12° Nicosia,
15 July, 2024

Cyprus ranks among top innovators in Europe

Innovation score rises above EU average, but challenges remain in state support and venture capital

George Kakouris

George Kakouris

Among the best-performing countries in terms of innovation between 2023 and 2024 is Cyprus, according to the latest European Commission data. Cyprus recorded an innovation score slightly above the EU average, with a relatively strong performance in cooperation between innovative SMEs, but weaknesses remain in terms of direct and indirect state support for research and development.

The data also show an increase in the focus on environment-related technologies and the uptake of broadband internet compared to the previous year, although there has been a decline in venture capital.

Compared to 2017, the data show a significant increase in international co-publications in research and public-private collaboration, but a decrease in exports of medium and high-tech products.

These findings are included in the annual European Innovation Scoreboard, which assesses performance in EU Member States, neighboring countries, and international competitors in innovation. The data capture the relative strengths of each country based on 32 indicators related to the economy, entrepreneurship, innovation sectors, the legislative framework, and factors such as climate change and demography.

The overall picture of the four indicator categories provides a good overview of the evolution of innovation in Cyprus. Specifically, in indicators related to the framework for the development of innovation (human resources/education, research sector, digitization), Cyprus shows an overall improvement. The same is true for indicators related to innovation activities (presence of innovative firms, collaboration, patent and design intellectual property rights).

However, the picture is more mixed for indicators concerning investment, with a decline in investment by the private sector and government, although investment in the employment of technology specialists shows improvement. Several indicators relating to the impact of innovation are also negative, particularly in terms of exports.

Among the countries in the ranking, which includes EU member states and 12 neighboring European countries, Cyprus is in 13th place and is one of 15 countries where the innovation index increased in 2024 to 116.9 (up 3.3 points compared to 2023, and 38.9 points compared to 2017).

In the categorization of countries, Cyprus is among the "strong innovation performers" (with an index between 100% and 125% of the EU average). Cyprus’s index is 106.3% above the average, placing it in the category below the leading countries (performing above 125% of the average).

The pan-European trends among the "strong innovation performers," including Cyprus, show strengths in innovation ecosystems, while the leading countries excel in digitization and attractive research sectors.

Cyprus stands out among the different regions of Europe, as it is one of the countries in southern and eastern Europe in the strong category, unlike most of its southern neighbors who are among the moderate (70% to 100% of the average) and emerging countries (below 70%). The strong and pioneer countries tend to be in northern and western Europe.

The report also lists the relative strengths and weaknesses of each country. Cyprus is considered to be in a relatively advanced position in terms of public and private sector co-publications in research, international scientific co-publications, and innovative small and medium-sized enterprises (SMEs) collaboration.

Cyprus's weaknesses relate to direct and indirect public support for research and development in enterprises, expenditure on research and development by enterprises themselves, and the ratio of innovation expenditure per employee.

Since 2017, Cyprus has recorded a significant increase in terms of scientific publications with public-private collaboration, international research collaborations, and collaboration between SMEs. However, there has been a decline in exports of medium and high-tech products and a worsening situation in terms of microparticle emissions and resource productivity.

Compared to 2023, there was a significant increase in indicators related to environment-related technologies, broadband penetration in the country, and the employment of ICT specialists. However, there was a decrease in venture capital expenditure, expenditure on innovation other than research and development, and exports of medium and high-tech products.

In general, innovation indicators in the European Union are improving, with a 10% increase from 2017 and a 0.5% increase from 2023. At the Member State level between 2023 and 2024, an increase in performance was recorded in 15 Member States, a decrease in 11, and no change in one. Denmark was the most innovative country in 2024, as it was in 2023, followed by Sweden, which was the leading country from 2017 to 2022.

Globally, the EU has a strong position in terms of the performance of innovative SMEs, especially concerning technologies related to environmental protection. However, Europe faces significant challenges from global competition in intellectual property, collaboration between innovative SMEs, and spending on research and development in the business sector. Globally, Switzerland is the most innovative country in Europe, South Korea is the most innovative competitor, and China has overtaken Japan and is closing the gap with the EU.

[This article was translated from its Greek original and edited for clarity]

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