European Innovation Scoreboard: Base Findings

One measure of innovation efficiency is the ability of firms to translate innovation inputs into innovation outputs. The ratio between the EIS composite index for inputs (education, investment in innovation, etc) and outputs (firm turnover coming from new products, employment in high tech sectors, patents, etc) provides a measure of this relationship for national innovation systems. The composite indicator for Inputs is computed as the average of the 16 indicators covered in Innovation drivers, Knowledge creation and Innovation & entrepreneurship; the composite indicator for Outputs is computed as the average of the 10 indicators covered in Applications and Intellectual Property. Table 2 shows the ranking of countries based on their SII scores and the composite indicators for Inputs and Outputs. Finland , Sweden and Switzerland are leading in both Inputs and Outputs.

Table 2. Input, output and SII ranks

	SE	CH	FI	DK	DE	AT	BE	UK	NL	FR	IS	LU	IE	NO	IT	EE	SI	HU	ES	CY	PT	LT	CZ	BG	PL	SK	EL	LV	RO
INPUT	1	3	2	5	7	9	6	8	11	12	4	18	17	10	20	13	16	19	22	14	21	15	27	23	25	28	26	24	29
OUTPUT	2	1	3	4	5	7	12	11	8	10	16	6	9	15	13	22	20	18	14	25	21	28	19	26	24	17	27	29	23
SII	1	2	3	4	5	6	7	9	8	10	11	12	13	14	15	16	17	18	19	20	21	22	23	24	25	26	27	28	29

Many countries have similar rankings on both Input and Output performance. The most noteworthy exceptions are Belgium , Iceland , Norway , Estonia , Cyprus , Lithuania and Latvia , which all rank much better on Inputs than on Outputs. Luxembourg , Ireland , Italy , Spain , Czech Republic , Slovakia and Romania all score much better on Outputs. These results should, however, be interpreted very carefully because many of the Output indicators measure intellectual property, where there is an enormous range in performance (see Figure 6).

Figure 7 graphs the composite index scores for Inputs against the scores for Outputs. The results give an indication of the efficiency with which a country transforms its innovation inputs (education, investment in innovation) into innovation outputs (turnover coming from new products, employment in high-tech sectors, and patents). Despite the fact there is no theoretical basis for assuming a linear relationship, and several aspects of innovation may only be partially covered by the EIS, this analysis is a first contribution to the discussions on the efficiency of innovation systems in Europe .

Countries above the diagonal line perform better on outputs than on inputs, suggesting that they are more efficient at transforming inputs into outputs than countries below the diagonal line. The picture is very diverse, with both highly innovative countries according to the SII, such as Germany and Finland , and mid performing countries such as Italy , falling above the diagonal line. On the other side fall most of the new Member States, with relatively large investments but poor performance on outputs. However, innovation is a long-term process and the evolution of the output performance of these countries will likely improve in the years to come, based on current investment in inputs. Among the more advanced countries, Iceland is an example of a country that is a poor performer on applications, despite a favourable general business environment with high investments in R&D and a good education level. This is partly explained by the emphasis in Iceland on long-term innovation strategies, based on biotechnology and the hydrogen economy, that have yet to pay off.

The receptiveness of a country's population might be one explanation for the fact that some countries perform relatively better on outputs and other countries on inputs. The section on Innovation demand shows that most countries with above average shares of citizens attracted by new products and services also have output/input rates above European trend. Similarly, countries with below average shares of citizens attracted by new products and services have below average output/input rates.