Innovation
Innovation Union Scoreboard 2015: Sweden, Denmark, Finland and Germany are on top
By Michael Hennigan, Finfacts founder and editor
Jun 1, 2015 - 3:12 PM

In the overall ranking for the European Commission's Innovation Union Scoreboard 2015 (IUS), Sweden is once more the innovation leader, followed by Denmark, Finland and Germany. The fastest growing innovators are Malta, Latvia and Bulgaria, Ireland (see below), the UK and Poland. In Europe, Switzerland, which is not a member of the European Union is the continent's top innovator. In global a comparison, the EU continue to be outperformed by the US, Japan and South Korea.

The Commission says the most innovative countries perform well and clearly above the EU average in all areas: from research and higher education systems, through business innovation activities and intellectual assets up to innovation in SMEs and economic effects, reflecting balanced national research and innovation systems.

The Innovation Union Scoreboard provides a comparative assessment of the research and innovation performance of the EU member states and the relative strengths and weaknesses of their research and innovation systems. It helps member states assess areas in which they need to concentrate their efforts in order to boost their innovation performance. In addition, the IUS covers Serbia, Former Yugoslav Republic of Macedonia, Turkey, Iceland, Norway and Switzerland. On a more limited number of indicators, available internationally, it also covers Australia, Brazil, Canada, China, India, Japan, Russia, South Africa, South Korea and the US.

What are the indicators used for the Innovation Union Scoreboard?

The Innovation Union Scoreboard, following the methodology of the previous editions, captures a total of 25 different indicators, distinguishing between eight innovation dimensions and three main categories of indicators:

• Enablers: the basic building blocks which allow innovation to take place - human resources, open, excellent and attractive research systems, and finance and support.
• Firm activities: which capture innovation efforts in European firms - firm investments, linkages and entrepreneurship, and intellectual assets.
• Outputs: show how this translates into benefits for the economy as a whole - innovators and economic effects.

TABLE Innovation Union Scoreboard dimensions and indicators.pdf

Four different performance groups for member states

The Innovation Union Scoreboard 2015 places member states into four different performance groups (Figure 2 above):

• Denmark (DK), Finland (FI), Germany (DE) and Sweden (SE) are “Innovation Leaders” with innovation performance well above that of the EU average;
• Austria (AT), Belgium (BE), France (FR), Ireland (IE), Luxembourg (LU), Netherlands (NL), Slovenia (SI) and the United Kingdom (UK) are “Strong innovators (Innovation followers)” with innovation performance above or close to that of the EU average;
• The performance of Croatia (HR), Cyprus (CY), Czech Republic (CZ), Estonia (EE), Greece (GR), Hungary (HU), Italy (IT), Lithuania (LT), Malta (MT), Poland (PL), Portugal (PT), Slovakia (SK) and Spain is below that of the EU average. These countries are "Moderate innovators";
• Bulgaria (BG), Latvia (LV) and Romania (RO) are “Modest innovators” with innovation performance well below that of the EU average.

The fastest growing innovators are Malta (MT), Latvia (LV) and Bulgaria (BG). Compared to last year, innovation performance has increased most rapidly in these Moderate and Modest innovator countries, underscoring a gradual convergence of innovation performance across EU member states.

Ireland

The European Commission's assessment on Irish innovation is not reliable due to massive tax avoidance while almost half the staff numbers in the ICT (information and communication technologies) sector are not techies but work in administration for mainly large American companies such as Apple, Google and Facebook.

"Exports in knowledge-intensive services" mainly are fake and result from Double Irish tax strategies that for example in respect of Google, it books about 40% of its annual global revenues in Ireland. Se here for more detail.

The European Commission also includes American companies that have become Irish for tax purposes and are incorrectly treated as part of Irish R&D spending even though they may not spend a cent on R&D in Ireland.

The Commission says: "Ireland is an innovation follower. Irish innovation performance has been increasing until 2011 and after a temporary decline in 2012 reached its highest level in 2014. Performance relative to the EU has improved from 10% in 2007 to 13% above the EU average in 2014.

Ireland's relative strengths are especially in Innovators and Human resources. Ireland performs well above the EU average on License and patent revenues from abroad and International scientific co-publications. Other strong performing indicators are Exports in knowledge-intensive services, SMEs innovating in-house, Employment in knowledge-intensive services and Population with tertiary education. Relative weaknesses are in Community designs, Non-R&D innovation expenditures and R&D expenditures in the public sector. Performance has increased considerably in License and patent revenues from abroad (28%), International scientific co-publications (7.7%) and New doctorate graduates (7.6%). Performance has declined most in Non-R&D innovation expenditures (-12%)."

Reality Check: Irish patent filings at European Patent Office fell in 2014

Irish resident patenting not suggestive of 'world class knowledge economy'

According to an Irish Government report this year:

• Foreign-owned firms accounted for 66.6% of total R&D expenditure in 2012. Ireland's enterprise R&D expenditure is dominated by a relatively small number of firms. Around 300 firms account for almost 70% of total R&D expenditure in 2012. 13% of foreign-owned firms (107 firms), each spending over €2m, account for 88% of R&D spending in the foreign-owned sector in 2012;
• Comparatively lower absorptive capacity of indigenous SMEs;
• A large proportion of foreign-owned firms (54%) are not R&D active;
• The pattern of R&D expenditure by sector for Irish-owned firms differs markedly from the pattern of R&D expenditure, by sector, for foreign-owned firms. The four sectors 'Chemicals', 'Computer, Electronic and Optical Products', 'Medical Device Manufacturing', and 'Computer Programming', together account for around 80% of R&D expenditure by foreign-owned firms. By contrast, these four sectors together account for only 15% of R&D expenditure by Irish-owned firms;
• Most R&D expenditure in Irish-owned firms (72%) is being carried out in sectors that are not significant exporters;
• Exports from indigenous enterprises are largely from low R&D-intensive and non-R&D active sectors. The top three exporting sectors for indigenous firms - Food, Drink & Tobacco, Other Traditional Manufacturing, and Business Services - account for around two thirds of sales and exports of Irish-owned firms. Together, however, these three sectors account for only 28% of R&D expenditure in Irish-owned enterprise agency supported firms;
• Ireland's share of firms engaged in new product and services development, at 22% of innovating firms, appears to be low when compared to similar data for other countries;
• There is evidence of low levels of formal collaboration between firms and with higher education institutions.