The results of the European Innovation Scoreboard, (EIS) 2017 are presented with a revised system of measures and indicators. Therefore, the results and rankings are not directly comparable with previous editions. However, time series that use the new measurement system allow the results to be shown over time.
New indicators take into account investments in skills, digital preparation, business initiative and public-private partnerships for innovation.
In addition, for the first time, contextual data are presented to analyze and compare the structural differences between countries.
The new EIS measurement system is composed of four main types of indicators (before 3) and ten dimensions of innovation (before 8) including a new dimension on the innovation friendly environment and the economic effects have been split into two separate dimensions, measuring the impact of innovation on employment and sales.
In total it shows 27 different indicators (before 25). 3 of them have been eliminated, 5 were modified and other 5 are new ones. In addition, the definitions of 6 indicators have been revised.
Another change is that the comparisons between countries and over time are made based on the results of 2010, which provides a better view of the changes over time.
Leaders in innovation
Globally, the EU is less innovative than Australia, Canada, Japan, South Korea and the United States. The differences in the innovation index with Canada and the United States are reduced compared to 2010, but those with Japan and South Korea have increased.
Japan has increased its index more than three times compared to the EU, and South Korea more than four times.
The EU maintains an advantage in the index over China, but this advantage is rapidly declining, as China grows more than seven times faster than the EU. The EU’s index lead over Brazil, India, Russia and South Africa is considerable.
China is the country that shows the highest growth among international competitors.
Sweden remains the innovation leader of the EU, followed by Denmark, Finland, the Netherlands, the United Kingdom and Germany. The ones that are growing fastest are Lithuania, Malta, the United Kingdom, the Netherlands and Austria.
The color columns show the innovation index of the EU member states in 2016, using the most recent data in the 27 indicators in relation to the 2010 ones. The horizontal hyphens show the index in 2015, using the same data and indicators in relation to the EU average in 2010. The gray columns show the index of the same states in 2010 in relation to that of the EU in 2010. The same measurement methodology has been used over the years. The dashed lines show the threshold values that separate the 4 innovation groups in 2016: leaders, strong, moderate or modest innovators.
In the renewed index, Spain moves from position 20 to 17, but shows no signs of growth or improvement over since 2010”
The innovation index has grown in 15 EU countries compared to 2010, but has decreased in 13.
The total UE innovation index improved by 2.0 percentage points between 2010 and 2016. This growth is the average of the 15 member states that have improved and 13 that have worsened
In Spain the innovation index has dropped 1.8% since 2010″
The vertical axis shows the innovation index of the member states in 2016 relative to the EU average in 2010. The horizontal axis shows the growth or decrease between 2010 and 2016 in relation to the EU average in 2010. The dotted lines show the respective average rates for the EU.
Logically, the optimal position is the upper right quadrant and the worst one is in the lower left quadrant where Spain is located.
Analysis of the 10 dimensions of innovation
It is interesting to analyse the measurements of the 10 dimensions of innovation to understand the factors that most influence the innovation index.
We can see that the biggest differences between the most innovative states, leaders or strong innovators and those that are moderate or modest, are given mainly in four dimensions.
Probably these four are the most determinant for the growth of a country’s innovation index:
- Finance and financial support. This dimension includes investments in venture capital and the support of public sector in R&D investments
- Alliances. Includes alliances and collaboration between SMEs for innovation, public-private collaboration and private co-financing of public investments in R & D
- Innovators. Includes SMEs with innovative products or processes, SMEs with innovations in marketing and organization and SMEs with their own in house innovations. A solid base of small and medium-sized innovative companies with growth.
- Attractive research systems. Includes international scientific co-publications, 10% of the most cited publications and foreign doctorate students.
Switzerland remains the most innovative country in Europe
Comparing the EU Member States with other European countries and neighbors, Switzerland remains the most innovative European country. Iceland, Israel and Norway are strong innovators with rates above the EU average; Serbia and Turkey are moderate innovators; Macedonia and Ukraine are modest innovators.
Situation of Spain
The relative position of Spain in relation to the average of the countries in the EU decreased since 2010. The distance to European innovation leaders and strong innovators increases even more.
We can identify that the dimensions where relative weaknesses is most important are practically the same as those mentioned earlier as the most determinant in the growth of a country’s innovation index: Finance and support, linkages or alliances and Innovators, comprising a solid base of SME’s innovative companies with growth. Exception is in attractive research systems.
Where Spain is closest to the EU average or slightly above it is in 2 dimensions: Human resources and environment favorable to innovation.
