Innovation report delivers ‘wake-up call’ for Europe

Stakeholders are calling for more research and innovation funding at EU and national level after the latest figures from the European Commission showed Europe’s innovation performance is growing more slowly than in China and internal geographical differences persist.

Innovation excellence continues to be geographically concentrated in northern and western Europe, while the overall performance of southern and eastern countries that joined the EU after 2004 still ranks below the EU average, according to the annual European Innovation Scoreboard (EIS) published on Monday.

The 2024 scoreboard shows Europe has "made significant progress in innovation performance in recent years,” according to EU research commissioner Iliana Ivanova. “However, [the] innovation divide persists between the member states, and the EU also has potential to improve its standing in the global innovation race. We must continue our efforts, particularly in striving for more private investment in research and innovation," she said.

Manuel Heitor, a professor at the University of Lisbon and former science minister of Portugal, had a more terse interpretation of the report. “This is a wake-up call for Europe.”

Heitor, who is the chair of the expert group selected by the Commission to oversee the interim evaluation of Horizon Europe which will feed into the planning of the EU’s next framework programme for research and innovation, FP10, calls for a portfolio of R&I incentives focused on competitive excellence, industrial competitiveness, societal challenges and a strong research and innovation ecosystem.

Kurt Deketelaere, secretary general of the League of European Research Universities (LERU) said one of the main conclusions from the report is that the EU needs to encourage the private sector to invest more in R&D. “It’s no surprise that Nordic countries are doing great, seeing the big amounts of available private money.” The Nordics’ performance is also the result of a friendly regulatory environment, Deketelaere added.

The ranking

The report assigns an overall performance score to each country, which is quantified as a percentage of the EU’s score from 2017.  In the round, the EU’s performance has increased by 0.5 percentage points compared to 2023, and has risen by 10% since 2017.

Switzerland is ranked as the most innovative European country, while South Korea remains the global leader, with a performance of 119.1% compared to the EU level in 2024.

Meanwhile, China has now surpassed Japan: between 2017 and 2024 the country's performance in innovation increased by 28.2 percentage points, closing the gap with the EU, from which it is now divided by 5.8 percentage points. Last year's scoreboard had already highlighted the rapid improvements to China’s performance.

Robert-Jan Smits, president of Eindhoven University of Technology and former director general of research and innovation at the European Commission, says an annual improvement of 0.5% will not be enough to compete with the likes of China and the US. “Member states have to put their money where their mouth is” to reach the goal of spending 3% of GDP on research and development,” Smits said.

According to the report, there are several areas in which the EU performs strongly compared to its global competitors, including the number of new doctorate graduates, international scientific co-publications, public sector R&D expenditure, and the share of SMEs introducing product innovations.

However, the bloc’s performance is middling in a number of other areas, including private sector R&D expenditure and public-private co-publications, and it is lagging behind in terms of collaboration between innovative SMEs as well as trademark applications.

Germany falls behind

The slight increase in EU performance reflects disparities at a national level, with 15 member states increasing their performance, and 11 suffering a drop-off, while Croatia remained stable.

Germany experienced the most significant decline, down 3.3 percentage points compared to 2017, driven partly by a significant fall in the number of SMEs launching new products. The biggest increase was seen in Lithuania, which gained 3.7 percentage points.

The EIS breaks countries down into four categories: emerging innovators (performance below 70% of the EU average), moderate innovators (70 to 100%), strong innovators (100 to 125%) and innovation leaders (above 125%). The newest edition shows Belgium losing its status as an innovation leader, despite its mostly stable performance.

The only other category change has Estonia becoming a strong innovator, having added an impressive 26.8 percentage points in the last seven years, second only to Cyprus whose score rose by 39 percentage points. This has seen both countries rise respectively from 15th and 19th in the rankings in 2017, to 10th and 11th.

Denmark however remains the most innovative EU country, followed by Sweden. Overall, the EU continues to see a wide gap between the best and worst performing countries, with only a slight convergence in the last seven years. For example, the bottom three performers (Bulgaria, Latvia, Romania) have remained stable while the other three emerging innovators (Croatia, Poland, Slovakia) have progressed.

Rethink the Widening programme

According to Smits, the success of Estonia and Cyprus may call for a redefinition of the Widening programme, which is a separate funding stream in Horizon Europe aimed at helping poorer member states improve their success in EU funding competitions. Many are opposed to the programme and suggest member states should use other financial resources to improve framework conditions for researchers and innovators.

“Charity starts at home, meaning that those countries that are investing in their own national science and innovation system belong to the top performers in the scoreboard, while those that are not giving priority to these investments are at the bottom of the list,” said Smits.

The future of the Widening initiative is the subject of much debate, and Smits argues closing the innovation divide should not be the job of Horizon Europe’s successor programme. “The urgently needed capacity building in the poor performing countries should happen via the Cohesion Funds,” he said.

Deketelaere is positive about the steady progress reflected in the scoreboard, but says the persistent innovation divide is “worrying” and a more ambitious and focused policy is required.

“As indicated in the Letta report, the key for the EU is to improve the regulatory environment for innovation investment in Europe and eliminate differences between and obstacles within member states,” he said.

The European Commission has published the annual EIS since 2001, comparing innovation performance based on 32 indicators covering the economy, business and entrepreneurship, innovation profiles, governance and policy framework, climate change and demography. The 2024 edition covers all EU member states, 12 neighbouring European countries, and 11 global competitors.