Introduction

The European Innovation Scoreboard (EIS) covers the 25 EU Member States, Bulgaria, Romania and Turkey, the associate countries Iceland, Norway and Switzerland, as well as the US and Japan. The indicators of the EIS summarise the main elements of innovation performance.

The 2005 EIS has been fully revised in collaboration with the Joint Research Centre (JRC) 1. The number of categories of indicators has been revised and increased from four to five and the set of innovation indicators has been modified and increased to 26. The correlation between indicators was evaluated which allowed to abandon several of them and add new ones allowing to capture information on new dimensions of the innovation performance. The methodology for the composite innovation index has been reviewed. The 2005 EIS Methodology Report (MR) describes and explains all changes in full detail.

The innovation indicators are assigned to five categories and grouped in two main themes: Inputs and Outputs.

Innovation Inputs:

• Innovation drivers (5 indicators), which measures the structural conditions required for innovation potential;
• Knowledge creation (5 indicators), which measures the investments in R&D activities, considered as key elements for a successful knowledge-based economy;
• Innovation & entrepreneurship (6 indicators), which measures the efforts towards innovation at the level of firms.

Innovation Outputs:

• Application (5 indicators), which measures the performance, expressed in terms of labour and business activities, and their value added in innovative sectors;
• Intellectual property (5 indicators), which measures the achieved results in terms of successful know-how.

Table 1 2 shows the 5 main categories, the 26 indicators, and the primary data sources for each indicator. In total, nine indicators are new compared to the EIS 2004. These are identified in Table 1.

Table 1. EIS 2005 Indicators

INPUT - Innovation drivers
1.1	S&E graduates per 1000 population aged 20-29	Eurostat
1.2	Population with tertiary education per 100 population aged 25-64	Eurostat , OECD
1.3 new	Broadband penetration rate (number of broadband lines per 100 population)	Eurostat
1.4	Participation in life-long learning per 100 population aged 25-64	Eurostat
1.5 new	Youth education attainment level (% of population aged 20-24 having completed at least upper secondary education)	Eurostat
INPUT – Knowledge creation
2.1	Public R&D expenditures (% of GDP)	Eurostat , OECD
2.2	Business R&D expenditures (% of GDP)	Eurostat , OECD
2.3 new	Share of medium-high-tech and high-tech R&D (% of manufacturing R&D expenditures)	Eurostat , OECD
2.4 new	Share of enterprises receiving public funding for innovation	Eurostat ( CIS)
2.5 new	Share of university R&D expenditures financed by business sector	Eurostat , OECD
INPUT - Innovation & entrepreneurship
3.1	SMEs innovating in-house (% of all SMEs)	Eurostat ( CIS)
3.2	Innovative SMEs co-operating with others (% of all SMEs)	Eurostat ( CIS)
3.3	Innovation expenditures (% of total turnover)	Eurostat ( CIS)
3.4	Early-stage venture capital (% of GDP)	Eurostat
3.5	ICT expenditures (% of GDP)	Eurostat
3.6	SMEs using non-technological change (% of all SMEs)	Eurostat ( CIS)
OUTPUT – Application
4.1	Employment in high-tech services (% of total workforce)	Eurostat
4.2 new	Exports of high technology products as a share of total exports	Eurostat
4.3	Sales of new-to-market products (% of total turnover)	Eurostat ( CIS)
4.4	Sales of new-to-firm not new-to-market products (% of total turnover)	Eurostat ( CIS)
4.5	Employment in medium-high and high-tech manufacturing (% of total workforce)	Eurostat
OUTPUT - Intellectual property
5.1	EPO patents per million population	Eurostat
5.2	USPTO patents per million population	Eurostat
5.3 new	Triadic patent families per million population	Eurostat, OECD
5.4 new	New community trademarks per million population	OHIM 3
5.5 new	New community designs per million population	OHIM 3

The Methodology Report researches in detail how to improve the methodology of calculating summary innovation indices using two different normalisation techniques (standardisation (z-scores) and re-scaling) and four different weighting schemes (budget allocation, factor analysis, benefit of the doubt and equal weighting). The Methodology Report provides a robustness analysis using a Monte Carlo experiment, which consists of a set of 300 simulations of evaluation of the composite indices, based on a random selection of the normalisation and weighting scheme applied. The robustness analysis shows that country groupings and rankings are relatively stable and insensitive to the different weighting and normalisation schemes. For the computation of the 2005 Summary Innovation Index (SII) it was thus concluded to keep the methodology as simple as possible, with equal weighting applied to all indicators.

The new methodology led to the removal of 5 redundant indicators, which were replaced with 9 new indicators that capture new dimensions of innovation performance and allow for further analysis. Considering the high political visibility of the Summary Innovation Index and the European Innovation Scoreboard, a requirement for any changes to the EIS was to ensure continuity with previous years. Figure 1 correlates the original 2004 SII scores and a recalculation of the 2004 SII using the 2005 methodology. The high correlation coefficient of 0.92 illustrates that the new methodology does not significantly change the relative innovation performance of countries as measured by the SII.
However, the position of several countries is impacted by this evolution, where Denmark, Austria, Luxembourg or Cyprus will benefit from a a better position. Iceland on the contrary will have a lower SII with the new methodology. The relative position of all other countries remain stable.

1 Joint Research Centre (JRC), Unit of Econometrics and Statistical Support to Antifraud (ESAF) of the Institute for the Protection and Security of the Citizen (IPSC).

2 Annex Table D gives full definitions for all indicators and also provides brief explanations why each new indicator was included.

3 Office for Harmonization in the Internal Market (Trade Marks and Designs): http://oami.eu.int/