The following table explains itself:
Given that the Spanish position does not improve, but is in decline, we must deduce that the effort in the years of the crisis has not focused on changing the economic model but on penalizing the facilitators even more and worsening the ecosystem favorable to innovation.
In a detailed analysis of the indicators and the establishment of root causes, we find the same barriers to innovation in Spain that we described in 2014:
- Lack of investment and venture capital. The private company does not invest in innovation. Public investment is unfocused from productive activity and, in general, disconnected from companies and economic interest.
- The prevailing company model is not a competitive one arisen from innovative initiatives and with a vision of participating in the global arena. Many of the biggest companies have emerged from public monopolies and operate by a model of proximity to political power.
- Lack of lifelong learning or continuous education. Universities increased in the number of publications, but they are not reflected in patents or the exploitation of licenses. The employment situation reinforces the tendency for better-educated people to seek employment abroad.
- The economic model remains unchanged. Growth is sought with the same paradigm as in the past.
- Financial structures are not closed to innovation and productive economy. Venture capital for innovative initiatives not only does not improve, but has declined.
- SME’s suffer particularly from lack of support and funding. On the other hand, SME’s are still not sufficiently connected, open to the outside world and with clear and differentiated business models. They do not invest in innovation, neither separately nor forming alliances or collaborations.
- Intellectual capital, management or organization systems are not valued. Probably due to the business model oriented to prices competition. The number of patents, brands, systems or ‘Know-how’, industrial design, etc. is considerably less than the average EU.
- External and customer orientation. Although exports improve, mainly by two or three sectors, there is a lack of international alliances in other sectors with higher added value.
- Lack of connection between science / technology and business.
Results of Innovation by European regions
The regional innovation scoreboard (RIS) is an extension of the European Innovation Scoreboard, which assesses the innovation index of European regions in a limited number of indicators. The 2017 RIS covers 220 regions in 22 EU countries, Norway, Serbia and Switzerland.
The RIS 2017 replicates the same system of measures and indicators of the European innovation scoreboard system as far as possible in terms of data availability. It also offers a new tool with contextual data that can be used to analyze and compare structural differences between regions.
This new system of measures and indicators confirms that the most innovative regions in Europe are found in the most innovative countries. The most innovative region of the EU is Stockholm in Sweden, followed by Hovedstaden (Copenhagen) in Denmark and Southeast in the United Kingdom.
However, there are also some innovative regional centers in moderate innovators countries: Praha (Prague) in the Czech Republic, Bratislavský kraj (Bratislava) in Slovakia and the Basque Country in Spain.
It is important to point out, as shown on the map, that a single Spanish region is situated between the ‘strongly innovative’.
Review of methodology
For the EIS 2017, the measurement framework has been significantly revised:
The last edition of the (EIS) of 2016 largely followed the methodology of the previous editions, under the last major revision of 2010.
In particular, for the current edition of 2017, there was a need to: (1) better align the dimensions of the EIS with changing policy priorities; (2) continuously improve the quality, timeliness and analytical soundness of the indicators; (3) ensure that the EIA better captures the increasingly important phenomena, including in fields such as digitization and entrepreneurship, and that includes indicators on key areas such as human resources, skills and science-business links; and (4) provide a contextual analysis of the data presented, examining the effects of structural differences among member states, in order to provide an improved evidence base for policy formulation.
The first change implies a regrouping of innovation dimensions, (Figure 2). The objective of this grouping is to distinguish better between the framework conditions and investments in innovation, the innovation activities of the companies and the impact of these activities.
The second change has been to add one more dimension to better see the environment in which companies operate. Companies innovate in response to changes in their environment, to increase the range of products or services or increase their market share. The lack of internal or external funds is for most companies the most important factor that hinder their innovation activities. In addition, the lack of qualified personnel, markets dominated by established companies and the uncertain demand for goods or services have a high score among the factors that hinder innovation. An environment that is favorable to innovation will act as a catalyst, helping companies to innovate or innovate more.
A third change involves dividing the dimension that measures the economic effects into two, one that measures the impacts on employment and the other that measures the impacts on sales.
Finally, changes have been introduced in some indicators, some eliminated or revised and others new. Table 1.
Framework conditions capture the main drivers of innovation performance external to the company and encompass three dimensions of innovation: human resources, attractive research systems, as well as an environment favorable to innovation. Investments capture public and private investment in research and innovation and cover two dimensions: finance and support and investments in companies. Innovation activities capture innovation efforts at the company level, grouped into three dimensions of innovation: innovators, links and intellectual assets. The impacts cover the effects of the innovation activities of the companies in two dimensions of innovation: impacts on employment and sales effects.