EU innovation continues to improve - but a geographical divide remains

(Image by S. Hermann & F. Richter from Pixabay )

The scoreboard provides an interesting insight into the progress the EU is making in modernizing its economic levers for growth, assessing how it is fairing domestically and on the international stage. The scoreboard also is significant within the context of the New European Innovation agenda, which the Commission announced in July 2022 and is intended to position Europe as a “leading player on the global innovation landscape”. 

The scoreboard has been published annually since 2001 and assesses relative strengths and weaknesses in national innovation performance, with the aim of helping member states identify areas they need to address. 

The latest update shows that since 2015 the EU has improved its innovation performance by approximately 10% and that compared to 2021, innovation performance has improved for 19 member states. However, performance has also declined for eight member states. 

Commenting on the findings, Mariya Gabriel, Commissioner for Innovation, Research, Culture, Education and Youth, said: 

Europe's commitment to innovation is shown by its continuous improvement in innovation performance. In support of Europe's innovation capacity, Horizon Europe promotes excellence and supports top researchers and innovators to drive the systemic changes needed to ensure a green, healthy and resilient Europe. 

The European Innovation Scoreboard 2022 demonstrates the importance of establishing a pan-European Innovation Ecosystem. The recently adopted New European Innovation Agenda will position Europe at the forefront of the new wave of deep-tech innovations and ensure that innovation reaches all regions of Europe, including rural areas.

Results

Based on their scores, Members States fall into four performance groups: Innovation leaders (performance is above 125% of the EU average), Strong innovators (between 100% and 125% of the EU average), Moderate innovators (between 70% and 100% of the EU average) and Emerging innovators (below 70% of the EU average).

Sweden continues to be the best performer in the EU, closely followed by Belgium, Denmark, the Netherlands and Finland. Compared to last year, the Netherlands has moved up from being a ‘strong innovator’ to an ‘innovation leader’, whilst Cyprus and Estonia have also both moved up a category. 

You can see the full results in the chart below: 

(Image sourced via the European Commission)

But the rankings are as follows:

• Germany, Ireland, France, Cyprus, Luxembourg and Austria are Strong innovators, performing above the EU average.

• Czechia, Estonia, Greece, Spain, Italy, Lithuania, Malta, Portugal and Slovenia are Moderate innovators.

• Bulgaria, Croatia, Latvia, Hungary, Poland, Romania and Slovakia are Emerging Innovators.

But as you can see from the below map, there is a clear innovation divide in Europe - where the performance groups tend to be geographically concentrated, with the innovation leaders and strong innovators being located in Northern and Western Europe, and most of the moderate and emerging innovators in Southern and Eastern Europe. 

(Image sourced via European Commission)

Comparing the EU average to some of the bloc’s global competitors, the Republic of Korea is the most innovative country. Australia, Canada and the United States also have a performance leader of the EU. However, according to the 2022 scoreboard data, the EU is outperforming China, Japan, Brazil, Chile, India, Mexico and South Africa. 

It’s worth noting though that if you look at data between 2015 and 2022, performance has increased the most in China (24.9% points). 

Commenting on the findings, Thierry Breton, Commissioner for Internal Market, said:

Europe's autonomy and competitiveness will depend on our capacity to become a technological and commercial leader in strategic areas such as space, defence, hydrogen, batteries, chips quantum and high performance computing. 

Europe's innovation agenda, our support to start-ups and innovative SMEs, industrial alliances or IPCEIs are already leading to highly innovative projects across Europe. This is how we translate our scientific excellence into technological and industrial leadership, and quality jobs in Europe.

A new innovation agenda

As noted above, these results come shortly after the European Commission announced its New European Innovation Agenda, which aims to position Europe at the forefront of “the new wave of deep tech innovation and start-ups”. It hopes to help Europe develop new technologies to address pressing societal challenges, and to bring them to market. 

The new Agenda set out that it aims to: 

• Improve access to finance for European start-ups and scale-ups, for example, by mobilising untapped sources of private capital and simplifying listing rules;

• Improve the conditions to allow innovators to experiment with new ideas through regulatory sandboxes;

• Help create  “regional innovation valleys” that will strengthen and better connect innovation players through Europe, including in regions lagging behind;

• Attract and retain talent in Europe, for example by training 1 million deep tech talents, increasing support for women innovators and innovating with start-up employees' stock options;

• Improve the policy framework through clearer terminology, indicators and data sets, as well as policy support to Member States.

My take

An interesting and helpful collection of data for member states to assess and for the EU to help guide future policy. As ever, the EU’s greatest challenge is getting member states to move collectively in the same direction. But it’s clear that the EU does understand where future growth is coming from and there is a global race to be a leader in this area. How that will play out over time - and there are significant macroeconomic challenges that will need navigating over the next few years.