Linkages & entrepreneurship and Throughputs can be understood as weak.

Over the past 5 years, Human resources, Finance and support and Throughputs have been the main drivers of the improvement in innovation performance, in particular as a result from growth in S&E and SSH doctorate graduates (5.1%), Broadband access by firms (16.1%) and Community designs (4.9%). Performance in Economic effects has not improved, in particular due to a decrease in Medium-high & high-tech manufacturing exports (-0.7%).

Germany

Germany is one of the Innovation leaders with innovation performance considerably above the EU27 average and the rate of improvement is about the same as that of the EU27. Relative strengths, compared to the country’s average performance, are in Innovators and Economic effects. Relative weaknesses are in Human resources, Finance and support and Throughputs.

Over the past 5 years, Human resources, Finance and support and Throughputs have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in S&E and SSH graduates (12.1%), Life-long learning (6.8%), Broadband access (17.5%) and Community trademarks (6.1%). Performance in Innovators has slightly worsened, due to a decrease in SMEs introducing product or process innovations (-0.7%).

Greece

For Greece, one of the Moderate innovators, innovation performance is below the EU27 average and the rate of improvement is above that of the EU27. Relative strengths, compared to the country’s average performance, are in Linkages & entrepreneurship, Innovators and Economic effects. Relative weaknesses can be found in Throughputs and Firm investments.

Over the past 5 years, Finance and support and Economic effects have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in Broadband access by firms (51.6%) and New–to-market sales (32.8%). Performance in Firm investments has worsened, due to a decrease in Business R&D expenditures (-4.5%) and Non-R&D innovation expenditures (-22.7%).

Hungary

Hungary is in the group of Catching-up countries with innovation performance well below the EU27 average but a rate of improvement above that of the EU27. Relative strengths, compared to the country’s average performance, are in Economic effects. Relative weaknesses are in Throughputs and Innovators.

Over the past 5 years, Throughputs and Economic effects have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in Community trademarks (10.9%), Community designs (8.9%), Knowledge-intensive services exports (9.6%) and New-to-market sales (17.0%). Performance in Innovators has worsened.

Ireland

Ireland is in the group of Innovation followers, with an innovation performance above the EU27 average. It is a growth leader within this group of countries with a rate of improvement just above that of the EU27. Relative strengths, compared to the country’s average performance, are in Human resources, Throughputs and Economic effects and relative weaknesses are in Firm investments and Linkages & entrepreneurship.

Over the past 5 years, Human resources and Finance and support have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in S&E and SSH doctorate graduates (12.8%), Private credit (14.6%) and Broadband access by firms (37.5%). Performance in Firm investments, Linkages & entrepreneurship and Innovators has worsened, in particular due to a decrease in Non-R&D innovation expenditures (-5.7%), Innovative SMEs collaborating with others (-7.0%) and SMEs introducing product or process innovations (-3.3%).

Italy

For Italy, one of the Moderate innovators, innovation performance is below the EU27 average and the rate of improvement is also below that of the EU27. Relative strengths, compared to the country’s average performance, are in Finance and support and Economic effects and relative weaknesses are in Human resources, Firm investments and Linkages & entrepreneurship.

Over the past 5 years, strong growth has come from Human resources, and Finance and support and Throughputs have also been the drivers of the improvement in innovation performance, in particular as a result from strong growth in S&E and SSH graduates (8.8%), S&E and SSH doctorate graduates (22.7%), Broadband access by firms (18.6%) and Community trademarks (4.7%). Performance in Firm investments has not improved and performance in Innovators and Economic effects has worsened, in particular due to a decrease in New-to-market sales (-7.8%) and New-to-firm sales (-5.3%).

Latvia

For Latvia, one of the Catching-up countries, innovation performance is well below the EU27 average but the rate of improvement is above that of the EU27. Relative strengths, compared to the country’s average performance, are in Human resources and Finance and support and relative weaknesses are in Linkages & entrepreneurship, Throughputs and Innovators.

Over the past 5 years, Human resources, Finance and support, Firm investments and Throughputs have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in S&E and SSH doctorate graduates (25.7%), Private credit (23.4%), Business R&D expenditures (12.7%), Community trademarks (29.4%) and Community designs (19.2%). Performance in Linkages & entrepreneurship has worsened, in particular due to a decrease in the Firm renewal rate (-18.6%) and Public-private co-publications (-8.1%).

