State of the (Innovation) Union

Last week (June 8) the European Commission published a massive report on the state of innovation in the EU and its 27 Member States. The Innovation Union Competitiveness Report 2011 weighs in at several hundred pages, but a more digestable Executive Summary is also available.

In addition, individual country profiles can be accessed via the report's webpage. To be published every two years, the Innovation Union Competitiveness Report will contribute to the Europe 2020 Strategy by providing an in-depth analysis covering the main features of an efficient research and innovation system. The report replaces the former Science, Technology and Competitiveness Report.

Key findings
The report highlights the fact that the EU's innovation performance needs major improvements in many areas if the Europe 2020 strategy is to deliver smart sustainable growth.

Europe needs more and "smarter" investment in both public and private research and development. More research cooperation within the EU and internationally is needed, along with better use of research results, in particular a stronger, cheaper EU intellectual property regime is needed. Education systems need to be adapted to business innovation needs and innovative and fast-growing SME's need more encouragement.

"This Report underlines that the road to the Innovation Union is long and challenging, with big obstacles along the way. But it confirms that the EU has agreed the right policies to get to the end of that road. Putting the Innovation Union into practice at European and national levels is an economic 'must', as important for sustainable growth as sorting out public finances," said Commissioner Máire Geoghegan-Quinn at the launch of the report.

Worrying facts
Some disturbing trends and data are revealed by the report. In 2008, 24% of the total world R&D expenditure was performed in the EU declining from 29% in 1995. Relative to GDP, business invests twice as much in R&D in Japan or in South Korea as it does in Europe.

The development of highly-skilled people needs to be better matched with the needs of business. Only 46% of EU researchers work in the business sector compared to 80% in the US.

Weak framework conditions prevent knowledge being transformed into marketable products and services. Although the EU is the primary producer of peer-reviewed scientific publications in the world (29% in 2009) the rate of growth of Patent Cooperation Treaty (PCT) patent applications in Japan and South Korea is almost double that of the EU.

Shockingly, half of EU Member States do not produce high-tech European Patent Office (EPO) patents at all. The relatively high cost of filing and maintaining a patent in Europe is a clear barrier to successful innovation in Europe. It is estimated that an SME must spend €168000 to obtain and maintain patent protection in all 27 EU Member States. This compares to only €4000 for similar protection in the United States!