Economic Impact of Innovation

The index below is a summary index of the economic impact of innovation composed of five of the Innovation Union Scoreboard's indicators:

table16

Belgium's score on this index is comparable to the average scores of the EU and of the reference group of countries. However, Belgium's score results from different situation in each indicator composing the index. On the positive side, knowledge-intensive sectors provide more jobs in Belgium than (on average and proportionally) in other Member States. Moreover, thanks to excellent trade performance in a range of research-intensive products, the contribution of medium and high-tech product exports to the Belgian trade balance has strongly increased in the last decade. On the negative side, Belgium's score is lower than EU average on the indicators “Share of knowledge-intensive exports in services exports” and “Sales of new to market and new to firm innovations as % of turnover”.

However, the low score of Belgium on the indicator “Share of knowledge-intensive exports in services exports” is largely explained by high volumes of export in some logistics, transport and trade related services which are linked to the geographical intermediation role of Belgium and which are classified as non-knowledge-intensive. Moreover, the low score of Belgium on the indicator “Sales of new to market and new to firm innovations as % of turnover” is explained by the fact that Belgium is strongly specialised in sectors with long innovation cycle as pharmaceuticals or chemicals and strongly under-specialised in sectors with short innovation cycle as IT. As the low scores of Belgium on these two indicators reflect some specificities of the industrial structure of Belgium not related to any underperformance, the situation of Belgium in terms of economic impact of innovation is more positive than the image given by the index.

While the Belgian research and innovation system seems to be effective in generating economic impacts in the sectors in which R&D investments are concentrated, the key issue for Belgium is to broaden its innovation base beyond those sectors. All Belgian regions have developed some efforts in this direction (see last paragraph on previous page). However, Belgium needs more growing innovative firms to fasten the renewal of its economic fabric and speed-up the transition towards a more knowledge-intensive and innovation-driven economy.