Science, research and innovation performance of the EU 2018
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1 Science, research and innovation performance of the EU 2018 Román ARJONA Strengthening Beñat BILBAO-OSORIO the foundations for DG Europe's's Research & future Innovation European Commission Madrid, 15 June 2018
2 2 Key messages Science and Innovation are crucial for economic and social prosperity Innovation and its impacts are changing due to digitalisation and other longer-term forces A new wave of innovation ahead of us. Digital meets physical. Large opportunities but also risks and uncertainty The fast pace of changes in innovation needs a renewed and strengthened science and innovation policy agenda
3 3 Changes in innovation dynamics are driven by long-term forces
4 4 that are changing the pace, nature and impacts of innovation... Increased complexity Concentration of benefits in Superstar firms Very rapid innovation pace change
5 5 increasing innovation divergence across firms, hindering innovation diffusion The widening labour productivity gap between global frontier firms and other firms (1) Non-financial business services M anufacturing Frontier firms (top 5%) Frontier firms (top 5%) Laggards 0.1 Laggards Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: Andrews, Criscuolo and Gal, 2016 Note: (1) The global frontier is measured by the average of log labour productivity for the top 5% of companies with the highest productivity levels within each 2-digit industry. Laggards capture the average log productivity of all the other firms. Unweighted averages across 2-digit industries are shown for manufacturing and services, normalised to 0 in the starting year. The vertical axes represent log differences from the starting year: for instance, the frontier in manufacturing has a value of about 0.3 in the final year, which corresponds to approximately 30% higher in productivity in 2013 compared to 2001.
6 TFP - compound annual growth (%), and holding back productivity and economic growth 4 3 Total factor productivity - compound annual growth, Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: European Commission - DG Economic and Financial Affairs
7 Percentage points 7 as productivity (TFP) is the crucial driver of long term economic growth Contribution to growth in GDP per capita, (annual average) Capital Total factor productivity (TFP) Human capital Labour GDP OECD non- OECD G20 OECD non- OECD G20 OECD non- OECD G20 OECD non- OECD G20 OECD non- OECD G20 OECD non- OECD G20 Science, Research and Innovation performance of the EU 2018 Source: Braconier H, Nicoletti G and Westmore B, (2014), OECD Note: (1) The non-oecd G20 countries are Argentina, Brazil, China, India, Indonesia, Russian Federation, Saudi Arabia and South Africa.
8 Percentage points 8 R&I creates new and better jobs but can affect existing ones There is no overall job destruction in Europe, but labour markets are becoming polarised, putting pressure on wages and on inequality Job polarisation - percentage point change in employment shares by skill group, High skilled Medium skilled - non routine -8.9 Medium skilled - routine Low skilled High skilled Medium skilled - non routine Medium skilled - routine Low skilled High skilled Medium skilled - non routine -9.5 Medium skilled - routine Low skilled EU Japan United States Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: OECD estimates based on EU-LFS, Japanese Labour Force Survey, BLS Current Population Survey
9 9 Europe is a global public research and scientific powerhouse
10 % 10 but less so an innovation leader, including in some forward-looking technologies New generation technologies - % share of IP5 (1) patent families filed at EPO and USPTO by type of ICT technology, and Quantum computing and telecommunication ( ) Big data ( ) Internet of things (IoT) ( ) Source: OECD Science, Technology and Industry Scoreboard 2015 Science, Research and Innovation performance of the EU 2018 Note: (1) The five IP offices (IP5) is a forum of the five largest intellectual property offices in the world (EPO, USPTO, JPO, SIPO, KIPO). They account for 90% of all patent applications filed worldwide.
11 11 and drags behind in terms of supporting transformational entrepreneurship
12 12 while significant resources are locked-in in unproductive companies 30 % share of capital sunk in zombie firms (1), % Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: OECD (Adalet McGowan, Andrews and Millot, 2017) Note: (1) Zombie firms are firms aged 10 years and with an interest coverage ratio<1 over three consecutive years. The sample excludes firms that are larger than 100 times the 99th percentile of the size distribution in terms of capital stock or number of employees.
