GOLDEN GROWTH
Figure 5.4: In Europe’s catching-up economies innovation is not always R&D (non-R&D innovation expenditure, percentage of turnover of all enterprises)
Note: Data refer to different years by country. Source: European Commission 2011b.
transition economies of the former Soviet bloc, now are trying harder to adapt advanced technologies to local circumstances. The Community Innovation Survey collects data on the share of companies undertaking innovative activities, measuring countries’ share of all companies undertaking some kind of innovation, collaborating with partners outside Europe (China, India, and the United States), and collaborating with other companies or research institutions as opposed to doing it in-house (table 5.1). The survey measures collaboration with other companies to gauge the extent of innovation spillovers within and outside Europe. Several observations follow from looking at this survey alongside parallel data on small and medium enterprises (SMEs) (from the IUS but also based on Community Innovation Survey data). There is a high correlation between the overall share of companies innovating and the share of SMEs innovating (0.85). The country with the largest share of companies innovating overall is Germany (close to 80 percent). The lowest proportion of innovating companies, as well as innovating SMEs, is in the transition economies of Eastern Europe: Latvia, Poland, Hungary, Lithuania, Bulgaria, and Romania. There is also a close correlation between the share of companies undergoing process and product innovation and the share undertaking marketing and organizational innovation (0.79). As Hall (2011) summarizes, at the firm level, distinguishing the type of innovation is important, because firms may have different effects on productivity. At the country level, the data suggest countries that have innovative firms tend to have more of innovation overall. The share of companies collaborating with others is also consistent across all firms and the subpopulation of SMEs (correlation of 0.81). Top performers are the United Kingdom, Denmark, Belgium, Estonia, and Slovenia. The least cooperation takes place in Romania, Latvia, and Bulgaria.10 German and Italian companies are far less likely to cooperate and consequently appear to be doing most of their innovation in-house. When looking at where companies’ partners are located, a distinct group of countries emerges that cooperate more internationally than others. This group includes Finland and Sweden as
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