The EU has made research and innovation a priority in recent years, but the results remain uneven.
Innovation has become a key driver of global economic competition, shaping productivity, industrial strength and geopolitical influence. In his report on the future of competitiveness, Mario Draghi warned that the EU’s overall capacity for innovation is lagging behind that of other major economies. He also emphasised that innovation is “key to pursue the green and digital transitions, necessary to reinforce Europe’s resilience, and to strengthen its position in global supply chains”.
The EU’s main challenge here is to close the innovation gap with China and the United
States. This challenge lies not only in the level of spending on innovation, but also in how quickly this spending is increasing.
In particular, China has rapidly expanded its research investment over the last two decades. Meanwhile, the United States continues to dominate many high-technology sectors.
European policymakers are increasingly stressing that, unless the investment gap is addressed and the fragmentation of
innovation systems is overcome, the continent’s long-term competitiveness will be put at risk.
Although Europe continues to produce world-class research, turning scientific discoveries into globally competitive businesses remains a challenge.
into globally competitive businesses remains a challenge.
Fragmented markets and limited access to growth financing make it more difficult for start-ups to scale than in the United States.
United States, s the Draghi report also highlights.
The EU remains an important public investor in research, with
programmes such as Horizon Europe, a 95.5 billion euros programme running from 2021 to 2027. Therefore, if the EU lags behind global leaders such as the US and South Korea, it is primarily due to lower investment from the private sector.
Research investment is rising but unevenly distributed
Within the EU, research spending has grown steadily but remains uneven across the bloc.
across the bloc.
In 2024, EU R&D expenditure accounted for 2.24% of GDP – equivalent to 403 billion euros. This falls short of the EU’s long-standing target of 3%, which is intended to boost innovation and competitiveness.
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A small group of northern and central European economies drives much of the continent’s research activity. Countries such as Sweden, Belgium, Germany, Germany, Austria and Finland
invest more than three per cent of their economic output in R&D.
In contrast, spending in parts of southern and eastern Europe, remains well below the EU average.
This has resulted in a highly concentrated innovation landscape, with a limited number of
countries accounting for a large share of Europe’s research capacity.
Patent data highlights concentrated innovation capacity
Patent activity is key to understand whether this uneven research spending translates into tangible innovation outcomes. Patents reflect a country’s inventive activity. They also show a country’s and its businesses’ capacity to exploit knowledge and research results, translate them into potential economic gains.
In terms of total patent applications, the EU is outperformed by major economies, with China accounting for almost half of the global total by 2024. However, figures on per capita performance within the EU reveal a mixed picture: Scandinavian countries are among the world’s top performers, while Southern Europe has significantly lower patent density.
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High-tech export reveals gabs in commercialisation
While patents offer an insight into inventive activity, they do not fully capture how innovation translates into economic performance. High-technology exports provide a clearer indication of this, reflecting a country’s ability to commercialise knowledge and compete in global markets.
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High-technology exports reveal a similarly uneven pattern across Europe. Countries with strong industrial and innovation bases, including Germany, Ireland and the Netherlands , account for a large share of high-tech exports, reflecting their role in global value chains and their ability to scale production. Smaller northern economies also perform strongly relative to their size, while much of southern and eastern Europe remains less integrated into hich-technology trade.
Innovation is becoming central to Europe’s defence strategy
In a speech delivered in November 2025 upon the publication of the EU’s Defence Industry Transformation Roadmap, Executive Vice-President Henna Virkkunen emphasised that innovation is also a critical component of Europe’s defence readiness. She said that disruptive technologies and their rapid development, testing and integration in defence capabilities are essential to modern warfare. The roadmap outlines the EU’s vision to modernise and scale up its defence industry by accelerating innovation, strengthening production capacity and integrating emerging technologies into military capabilities. Drawing lessons from the war in Ukraine, it proposes measures to speed up development, testing and deployment of new defence technologies while improving cooperation between EU governments, industry and research actors.
- Author: Maria Markus, Euranet Plus News Agency
