The World Intellectual Property Organisation (WIPO)’s 2017 Global Innovation Index recently revealed the top three innovation clusters were Tokyo-Yokohama, Shenzhen-Hong Kong and San Jose-San Francisco.

The report focussed on patents published between 2011 and 2015 under the Patent Cooperation Treaty (PCT) system. While there were only 6,000 PCT filings separating San Jose-San Francisco from Shenzhen-Hong Kong, Tokyo-Yokohama had more filings than the second and third place clusters combined.

An unexpected result

One interesting takeaway is European clusters appeared low in the rankings,
with Paris the highest at number 10. Frankfurt-Mannheim held 12th place, while the UK did not appear until London in 21st place.

Since the turn of the century, China has increased its global share of scientific publications in chemistry from seven to 28 per cent and its share of world trade with research-intensive goods from three to ten per cent. Other industries are also seeing similar advances from China and the US, with Europe’s share of technological advances dwindling.

It is the role of companies to turn new ideas into innovative products and solutions. However a supportive environment is crucial to achieve this. European regulation is necessary to ensure scientific progress and technological innovation, with swift adaptation of the regulatory framework. The European economy should strengthen innovation-friendly policymaking which speeds the IP application process.

Lack of investment

The US has also pulled ahead of Europe through digital advances. Today the companies dominating worldwide digital services are largely American – Google, Amazon, Facebook and Apple. The aftermath of the financial crisis also slowed Europe’s investment in research, digitalisation and education.

There are also structural reasons for this gap. The US can operate as one entity with a common language, while Europe’s single market is not as complete. Labour mobility is hampered by different languages, while regulations differ between countries for the same products.

Coming change

In 2016, the European Investment Bank (EIB) identified the investment Europe needed to make it competitive with the US and Asia. An additional €330 billion would need to be spent across research and development, advanced manufacturing technology, state-of-the-art education facilities, broadband, data centre capacity and cyber-security.

The EIB found that cash was abundant in the European economy – it only needed momentum behind new investment and risk-taking to ensure money was put towards furthering innovation. The EIB therefore began implementing the financing of a three-year program that would support €315 billion of new investment in infrastructure and innovation. If the program is successful Europe’s competitive standing could rise significantly in the future, challenging the US and Asia as a centre for innovation excellence.