Europe’s ecosystem for research and innovation

Europe’s ecosystem for research and innovation has improved significantly in recent years, but more efforts are needed to establish a knowledge-oriented and innovation-driven economy. This is the main finding of the 2014 edition of the report Research and Innovation performance in the EU: Innovation Union progress at country level, published by the European Commission on 26 September 2014.

The report presents a straightforward analysis of the R&I performance of 33 individual countries. It provides policy-makers and stakeholders with a concise and comparative overview which allows for transparent comparisons of progress country by country. This analysis is important as EU Member States should make sure that investments in R&I are matched by an increase in their quality in order to get the most value for every euro invested. As underlined in the Commission Communication Research and Innovation as sources of renewed growth, (published on 10/06/2014, MEMO/14/405) far-reaching priority reforms are required at strategy, programme and institutional level to allow Europe to capture the next growth opportunities.

Key findings of the report include:

  • Public investment in research and innovation is key to creating the knowledge and talent that innovative firms need, and it spurs business R&I investment and growth. In the first period of the crisis, many Member States protected their R&I expenditure. Some even increased their R&I budgets, such as Germany, Denmark or several Central and Eastern European countries (notably due to the mobilisation of structural funding). But in recent years, other Member States such as Bulgaria, Romania, Croatia and Hungary cut their R&I budgets further, even though their public R&D intensity had already been well below the EU average. This risks delaying considerably the transformation of these countries into knowledge-based economies.
  • Critical structural reforms need to go hand in hand with investments in R&I in order to increase the efficiency, effectiveness and excellence of the public research system. Analysis points to the persistence of a clear ‘East-West’ science divide in Europe, with a weaker science base in all Central and Eastern European countries (as well as Cyprus and Malta). This is alongside a ‘North-South’ differential: Greece, Portugal, Spain and Italy perform just below the EU average and hold an intermediate position between Central and Eastern European countries and Northern/Western Europe.
  • Many European countries need to ensure a better match between scientific output and industry needs. While for some Member States the urgency is to increase the overall quality of their science base, others need to find ways to harness their strengths in order to create economic wealth and address societal challenges.


  • Framework conditions for business research and innovation need improving. This is the case even in Member States with the most advanced R&I systems. Key policy challenges include inefficiencies in public incentives to stimulate business R&D; lack of demand-side measures and a poor match between supply- and demand-side measures; and bottlenecks that restrict the growth of firms in innovative sectors.
  • EU performs relatively well on global scale. According to the Innovation Output Indicator, Switzerland and Japan have a clear lead in performance, but the EU is almost level with the United States. Although there was a slight improvement in performance in the EU as a whole over the period 2010-2012, it stagnated in the same period in Switzerland and the US, but moved further ahead in Japan. As a result, the EU’s performance gap narrowed with Switzerland and the US, but increased with Japan. However, it will take a longer observation period to confirm these trends.


The report “Research and Innovation performance in the EU: Innovation Union progress at country level-2014” is the third edition of the annual report issued by the European Commission’s Directorate-General for Research and Innovation. It tackles both investments in R&I and reforms within the national science, technology and innovation systems in the 28 EU Member States and several other countries. It highlights areas of scientific and technological strengths at the national level, examines developments linked to newly enacted R&I strategies and presents key indicators of research and innovation performance.

This year’s edition presents a number of new features such as an analysis of the factors underlying each country’s R&I performance, using the Commission’s new Innovation Output Indicator, as well as science and technology specialisation patterns based on the thematic priorities of the EU’s Seventh Framework Programme for R&I. Based on a holistic economic and indicator-based analysis, it provides an operational tool to stakeholders and policy-makers to support the framing of research and innovation (R&I) policies and to facilitate the monitoring of performance. In order to ensure cross-country learning and comparability, Eurostat and OECD data have been exploited, and have been complemented with data from other sources where required.