1. Research and Innovation Research and Innovation 4.3 Innovation Headline Indicator [RESTRICTED TO ERAC MEMBERS] Clara de la Torre, Pierre Vigier, DG Research and Innovation ERAC, 6 September 2012

2. Research and Innovation Research and Innovation 2 Headline Indicators Innovation Union Scoreboard Innovation Union Competitiveness report Where do we want to go? Where do we stand? How can we get there? Innovation Union Scoreboard: http://ec.europa.eu/enterprise/policies/innovation/files/ius-2011_en.pdf Innovation Union Competitiveness Report: http://ec.europa.eu/iuc2011 EU STI monitoring 2010-2020

3. Research and Innovation Research and Innovation 3 Innovation Headline Indicator: the origins Europe 2020: develop an innovation headline indicator next to the R&D intensity target Innovation Union (October 2010): share of fast-growing innovative companies in the economy European Council of 4 February 2011: "quickly develop a single, integrative innovation indicator" DG RTD, DG ENTR, Eurostat, OECD started to work on developing the indicator in November 2010

4. Research and Innovation Research and Innovation 4 Objective of the indicator The Innovation Headline Indicator should inform on the capacity of an economy to create and maintain high quality jobs in economic sectors that are promising for the future in terms of innovation, growth and employment.

5. Research and Innovation Research and Innovation 10 criteria for the indicator 1. Relevance: Focuses on innovation 2. Relevance: Considers economic impact (e.g. growth, jobs) 3. Relevance: Takes into account all forms of innovation 4. Policy impact: Measures capacity to change through data on fast-growing innovative firms 5. Policy impact: Measures capacity to change through yearly changes related to policies. 6. Sizeable: Covers a significant part of the economy. 7. Stable and objective: Changes in the value derive from changes in innovation policies rather than from other factors (e.g. economic cycle) 8. Internationally comparable 9. Credible 10. Easily communicable 5

6. Research and Innovation Research and Innovation Two dimensions to be combined in the indicator 1) High-growth of enterprises 2) Innovation 6

7. Research and Innovation Research and Innovation 1) High-growth enterprises 7 Builds on work by the Entrepreneurship Indicators Programme (EIP), a joint OECD/Eurostat programme that started in 2006 Definition of High-growth enterprises for the innovation indicator: o average annual growth (in terms of employment) greater than 10% over a 3-year period o 10 or more employees at the beginning of the observation period Definition internationally tested and developed by the EIP (with 20% instead of 10% for the growth threshold) 10% was preferred for the innovation indicator in order to account for a greater share of the economy, in particular in times of economic crisis. Based on business registers' data Good international comparability of the data

8. Research and Innovation Research and Innovation 2) Innovation 8 Sectoral definition of innovation, so that the innovation indicator: o Takes into account the economic structure of each country o Defines an "innovation frontier" for each economic sector o Is based on reliable data Innovation coefficients are assigned to economic activities (NACE, 3-digit level) based on: o Community Innovation Survey (CIS) data o Knowledge Intensity of Economic Activities (KIA) data o Labour productivity (PROD) data 3-digit level, a precise, fine-grained economic breakdown: o Smart specialisation o Structural change within 2-digit sectors o Reliable data

9. Research and Innovation Research and Innovation International comparisons 9 Non-European countries, incl. the US, have been associated since the start in November 2010 (through OECD/EIP) Brazil, New-Zealand, China, India communicated data for testing definition and volatility of variables (autumn 2011) Important difficulties linked to the absence of business registers in Asian countries might impair the good international comparability

10. Research and Innovation Research and Innovation 10 First data collection on employment in high-growth enterprises led by Eurostat took place in 2011 It provided data for one reference year (2009) Second data collection on-going (deadline 10 September 2012) It will provide two additional reference years: 2008 and 2010 (and 2011 in some cases) Support from National Statistical Offices is crucial Production of the indicator: current status

11. Research and Innovation Research and Innovation 11 Next steps (indicative) End-September/Early October: Calculations with the new data collected which will provide the first short time series: 2008, 2009, 2010 (and 2011 for some MSs) Second half of October: Member States' seminar to discuss methodology and draft proposals End of 2012/beginning of 2013: Proposal to be made by the Commission