Private sector slowdown to blame for EU innovation stagnation

The Innovation Union Scoreboard is an annual report that ranks EU Member States according to their levels of innovation and assesses the EU’s overall performance in the global market.

Sweden, Denmark, Finland and Germany topped the scoreboard as the EU’s most innovative countries, while Latvia, Bulgaria and Romania remained at the bottom. However, both Latvia and Bulgaria have made significant increases in their performance since 2007, ranking first and second for countries that have improved their innovation the most.

Presenting the results in Brussels on Thursday, Carlos Moedas, EU Commissioner for Research, Innovation and Science, said that the lack of innovation growth in 2014 was due to a decline in private sector innovation activities.

‘What we have seen in the last year is that … unfortunately, things are a little bit stalled,’ he said. ‘The first question is: is it because of the science base, is it because of the resources? No. All that is still improving. Where the problem seems to be coming up is on the private side.’ 

Areas highlighted by the Commissioner as seeing a particular decline include the availability of venture capital as a percentage of economic output, and the share of small- and medium-sized companies with in-house innovation.

Breaking down barriers

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‘In the last seven years the European Union has been closing the gap of innovation when compared to the United States and Japan.’

In order to create an innovation-friendly environment for businesses, Commissioner Moedas said the EU is working to increase access to finance and lower barriers to innovation in the labour markets, product markets and judicial systems.

‘We need more investments to boost the EU’s innovation performance. This should go hand in hand with better conditions and a single market for innovative products and services in Europe.

‘Today you live in a world where speed and scale are extremely important. To have speed and scale you really have to have the right reforms in Europe so we do not have barriers between countries.’

Globally, South Korea is the top innovation performer but the EU also ranks as less innovative than the US and Japan. Since 2007 this gap has been narrowing, however, as innovation has been growing faster in the EU than in the US and Japan.

‘Indicators are not about absolute numbers, indicators are about trends,’ said Commissioner Moedas. ‘What you see is that in the last seven years the European Union has been closing the gap of innovation when compared to the United States and Japan.’