Nordics lead EU’s innovation league table

By on 24/06/2021 | Updated on 24/06/2021
Peak innovation: Scandinavian nations have led the EU’s innovation index.

An annual exercise to assess which countries in the EU and beyond have created the best environments for innovation across their private and public sectors has hailed Sweden as the EU’s innovation leader.

Fellow Nordics Finland and Denmark also ranked high in the index, along with Belgium, suggesting that the right conditions for innovation – and the economic growth that typically accompanies it – are geographically concentrated in northern and north-western Europe.

The European Innovation Scorecard (EIS) has been compiled by academics for the EU Commission since 2001, looking at a range of indicators such as fast broadband penetration, the number of patents filed, R&D spending in the public and private sector, and the proportion of the workforce employed in IT.

Overall, the EIS shows that EU nations are making progress on supporting innovation, with average innovation performance increasing by 12.5% in 2021 compared to 2014. Cyprus, Estonia, Greece, Italy and Lithuania top the league of the most-improved after increasing their scores by 25% or more, while Belgium, Croatia, Finland, and Sweden have raised their game by 15-25%.

Powering productivity

According to the EU Commission, the criteria champion openness, competitiveness and the cultivation of human talent, and the results inform policy development on innovation – also seen as vital to creating a sustainable and inclusive post-Covid recovery across the EU.

Around two-thirds of Europe’s productivity growth in recent years is driven by innovation, according to a 2020 report, Science, Research and Innovation performance of the EU, which found that innovation boosts economic resilience and competitiveness.

Thierry Breton, EU Commissioner for the Internal Market, said: “European innovations like the technologies at the heart of new COVID-19 vaccines have been crucial to fighting and overcoming the current pandemic.

“The EU’s improved innovation performance is a very positive signal. Investing in innovation is investing in our ability to be at the technological forefront for a sustainable, digital and resilient economy and society.”

As well as the 27 member states, the EIS covers the EU’s near neighbours and satellites: Bosnia and Herzegovina, Iceland, Israel, Montenegro, North Macedonia, Norway, Serbia, Switzerland, Turkey, Ukraine and the United Kingdom.

Global comparisons

The EIS researchers also analyse leading global nations. Looking at their performance against an EU average, they found that the EU offers a more fertile environment for innovation than China, Brazil, South Africa, Russia, and India.

On the other hand, South Korea, Canada, Australia, the United States and Japan all have a performance lead over the EU, with South Korea acing the assessment with a score 21% over the EU average.

The indicators measured under the EIS include the award of PhDs in STEM subjects, investment of venture capital and public funding, the share of innovative projects linked to environmental improvements, and job turnover among specialists in science and technology – all these factors registered an increase in 2021.

The EIS methodology also takes into account public and private investment in education, research and skills development; innovation partnerships among companies and with academia, and strong digital infrastructure and skills.

Countries where the public sector attracts the most R&D investment are Denmark, Iceland and Germany, where “R&D intensity” is around 1% of GDP. Compared to 2020, 19 countries improved their performance on this measure during the COVID pandemic.

Private investment from venture capital sources is most likely to support innovative ideas in Cyprus, United Kingdom, Luxembourg and Finland, where investment runs at around 0.25% of GDP, compared to an EU average of 0.141%. In 2020, 22 countries saw increased investment from venture capital.

Looking at direct government funding or tax breaks for businesses pursuing R&D, the EU average is 0.164% of GDP. But France and United Kingdom had the most generous regimes, with direct support for business R&D costs amounting to 0.30% of GDP.

The average number of enterprises with fast broadband penetration stood at 23% in the EU, while  Denmark, Sweden, Switzerland and Portugal all scored at least 40%. Greece and Ukraine were the laggards in this category, with less than 10%.

Impatient for patents

The researchers also looked at the number of patents filed under the Patent Co-operation Treaty. Levels were highest in Israel, Sweden and Finland, at around 7.5 applications per billion GDP. On average in the EU, there were 2.96 patent applications.

But while COVID-19 in general has unleashed innovation, it seems to have depressed the number of patent applications: compared to 2020, 27 countries in the survey filed fewer applications.

The EIS also measured environment-related technologies as percentage of all technologies, scoring the EU at 11.2% on average while Malta, Bulgaria and Denmark led from the front at 20%. However, this was another category that saw a downturn in 2020, with 24 countries registering a decrease.

In terms of education and skills, countries with the largest cohort of young professionals completing tertiary education are Cyprus, Luxembourg, Ireland, Lithuania and Norway, where at least 50%  of people aged 25-34 graduate. The EU average for this indicator is 28.9%.

The EIS is a project of the European Commission’s Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs.

About Elaine Knutt

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