Urenio Watch Watch: Innovation Measurement

European Innovation Scoreboard 2006

Summary Innovation Index (SII) and trends. Click to enlargeThis is the sixth edition of the European Innovation Scoreboard (EIS). The Nordic countries and Switzerland continue to be the innovation leaders worldwide, while many of the new Member States are steadily catching up with the EU average. These are some of the main findings of the European Innovation Scoreboard 2006, published on 22 February 2007. The report presents a comparative analysis of the innovation performance of European countries, the US and Japan.

With respect to the situation in Europe, significant national differences are still observed. The above Figure shows the Summary Innovation Index (SII) on the vertical axis and the average growth rate of the SII on the horizontal axis. Countries above the horizontal dotted line currently have an innovation performance above that of the EU25. Countries to the right of the vertical dotted line had a faster average increase in the SII than the EU25.

Based on their SII score and the growth rate of the SII, the countries included in the analysis can be divided into four groups or clusters:

  • Sweden, Switzerland, Finland, Denmark, Japan and Germany are the innovation leaders, with SII scores well above that of the EU25 and the other countries. The lead of the innovation leaders has been declining compared to the average of the EU25, with the exception of Denmark.
  • The US, UK, Iceland, France, Netherlands, Belgium, Austria and Ireland are the innovation followers, with SII scores below those of the innovation leaders but above that of the EU25 and the other countries. The above EU25 average innovation performance of the innovation followers has been declining. Also, the gap of the innovation followers with the innovation leaders has on average slightly increased.
  • Slovenia, Czech Republic, Lithuania, Portugal, Poland, Latvia, Greece and Bulgaria make up the group of catching-up countries, with SII scores well below that of the EU25 and the innovation leaders, but with faster than average innovation performance improvement.
  • Estonia, Spain, Italy, Malta, Hungary, Croatia and Slovakia seem to be trailing, with SII scores well below that of the EU25 and the innovation leaders, and innovation performance growth which is either below or only just above that of the EU25.

Cyprus and Romania form a separate fifth cluster of fast growing, catching-up countries. Cyprus being one of the smallest EU countries and Romania starting from very low levels of innovation performance, this cluster is less robust than the other clusters, and is therefore not considered to be a meaningful cluster. Luxembourg, Norway and Turkey do not fit into any of these groups.

The gap between the US and the EU has decreased

The US and Japan are still ahead of the EU25 in terms of innovation performance, but the innovation gap between the EU25 and Japan, and in particular with the US is decreasing. The EU25 has improved its relative performance compared to the US in S&E graduates, tertiary education, business R&D, early-stage venture capital, medium-high and high-tech manufacturing employment, EPO patents, USPTO patents and community trademarks. The EU has improved its relative performance compared to Japan mostly in S&E graduates and broadband penetration rate. For business R&D, the share of medium/high-tech R&D and the employment share in medium/high-tech manufacturing, the EU has experienced a decline of its relative performance.

Five key dimensions of innovation performance

As innovation is a non-linear process, the 25 EIS innovation indicators have been classified into five dimensions to better capture the various aspects of the innovation process. 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, Applications 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.

Innovation performance per country group and innovation dimension

Figure 2: Innovation performance per country group and innovation dimension.

In terms of this year’ s composite indicator scores, the innovation leaders perform best on all innovation dimensions (Figure 2). The innovation followers score second on every innovation dimension. Of the countries showing a below EU25 innovation performance, the trailing countries perform better than the catching-up countries on Knowledge creation, Applications and Intellectual property but worse on Innovation drivers and Innovation & entrepreneurship.

Innovation performance per group of indicators

Figure 3: Innovation performance per group of indicators.

Figure 3 shows the ranking of countries for each of the 5 dimensions, from worst to best performer. Countries generally perform at a comparable level in each of these dimensions. However, there are some noteworthy exceptions. Germany and Austria are performing relatively worse in Innovation drivers, the Netherlands in Innovation & entrepreneurship, and the Netherlands, Austria and Iceland in Applications. Of the stagnating countries, Estonia is among the best performers in Innovation & entrepreneurship and Malta in Applications.

About the European Innovation Scoreboard

Commissioned by the Directorate-General for Enterprise and Industry of the European Commission, the European Innovation Scoreboard is prepared by the Maastricht Economic Research Institute on Innovation and Technology (MERIT) assisted by the Joint Research Centre of the European Commission.