Lithuania

Lithuania is among the group of Catching-up countries, with an innovation performance well below the EU27 average. However, unlike most other countries in this group its rate of improvement is below that of the EU27. Relative strengths, compared to the country’s average performance, are in Human resources, Finance and support and Linkages & entrepreneurship and relative weaknesses are in Firm investments, Throughputs and Innovators.

Over the past 5 years, Finance and support, Human resources and Throughputs have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in S&E and SSH graduates (10.8%), Private credit (27.9%) and Community trademarks (19.4%). Performance in Linkages & entrepreneurship and Innovators has worsened, in particular due to a decrease in Innovative SMEs collaborating with others (-8.7%) and SMEs introducing product or process innovations (-6.1%).

Luxembourg

For Luxembourg, one of the Innovation followers, innovation performance is above the EU27 average but the rate of improvement is slightly below that of the EU27. Relative strengths, compared to the country’s average performance, are in Throughputs and Innovators and relative weaknesses are in Human resources, Firm investments and Linkages & entrepreneurship.

Over the past 5 years, Finance and support and Throughputs have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in Private credit (16.8%), Broadband access by firms (20.0%) and Community designs (13.5%). Performance in Firm investments, Linkages & entrepreneurship, Innovators and Economic effects has worsened, in particular due to a decrease in Public-private co-publications (-14.3%), Employment in medium-high & high-tech manufacturing (-6.4%) and New-to-firm sales (-8.0%).

Malta

For Malta, one of the Catching-up countries, innovation performance is below the EU27 average but the rate of improvement is above that of the EU27. Relative strengths, compared to the country’s average performance, are in Finance and support and Economic effects and relative weaknesses are in Human resources, Linkages & entrepreneurship and Innovators.

Over the past 5 years, Throughputs has been the main driver of the improvement in innovation performance, in particular as a result from strong growth in Community designs (32.4%) and Technology Balance of Payments flows (37.5%). Performance in Economic effects has hardly grown, in particular due to a decrease in New-to-firm sales (-18.4%), which was stronger than the increase in New-to-market sales (16.3%).

Netherlands

Netherlands is one of the Innovation followers. Its innovation performance is just above the EU27 average but the rate of improvement is below that of the EU27. Relative strengths, compared to the country’s average performance, are in Finance and support and Linkages & entrepreneurship while relative weaknesses are in Firm investments and Innovators.

Over the past 5 years, Human resources and Finance and support have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in S&E and SSH graduates (11.3%), S&E and SSH doctorate graduates (6.8%) and Broadband access by firms (23.8%). Performance in Firm investments and Linkages & entrepreneurship has worsened, in particular due to a decrease in Non-R&D innovation expenditures (-1.5%) and the Firm renewal rate (-4.4%).

Poland

Poland is among the group of Catching-up countries, with an innovation performance considerably below the EU27 average but an above average rate of improvement. Relative strengths, compared to the country’s average performance, are in Human resources, Firm investments and Economic effects and relative weaknesses are in Finance and support, Linkages & entrepreneurship and Throughputs.

Over the past 5 years, Throughputs have been a strong driver of improved performance and Human resources and Linkages and entrepreneurship have also been drivers of improvement, in particular as a result from strong growth in S&E and SSH doctorate graduates (12.2%), Public-private co-publications (20.6%), EPO patents (9.0%), Community trademarks (11.1%) and Community designs (27.3%). Performance in Innovators and Economic effects has worsened, in particular due to a decrease in New-to-market sales (-13.4%).

Portugal

For Portugal, one of the Moderate innovators, innovation performance is below the EU27 average but the rate of improvement is more than twice that of the EU27 making it a growth leader within its group of countries. Relative strengths, compared to the country’s average performance, are in Finance and support and Innovators while relative weaknesses are in Human resources, Firm investments, Linkages & entrepreneurship and Throughputs.

Over the past 5 years, Human resources, Finance and support, Firm investments and Throughputs have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in S&E and SSH graduates (9.8%), S&E and SSH doctorate graduates (19.2%), Broadband access by firms (25.1%), Business R&D expenditures (26.3%), EPO patents (8.4%) and Community trademarks (12.1%). Performance in the other dimensions has increased at a slower pace, except in Innovators where there has been almost no improvement.

