Spotlight on Cyprus: The small island rising up the innovation rankings

The latest European Innovation Scoreboard shows not much has changed when it comes to which countries lead and which lag, but Cyprus stands out, having leapfrogged its way through the rankings to tenth place, up from 15 in 2017 and is a ‘strong innovator’ for the third year in a row.

Estonia also made headway, rising from 19 to 11, and was also the only country to move up a category, into the strong innovators group. Meanwhile, Belgium lost its innovation leader status.

The report scores countries across 32 metrics such as digital skills, frequency of research publications and citations, funding availability and the number of start-ups launching new products. Countries are then ranked based on their overall scores.

Between 2017 and 2023, Cyprus logged an impressive 39% performance increase, while Estonia improved by 27%. These improvements vastly outpace the average 10% increase seen across the EU. 

More broadly, the 2024 report hints that efforts to bolster innovation in Europe’s Widening countries might be paying off, with eight of the 15 countries seeing their scores increase year-on-year. Cyprus, Slovenia, Czechia, Lithuania, Hungary, Poland, Slovakia and Bulgaria were among the 10 countries to see their scores go up compared to 2023.

“It’s no surprise to us that we rank tenth out of 27 EU Member States, and it’s the third year in a row that we are in the strong innovators category,” says Theodoros Loukaidis, director general of the Cyprus Research and Innovation Foundation (RIF), the national funding agency. “We’ve travelled a great distance, and we did it fast.”

What it takes

Over the past 35 years, Cyprus has transformed itself from a place with no universities into a research hub that is now home to 12 universities, of which three are public and nine private. In a population of 1.25 million there are 3,500 researchers, according to RIF estimates.

An upcoming government bill allowing foreign universities to set up branches in Cyprus looks likely to create yet more university places and attract more talent from abroad, while a growing network of innovation hubs and venture capitalists are on hand to support technology transfer and translation to the market.

Eight centres of excellence have been set up with funding from the EU’s Teaming for Excellence scheme, which supports research systems in Widening countries.

Loukaidis says Cyprus is on track to receive €500 million from Horizon Europe, having secured €240 million at the midway stage of the seven-year programme.

Policies to make Cyprus more attractive for international researchers include the Golden Knowledge visa that makes it easier for foreign research and innovation workers to obtain citizenship.

“If we had this conversation 10 years ago, there would have been very little we could have [said] about the research and innovation ecosystem,” says Loukaidis. “Today we are a strong innovator and this is primarily down to exceptional talent with extensive international experience.”

Cypriots returning after studying abroad are driving a shift towards entrepreneurialism, Loukaidis adds, while younger researchers are more interested in careers outside academia. RIF also estimates there are now 3,000 innovative SMEs in Cyprus, and 60 VC investors.

The government has also sensed an opportunity to reinvent Cyprus as a tech and research-powered economy, with the share of GDP allocated to R&D having almost doubled from 0.44% to 0.77% over the past decade. This is below the EU average R&D spend of 2.22%, but represents a jump from €83 million in 2009 to over €212 million in 2022. A new Cyprus equity fund, launched in November 2023 with €27.5 million in government funding, is support ing start-ups in sectors like digital health and climate technologies.

“Traditionally, research in Cyprus was funded by the government or programmes like Horizon,” says Sotirios Chatzis, the head of the Electrical Engineering, Computer Engineering and Informatics department at the Cyprus University of Technology. “This meant opportunities were not many for our researchers, and we had a leak of talent abroad. This changed when we got funds addressing the innovation gap, and now more and more researchers find their way into the innovation ecosystem by either [starting their own companies and] attracting venture capital, or working in companies that invest in innovation.”

Spin-outs stifled

Cyprus’s innovation ecosystem has made huge strides forward, but challenges still remain. The island is small and people often naturally look abroad for bigger career opportunities.

It is also difficult to spin research out of universities, with it often being unclear who has ownership and IP rights.

“Even seven years after us putting pressure [on the government], there are still only one or two academic institutions that have concluded their IP and spin-off policy,” says Maria Georgiadou, managing director of Cyprus Seeds, an organisation established in 2018 to support the commercialisation. “There aren’t policies in place. And without policies on how to spin out and who owns the IP, who would be an entrepreneur from academia?”

Spin outs are indeed rare. Cyprus Seeds has supported 27 projects through its programmes, which provide funding and mentorship to scientific teams. It has so far produced six spin-outs, including biotech company Gynetronics from the University of Cyprus and IoT Security Solutions Ltd, a cybersecurity startup from the CYENS Centre of Excellence.

“Across Europe, we need to do more on the innovation side,” Loukaidis agrees. “We are a research powerhouse, but we need to enhance the ability for researchers to make that transition, to protect intellectual assets and have access to funding.”