The indicator was created at the request of EU leaders to benchmark national innovation performance and support policy-makers in removing bottlenecks that prevent innovators from translating ideas into successful products and services.
Fig.1 The simple composite indicator zooming on innovation output
Commissioner Máire Geoghegan-Quinn, responsible for Research, Innovation and Science, 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 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.
The top performers score 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 UK has a strong position on the two indicators measuring employment in knowledge intensive industries and relative weight of knowledge intensive exports in all services exports. It scores less well on the indicators that measure patents, dynamic innovative firms and the share of hi-tech exports in the overall trade balance of the country.
At global level, 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.
Fig.2 Global comparison