Romania

Romania is one of the growth leaders among the Catching-up countries, with an innovation performance well below the EU27 average but a rate of improvement that is one of the highest of all countries. Relative strengths, compared to the country’s average performance, are in Innovators and Economic effects and relative weaknesses are in Finance and support and Throughputs.

Over the past 5 years, Finance and support and Throughputs have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in Public R&D expenditures (18.0%), Private credit (17.4%), Broadband access by firms (24.3%), Community trademarks (36.0%) and Community designs (44.3%). Performance in Firm investments and Innovators has increased at a lower pace.

Slovakia

For Slovakia, one of the Catching-up countries, innovation performance is well below the EU27 average but the rate of improvement is above that of the EU27. Relative strengths, compared to the country’s average performance, are in Firm investments and Economic effects and relative weaknesses are in Finance and support, Linkages & entrepreneurship, Throughputs and Innovators.

Over the past 5 years, Human resources, Finance and support and notably Throughputs have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in S&E and SSH graduates (8.7%), Broadband access by firms (32.0%), EPO patents (12.5%), Community trademarks (27.4%) and Community designs (14.4%). Performance in Firm investments has worsened, in particular due to a decrease in Business R&D expenditures (-13.4%).

Slovenia

For Slovenia, one of the Moderate innovators, innovation performance is just below the EU27 average but the rate of improvement is above that of the EU27. Relative strengths, compared to the country’s average performance, are in Human resources, Finance and support and Innovators and relative weaknesses are in Throughputs.

Over the past 5 years, Finance and support and Throughputs have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in Private credit (17.3%), Community trademarks (7.5%) and Community designs (8.6%). Performance in Firm investments, Linkages & entrepreneurship and Economic effects has increased at a lower pace.

Spain

For Spain, one of the Moderate innovators, innovation performance is below the EU27 average and the rate of improvement is just below that of the EU27. Relative strengths, compared to the country’s average performance, are in Finance and support and Economic effects and relative weaknesses are in Firm investments and Linkages & entrepreneurship.

Over the past 5 years, Finance and support and Firm investments have been the main drivers of the improvement in innovation performance, in particular as a result from strong growth in Private credit (12.7%), Broadband access by firms (15.3%) and Non-R&D innovation expenditures (13.4%). Performance in Linkages & entrepreneurship and Innovators has worsened, in particular due to a decrease in the Firm renewal rate (-6.0%). The growth in performance in Human resources is significantly below the EU average.

Sweden

Sweden is one of the Innovation leaders and the best performing EU Member State, although its rate of improvement is below that of the EU27. Relative strengths, compared to the country’s average performance, are in Human resources, Finance and support and Firm investments and relative weaknesses are in Throughputs and Innovators.

Over the past 5 years, Finance and support and Throughputs have been the main drivers of the improvement in innovation performance, in particular as a result from relatively strong growth in Venture capital (9.1%), Broadband access by firms (8.8%), Community trademarks (7.8%) and Technology Balance of Payments flows (10.1%). Performance in Firm investments, Linkages & entrepreneurship, Innovators and Economic effects has worsened, in particular due to a decrease in Innovative SMEs collaborating with others (-4.5%) and the Firm renewal rate (-6.1%).

United Kingdom

For the UK, one of the Innovation leaders, innovation performance is above the EU27 average but the rate of improvement is below that of the EU27. Relative strengths, compared to the country’s average performance, are in Human resources, Finance and support, Firm investments and Linkages & entrepreneurship and relative weaknesses are in Throughputs, Innovators and Economic effects.

Over the past 5 years, Finance and support has been the main driver of the improvement in innovation performance, in particular as a result from strong growth in Venture capital (22.9%) and Broadband access by firms (30.4%). Performance in Firm investments, Linkages & entrepreneurship, Innovators and Economic effects has worsened, in particular due to a decrease in Knowledge-intensive services exports (-4.7%), New-to-market sales (-12.7%) and New-to-firm sales (-10.7%).

Table 1 EIS 2008 Indicators

Table 2 Overall innovation performance: the EIS Summary Innovation Index

[ Figures and graphics available in PDF and WORD PROCESSED ]

Note: The Summary Innovation Index (SII) is a composite of 29 indicators going from a lowest possible performance of 0 to a maximum possible performance of 1. The 2008 SII reflects performance in 2006/2007 due to a lag in data availability.