13 Labour productivity (1) in current PPS 13 affecting Europe's bridging of the productivity gap in knowledge-intensive sectors Labour productivity (1) of manufacturing (MFG) and knowledgeintensive services (KIS) by type of sector - EU and the United States United States (2) (2015) EU (2014) Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: Eurostat, OECD Notes: (1) Value added per person employed in current PPS. (2) US: (i) Medium-low-tech MFG does not include repair and installation of machinery and equipment; (ii) High-tech KIS does not include scientific research and development and telecommunications (iii) Market and other KIS does not include employment activities. (3) Market and other KIS does not include investigation activities due to unavailability of data.
14 14 Low investment in intangible assets, such as business R&D
15 15 coupled with the need for better conditions for open science
16 16 open innovation Public-private co-authored scientific publications per million population, 2008 and EL CY PT MT PL RO BG LT LV RS TR UA BA MK AL (1) 2008 Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: EIS 2016, CWTS based on Web of Science database (March 2017 data), Eurostat, OECD Note: (1) LV, AL: 2013; US, JP, CN, KR, IL, BA: 2014.
17 billion euro 17 access to risk capital to support the creation and scale up of innovation Venture capital funds raised (billion euro) in the EU and in the United States, United States EU (1) Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: Invest Europe, NVCA / Pitchbook Note: (1) EU does not include HR, CY, MT, SI, SK.
18 18 and better functioning markets partially explain this situation. 7 Global Competitiveness Index - goods market efficiency, 2017 values are on a scale of 1 to 7 (best) Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: World Economic Forum. The Global Competitiveness Index dataset Notes: (1) EU is the unweighted average of the values for the EU Member States. (2) MK: 2016.
19 19 R&D intensity - compound annual growth (%), (2) (4) General values mask significant differences across MS. An innovation divide persists, but is more nuanced R&D intensity, 2016 and compound annual growth, BA MK ME MD CY RO TN UA MT LV TR BG PL EL LT SK HU EE HR IT RS ES IE LU PT UK CZ IS CN NO SI EU FR NL BE AT DK DE FI R&D intensity, 2016 (1) US SE CH JP KR IL Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: Eurostat, OECD, UNESCO Notes: (1) BG, CZ, EE, FR, HR, LV, LT, HU, MT, RO, SI, SK, CH, ME, MK, TR, BA, MD, UA, TN, IL, US, JP, CN, KR: (2) BG, CZ, EE, FR, HR, LV, LT, HU, MT, PL, RO, SK, MK, TR, MD, UA, TN, IL, US, CN, KR: ; SI, CH, JP: ; EL, PT, SI: ; RS: ; ME: ; BA: ; IS:
20 Top 10% highly cited scientific publications (1) (%), 2014 (citation window: ) 20 although there are still differences in the efficiency to transform investment into scientific excellence Public R&D intensity, 2014 and the top 10% highly cited scientific publications (1) 2014 (citation window: ) RO BG CY MT HU IE CN HR LV UK EL SI PL TR SK IT LU ES IL US BE PT EU FR LT NO IS JP EE CZ KR NL AT CH DE FI SE DK R² = Public R&D intensity (%), 2014 Science, Research and Innovation performance of the EU 2018 Source: DG Research and Innovation - Unit for the Analysis and Monitoring of National Research and Innovation Policies Data: CWTS based on Web of Science database Note: (1) Scientific publications within the 10% most cited scientific publications worldwide as % of total scientific publications of the country; fractional counting method.
21 21 Analytical conclusions Stronger innovation diffusion required to boost stronger productivity and economic growth, and avoid raising inequality Europe's R&I performance is improving slightly over time in most indicators Innovation Divide persists, but is more nuanced Despite this progress, Europe is far from meeting its objectives and weaknesses persist
22 22 Policy implications
23 23 Policy implications for Europe Ensuring essential investment and stimulating private investment Making regulatory frameworks fit for innovation Becoming a front runner in market-creating innovation Reconnecting R&I with citizens through EU-wide R&I missions Supporting the dissemination of innovation throughout the Union Investing in skills and empower universities to become more entrepreneurial and interdisciplinary
24 Visit
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