European Innovation Scoreboard 2024: How does Portugal stand?

The Report on Innovation in the European Union reveals that, in the last year, 15 Member States registered an increase in their performance.

But what exactly is the European Innovation Scoreboard?

The European Innovation Scoreboard (EIS) is published annually since 2001 and provides a comparative assessment of the research and innovation (R&I) performance of European Union (EU) Member States, European neighbouring countries, and selected third countries (global competitors).

 It helps stakeholders assess areas where they should concentrate their efforts to improve innovation performance, taking into account the national socio-economic context (which is captured by a complementary set of structural indicators to help interpret the results). The EIS results can help reveal which dimensions of national innovation systems are particularly weak or strong and which, therefore, should be the subject of attention by policymakers.

European Innovation Scoreboard 2024: Who rises and who falls?

The EIS 2024 is the fourth edition applying the current measurement framework, introduced in 2021, of 32 indicators. The report uses updated data for the period 2017-2024 regarding all EU Member States and 12 European neighbouring countries, including Moldova for the first time. It also compares the EU's performance, using a smaller set of 19 indicators, with that of 11 global competitors.

This year's edition reveals that 15 European Union Member States, including Portugal, registered an increase in the innovation index in the last year.

Portugal remains in the "Moderate Innovators" category, demonstrating a slight but consistent growth in its innovation index. Portugal's summary innovation index, relative to the EU in 2017, is 91.8%. Despite this increase, Portugal occupies the 23rd position in the ranking, a significant drop compared to the 18th position occupied in 2023. This performance is lower than the average of "Moderate Innovators", which is 84.8%. Furthermore, Portugal's growth has been lower than the EU average, with an increase of only 0.5 percentage points compared to the previous year, whilst the EU average increased by 10%.

Since 2017, Portugal has registered an increase of 4.3 percentage points, reflecting stable progress in several dimensions, such as international scientific co-publications, the percentage of doctorate students, digitalisation, and broadband penetration. Direct and indirect State support for business Research and Development (R&D) is another strong point, encouraging the development and implementation of new technologies.

On the other hand, the performance of SMEs introducing product innovations has decreased by more than 69% since 2017, which highlights the need for greater support and incentive for this vital sector of the economy. Also among the points to improve are air emissions by fine particulate matter, innovation expenditure per person employed, and exports of knowledge-intensive services.

The drop in the 2024 ranking indicates that, despite advances, Portugal needs to intensify its efforts to keep up with the pace of innovation of other EU Member States.

Other Highlights of the Report

Denmark stands out as the most innovative country in the EU, followed by Sweden. Estonia, in turn, has evolved into a “Strong Innovator”, demonstrating significant growth since 2017. Outside the EU, Switzerland remains the most innovative European country, while South Korea leads globally.

The report also points out areas where the EU faces challenges, especially in comparison with global competitors, such as intellectual assets, collaboration between innovative SMEs, and R&D expenditure in the business sector. It further emphasises the importance of innovation for economic growth and global competitiveness. Policies based on concrete data, such as those presented in the European Innovation Scoreboard, are fundamental to strengthening innovation across Europe and maintaining its competitive position worldwide.

The Role of Financial Incentives and Tax Benefits

Financial Incentives and Tax Benefits are crucial to boosting the performance of Portuguese SMEs that introduce product innovations. These economic instruments provide the necessary resources for companies to invest in research and development (R&D), acquisition of advanced technologies, and training of qualified human resources. Specifically, Tax Benefits, such as the Tax Incentive System for Business Research and Development (SIFIDE), offer significant tax deductions to companies investing in R&D, substantially reducing the costs associated with innovation. This financial support creates a more favourable environment for risk, allowing SMEs to invest in new ideas and technologies without compromising their financial stability. As a result, companies are capable of developing more competitive and innovative products, contributing to economic growth and job creation in the country.

On the other hand, European Funds, whether via RRP or Portugal 2030, play a fundamental role in intensifying the efforts of Portuguese SMEs to keep up with the pace of innovation of other European Union Member States. These resources allow SMEs to benefit from incentives, most of them non-repayable grants, to improve their productive capacities, develop innovative, digital, and sustainable solutions, especially based on R&D results, increase qualified employment, produce new goods and services, or improve manufacturing, logistics and distribution, organisational, or marketing processes or methods.

This will allow for the production of tradable and internationalisable goods and services, generators of greater added value, facilitating or reinforcing entry into new markets.

The combination of European Funds with Tax Benefits such as SIFIDE creates a robust support ecosystem, which not only encourages innovation but also facilitates its implementation and commercialisation. In this way, Portuguese SMEs are better equipped to compete globally, accelerate their technological modernisation, and contribute to a more cohesive and innovative European economy.

For more information on the European Innovation Scoreboard 2024 and Portugal's performance, consult the full report available on the European Commission website.