R&D&I in the Member Countries

In analysing R&D&I, not only expenditures and available human resources have been taken into account but also employment in high- technological industries and knowledge-intensive services, exports of high-technological products and licensed patents. In this way, we can measure the strength of presence of advanced technologies in the eomy alongside R&D activity. In cluster analysis, the Nordic and con-tinental countries are markedly separate from the Mediterranean and post-socialist countries.

Th e vanguard countries are unquestionably Finland, Sweden, and Germany. Here, the business sector accounts for two-thirds of high-level R&D expenditures. Particularly in Germany, these expenditures are paired with a high level of employment in advanced technological indus-tries. Sweden and Finland tend to excel more in knowledge-intensive services. Th ese countries also fi gure prominently in terms of patents per number of inhabitants compared to the other clusters.

Due to its unique circumstances, Luxembourg again carves itself a separate position. Corporate fi nancing plays a strikingly large role in moderate R&D expenditures. Th e proportion of exports of advanced technological products is high and that of knowledge-intensive services also above average.

A moderate level of R&D expenditures characterises the cluster com-prising the other continental countries, Ireland and the UK, in which the share of the business sector exceeds 50 per cent, but is still lower than the aforementioned groups. In keeping with this, there are signifi cantly fewer patents per number of inhabitants than in the vanguard countries. Th e proportion of exports of advanced technological products is high, as is the proportion of those working in knowledge-intensive services.

Th e cluster comprising post-socialist and Mediterranean countries is characterised by a low level of R&D expenditures. Th e government share of fi nancing reaches 50 per cent, while that of the business sector is accordingly low. Th e ratio of patents to the population is dramatically lower, even lower than the preceding cluster. Th e presence of multina-tional fi rms may explain the smaller-than-expected gap in employment and exports compared to the other three clusters (Table 3.2 ).

Th e horizontal axis in Fig. 3.2 shows the degree of development of countries’ R&D systems, while the vertical axis indicates the weight of high-technological products in exports, as well as the proportion of those employed in knowledge-intensive fi elds (S-stress: 0.02)

Several attempts have been made in the literature to draw up an empir-ically grounded ranking or grouping of EU or OECD countries.

Hall and Soskice ( 2001 ) argued that of the two basic types of mod-ern capitalism, the liberal market economy promotes radical innovation, while the coordinated market economy encourages incremental inno-vation. From the observation of the innovative activities of the world’s

developed economies, Taylor ( 2004 ) concluded that the aforementioned division is unsustainable. According to Akkermans et al. ( 2009 ), Hall and Soskice’s conclusion, though invalid as a principal rule, still applies to many branches of industry.

A comprehensive picture is provided by the European Innovation Scoreboard (EIS), issued annually within the framework of the Lisbon Strategy. Th e EIS report for 2008 employed a total of 29 indicators, including those applied in my study. An index made up of these indica-tors produced a ranking of the member states. Taking a fi ve-year period as its basis, the report also created clusters based on the indicators used.

Sweden, Finland, and Germany are joined as innovation leaders by Denmark and the UK. Th e group of innovation followers coincides with our third cluster (naturally without the promoted Danes and Brits). Th e Mediterranean and NMS are split among the groups of moderate inno-vators and catching-up countries (Table 3.3 ) in somewhat diff erent posi-tions than those suggested in the MDS diagram (Fig. 3.2 ). It is worth

Table 3.2 R&D&I clusters

Clusters 1. High R&D expenditures, high contribution

by the business sector

Finland, Germany, Sweden High level of employment in advanced

technologies

High ratio of patents to the population 2. Moderate R&D expenditures, high

contribution by the business sector

Luxembourg High level of exports of advanced

technological products

High ratio of US-registered patents to the population

3. Moderate R&D expenditures, moderate contribution by the business sector

Austria, Belgium, Denmark, UK, France, Netherlands, Ireland

High level of employment and exports in advanced technologies

Moderate ratio of patents to the population 4. Low R&D expenditures, low contribution by

the business sector

Bulgaria, Czech Republic, Estonia, Greece, Poland, Latvia, Lithuania, Hungary, Italy, Portugal, Romania, Slovakia, Slovenia, Spain Below-average exports and employment in

advanced technologies

Low ratio of patents to population

noting that Estonia precedes even Slovenia in the EIS ranking of innova-tive performance (UNU-MERIT 2009 ).

In the cluster analysis, I document a given situation, while the EIS report also measures growth in the examined fi ve-year period based on changes in indicators in several other European countries, as well as in the EU-28 member states.

Due to the time horizon for the cluster analysis, the results need to be compared to the 2008 EIS report. In later EIS reports, the grouping of countries altered somewhat, as did the range of indicators, but the

Fig. 3.2 Two-dimensional MDS-based representation of R&D&I

ration of the old, non-Mediterranean from other member states did not.

More recent reports will be discussed later.

In examining the literature on innovation (for example, Altuzarra et al. 2007 ; Bilbao-Osorio and Rodríguez-Pose 2004 ; Crescenzi 2005 ), it is noticeable that no matter the basis for the analysis, from a very narrow database to a thoroughly extensive one, the group of old, non- Mediterranean member states is separate from the Mediterranean and NMS. Despite the convergence documented in the EIS report, the sec-ond group will long remain far from the innovation-driven, knowledge- based economy that is theoretically the EU’s common goal.

In the new, post-socialist member states, FDI plays an undeniably important role in technological development. European research by Srholec ( 2009 ), which reaches beyond the boundaries of the EU, reveals that foreign subsidiaries are more likely to be inclined to engage in inno-vative cooperation with both domestic and foreign partners. With respect to the NMS, Chinkov ( 2006 ) came to the conclusion, based on empirical data, that the imported results of foreign R&D play a substantial role in the growth of productivity as a whole, and the growth in domestic R&D is insignifi cant.

Table 3.3 Innovation growth

Group

Growth rate (%)

Growth leaders

Moderate

growers Slow growers Innovation

leaders

1.6 Switzerland Germany, Finland

Denmark, Sweden, UK

Innovation followers

2.0 Ireland, Austria

Belgium France, Luxembourg, Netherlands Moderate

innovators

3.6 Cyprus, Portugal

Czech Republic, Estonia, Greece, Iceland, Slovenia

Italy, Norway, Spain

Catching-up countries

4.1 Bulgaria, Romania

Latvia, Hungary, Malta, Poland, Slovakia, Turkey

Croatia, Lithuania

Source : European Innovation Scoreboard 2008 (UNU-MERIT 2009 :11)

Since the beginning of the 1990s, it has become widespread practice to approach innovation as a system (Asheim and Coenen 2006 ). Th e aforementioned research studies also underline what this cluster analysis has shown: not only do the new and Mediterranean member states lag behind the old, non-Mediterranean member states in quantitative terms, but the institutional structure of their innovation systems is diff erent.

Rather than the distinction made by Hall-Soskice between incremental and radical innovation, the main source of this diff erence lies in whether the system of domestic research and development is properly advanced or if innovations enter the economy primarily through foreign companies.