Commission launches new innovation indicator

Sweden, Germany, Ireland and Luxembourg are the member states getting the most out of innovation, according to a new indicator proposed by the European Commission. The 'Indicator of Innovation Output' measures the extent to which ideas from innovative sectors are able to reach the market, providing better jobs and making Europe more competitive. The indicator was developed at the request of EU leaders to benchmark national innovation policies, and shows that significant differences remain between EU countries. The EU as a whole performs well in an international comparison, even though it remains behind some of the most innovative economies worldwide (MEMO/13/782).

Research, Innovation and Science Commissioner Máire Geoghegan-Quinn said: "The European Union must turn more great ideas into successful products and services in order to lead in the global economy. We also have to close a worrying 'innovation divide'. The proposed indicator will help us measure how we are doing and pinpoint areas where countries need to take action."

The proposed new indicator shows a wide range of innovation output across member states (EU average set to 100 in 2010):

The top performers in the EU owe their ranking to doing well on several or all of the following factors: an economy with a high share of knowledge-intensive sectors, fast-growing innovative firms, high levels of patenting and competitive exports.

The novelty of the proposed indicator is that it focuses on innovation output. As such, it complements the Commission's Innovation Union Scoreboard (IUS) and Summary Innovation Index (SII) (IP/13/270). These assess the innovation performance of Member States and the EU more widely, against a broad set of 24 innovation indicators including inputs, throughputs and outputs.

Innovation output is wide-ranging and differs from sector to sector. The proposed indicator is based on four components chosen for their policy relevance.

• Technological innovation as measured by patents.
• Employment in knowledge-intensive activities as a percentage of total employment.
• Competitiveness of knowledge-intensive goods and services. This is based on both the contribution of the trade balance of high-tech and medium-tech products to the total trade balance, and knowledge-intensive services as a share of the total services exports.
• Employment in fast-growing firms of innovative sectors.

A comparison with some non-EU countries shows that the EU as a whole does well. Switzerland and Japan have a clear performance lead, but the EU is more or less even with the United States on innovation output.

Background

The Europe 2020 strategy for smart, sustainable and inclusive growth is underpinned by five headline indicators. One of these is to improve the conditions for Research & Development (R&D), with the aim of raising combined public and private investment levels for R&D to 3% of GDP. To complement this R&D intensity indicator, the European Council gave the Commission the mandate to develop a single innovation indicator.

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