Latest EU innovation index shows strong performance on the bloc’s borders – and Germany sagging – feeding into Brexit debate
A European Commission report shows many of the best innovators in Europe may soon be on the union’s borders, rather than inside it – with the UK, Switzerland, Norway and Israel all scoring highly on the agency’s innovation index, even as Germany slipped down the rankings.
The report, based on an annual statistical review of science and technology indicators, could further strengthen calls for the European Union to step up R&D collaboration with its neighbours, including a post-Brexit UK.
The annual data set, called the European Innovation Scoreboard, ranked Switzerland as the most innovative country in Europe, and the UK as No. 6 – with its performance rising due partly to more innovations coming from its small-business and service sectors. Israel and Norway ranked 12th and 13th, respectively.
Germany, previously ranked by the Commission as an “innovation leader”, saw its standing downgraded due to difficulties in its education and growth-company sectors. As in prior editions, the weakest performers were on the EU’s eastern flank, with Cyprus and Romania scoring lowest. Sweden, Denmark, Finland and the Netherlands continued to rank highly.
The report’s release is always a political event – and the Commission was prompt to put its preferred spin on the numbers. It highlighted the fact that the EU overall since 2010 has improved its performance by 5.8 per cent compared to the rest of the world - and is now virtually tied with the US. It ranks South Korea as the most innovative country on earth, followed by Canada and Australia.
It also highlighted the fact that, among the many indicators that go into the overall index, the EU does best in those related to science and worst in those related to commercialisation. That fits in with the current Commission refrain, as it promotes its planned €94.1 billion Horizon Europe programme, that the EU needs to put more effort into commercialising what it discovers. “This edition of the Scoreboard shows again that Europe is strong in science but underperforming in innovation,” said EU Research Commissioner Carlos Moedas, in a prepared statement.
14% UK improvement
But the UK and German results are probably the most eye-catching, given the continent’s political preoccupation with Brexit.
Since 2010, when the Commission began publishing its data this way, Britain improved its innovation performance by 14 per cent – giving it the second-best gain in Europe, after the Netherlands, and nipping past Luxembourg (which scores highly on finance and business indicators). Most of that gain happened from 2013 to 2016, and in fact the rate of improvement slowed markedly in 2017. But the underlying indicators pointed to above-average performance in education, science, start-ups and job growth. The innovation productivity of its small-business sector nearly doubled from 2014 to 2016.
Naturally, UK officials were quick to comment. “The really promising thing,” observed Dan Hodges, head of economic analysis and market insight at government agency Innovate UK, “is around what’s happened in sales of innovation products” and services. While the country’s science and education sector has long been strong, its sales of new-to-market innovations jumped to nearly twice the EU average from less than half the average in 2010. The reasons are difficult to identify but could include UK companies responding well to tough times and mounting competition by churning out newer products and services than they might otherwise have done.
Germany, by contrast, appears to be treading water. Though still one of the top innovators in Europe, its performance has been virtually unchanged since 2010 – while other European nations have improved markedly. As a result, it was downgraded by the Commission from a first-tier “innovation leader” with the UK, Nordics and Netherlands, to a second-tier “strong innovator” with Belgium, Ireland, Austria and France. German investment in innovation, small company innovations and patent applications continued strong; but the country was notably weak in the number of university graduates, foreign doctoral students and fast-growing companies it produces.
‘A pinch of salt’
The whole exercise of comparing national innovation performance is controversial among economists. The idea of publishing one, composite index number for each country was an idea originally pushed by Janez Potočnik, an economist and former EU research commissioner, who wanted a simple way to highlight to politicians whether countries are getting better or worse. Since then, a small community of statisticians has been firing rounds at the Scoreboard – and each year the Commission makes adjustments to its methodology. This has the effect, the Commission acknowledges, of making it difficult to compare years.
One group of researchers, led by Charles Edquist of Lund University, has in particular criticised the way the Commission compiles the data into one, big, headline index number. It starts, in the latest Scoreboard, with 27 sub-indicators measuring patent applications, university graduates, scientific publications, job creation, new product launches and other factors it associates with the idea of innovation. Then, with a bit of math, it combines them into one index number – giving equal weight to all 27 indicators. That, Edquist and others argue, gives a misleading impression, as the indicators are all measuring different things with different importance.
Others agree, though still find the results useful. “I always take them (composite indicators) with a pinch of salt,” said Hodges of Innovate UK. “Every country will be strong in some areas and weak in others – and all indicators are not equal. In the way they are aggregated, some of that interesting detail is lost.”
In short, Hodges said, “I wouldn’t put my faith in the headline figure, but it’s a useful indication of the trends.”