Innovation Policy in Europe 2004 

What is innovation? Most people would probably say it is the direct result of the applied use of new technologies and scientific research. But sometimes it can be simpler than that, as the fast food chain McDonald’s France discovered earlier this year. Despite a decline in the global fast food market, it managed to lift its 2004 revenues by 5.5% thanks to the introduction of what it described as “innovative policies”. By adapting its restaurants to meet French tastes, McDonald’s had managed to grow its business against the odds.

Companies like McDonald’s are proving that innovative practices – with their accompanying boost to revenue growth and job creation – need not be complex or overly technical. However, public and private enterprise need to be constantly geared for change; a culture of innovation needs to be encouraged across an organisation.

Promoting such a culture across the EU has been the task of the Commission’s Enterprise and Industry DG which has recently refocused its efforts on boosting innovation and competitiveness.

Europe from a global perspective

As part of that task, it has also tried to assess how well Europe has been meeting the innovation challenge to date, and what pitfalls might lie ahead. For the past five years, the DG’s Trend Chart initiative has tracked innovation performance across Europe so as to provide stakeholders with a clearer picture of the innovation landscape in Europe.

This report takes on the ambitious task of assessing the innovation performance of all 25 EU Member States, plus eight associated and candidate countries in Europe. In the first chapter, it gives an overview of the challenges faced by all the Member States, and then, in the second, moves on to detail how each has responded to those challenges. For the first time, the report also tries to place European policy developments in a broader perspective of trends in other parts of the world, namely in neighbouring Mediterranean rim countries, in Asia and in NAFTA (the USA, Canada and Mexico).

Using the 2004 European Innovation Scoreboard and a multinational network of experts, the report highlights more than 100 specific challenges on the innovation front and rates the performance of each Member State. It also identified five key trends in recent policy developments across the EU, including significant efforts to increase the size and reach of the skilled workforce, and a push by governments to boost private investment in R&D.

Trouble at the top?

The report notes best practice policies across the EU, but does not attempt to single out any particular Member State for special mention. The report even highlights weak spots in the innovation systems of those countries considered to be the EU’s leaders in this area. For example, it comments on Finland struggle to maintain “momentum in high-tech patenting [and] in its share of employment in high-tech manufacturing”, and “the relatively low rates of non-technological innovation amongst SMEs”. Sweden’s overall performance might be “extremely good”, but the report expresses concern about emerging problems, including the declining number of science and engineering graduates.

Indeed, even the United States, the acknowledged world leader in innovation along with Japan, does not come off completely unscathed. The report quotes data which suggests that the US’s commitment to maintaining its innovation edge has waned. Countries, such as Sweden, Finland, Israel and South Korea now spend more on R&D as a percentage of GDP than the USA. In fact, the United States “is no longer assured of maintaining a leadership role”. That should give European innovators something to think about.

Read the full Trend Chart on Innovation Policy in Europe  here .