Mind the gap: divisions growing in Europe’s regional innovation performance

Differences in innovation performance between Europe’s regions are becoming larger over time, according to the latest version of the EU regional innovation scoreboard published this week.

The survey, covering 190 regions in the EU, Norway and Switzerland, shows that those at the bottom of the pile – ‘modest innovators’ in EU-speak - saw growth fall by two per cent since the last scoreboard in 2012.

Of the 190 regions, 34 are judged to be innovation leaders, 57 innovation followers, 68 moderate innovators and 31 modest innovators.

The average performance of the leaders, followers and moderate innovators has been improving over time, with followers growing fastest at an average annual growth rate of nearly four per cent. Leaders and moderate innovators both saw annual growth increases of nearly two per cent.

For regions in the modest bracket, however, the trend is in the opposite direction, with an annual loss of two per cent.

The figures were released as the Commission’s new regional strategy gets underway.  Johannes Hahn, the Commissioner responsible for EU regional policy, acknowledged that while the scoreboard shows some regions are clearly pushing forward, disparities exist. “The new regional policy will address this head on: every one of Europe's 274 regions will have to develop a smart specialisation strategy which will include innovation. Regions will have to build on their economic strengths,” Hahn said.

The usual and unexpected suspects

While pockets of excellence beam out of the expected places, unsurprisingly, the most innovative regions are nested in the most innovative countries.

The top bracket of performers, comprising 27 regions which are 20 per cent above the EU average, are concentrated in the eight member states of Denmark, Finland, Germany, Sweden, Netherlands, UK, Ireland and France. North and west countries continue to lead east and south. Outside the EU, and top of the class overall, is Switzerland, with all of its seven regions classed as innovation leaders.

Regions whose performance outshines the national average include Oslo og Akershus, Vestlandet and Trøndelag in Norway; Piemonte, Friuli-Venezie Giulia and Emilia-Romagna in Italy, País Vasco and Comunidad Foral de Navarra in Spain, Lisboa in Portugal and Bratislavský kraj in Slovakia

Capturing change and stability

The data show the economic crisis led to changed priorities between 2004 - 2010, with Greece, Hungary, Italy, Spain and Poland altering course and awarding less funding to innovation than previously planned.

On the whole however, the scoreboard presents a fluid picture of Europe’s regions over the course of 2004-2010. In total, 40 regions bettered their standing whilst 37 moved down the ranking. Slovakian, Belgian and Hungarian regions have seen their performance levels change most often in Europe.

France, Portugal, Slovakia and Spain are the four EU countries with the most divergent regions. In Spain, for example, there are three different performance groups: Pais Vasco is a follower, Cantabria is a moderate innovator and Canarias is seen as modest.

There’s a static picture in Bulgarian, Greek and Slovenian regions, where no improvements are seen across time, and Switzerland, where the regions maintained their status as leaders.

Data wormholes

The scoreboard uses 25 different yardsticks to measure regional performance, including university completion rates, public and private innovation spend, patent applications and high-tech employment rates.

The availability of data, however, is a mixed bag, with the authors finding excellent data for Belgium, Bulgaria, Czech Republic, Poland, Romania, Slovakia and Slovenia, but patchy figures for Croatia, Denmark, Greece and Switzerland.

“I would like to see more data available,” said Hugo Hollanders of Maastricht University and lead author. “With more data, regional policymakers would know more about their own performance and could have a stronger say. I’d like to go deeper than the regional level and look into provinces and cities.”

The role of EU money

The scoreboard also looks at how regions use EU money, in particular structural funding.  

The volume and percentage of EU structural funds directed at research, technology and innovation has increased steadily over the past 25 years. From 2000-2006, an estimated €29.5 billion of the total EU structural fund budget was spent on research and innovation, rising to some €86 billion in the 2007-13 budget and a proposed €100 billion for 2014-20.

For countries like Denmark, Luxembourg and Austria, the spend on research and business innovation as a share of structural funds is high, at between 60 and 70 per cent.

The vast majority of regions do not prioritise spending structural funds on research and innovation. Countries including Cyprus, Romania and Bulgaria spent less than ten per cent of structural funds on these areas over the same period.

Some regions have difficulties in committing to spend structural funds at all. The causes of difficulties in taking up EU funding include shortage of resources to co-finance projects, lack of long-term strategic vision from local authorities, low administrative capacity to manage funds, weak inter-institutional cooperation and underdeveloped public-private partnerships. For regions in Hungary, Poland and Greece, this remains a problem.

Attempting to balance the scales

To qualify for regional development funds over the next seven years, local officials must identify which sectors hold potential for developing competitive advantage, and build an innovation strategy around them.

Funding will not be spread thinly across projects, diminishing its impact, as in the past. Instead, regions will be required under the EU’s Smart Specialisation strategy to focus on a limited number of policy objectives, to build up a critical mass of investment in selected areas.