MUNI ECON Exploring the dynamics of innovation: a comparative study of Nordic and western European countries 1 26th International Colloquium on Regional Sciences Ramil Namazov Department of Regional Economics Faculty of Economics and Administration Masaryk University Leyla Shahvaladova Department of Economics Faculty of Economics Azerbaijan State University of Economics Table of contents 1. Research topic and Abstract 2. Objectives and Keywords 3. Literature review 4. Objectives and aim 5. Methodology 6. Results 7. Conclusion 8. References 2 26th International Colloquium on Regional Sciences IIUN I ECON Research Topic (Abstract) The study aims to employ a comparative analysis of various indicators such as R&D expenditure, patent applications, human resources in R&D, and employment in high-tech sectors to identify similarities and differences in innovation performance between the two groups of countries: the Nordic countries (Finland and Sweden) and Western European countries (Netherlands and Belgium). The researchers collected data from Eurostat to conduct the analysis. The methodology used a comparative approach to identify notable trends or differences between the Nordic and Western European regions based on results from innovation indicators. While the researchers were able to present data on human resources in science and technology (HRST) and the percentage of employment in high-tech sectors for NUTS 2 regions, other two indicators gross domestic expenditure on R&D and patent applications are analyzed from country perspective due to the lack of data available for some regions. Nonetheless, using indicators for both country and NUTS 2 provides valuable insights into the innovation performance from both a country and regional perspective. The study finds that Nordic countries generally perform better in terms of innovation indicators in high sectors compared to the other Western European countries. MUNI 3 26th International Colloquium on Regional Sciences Objectives and Keyword Objectives: •Research and development expenditures •R&D personnel •Patents •Human resources in science and technology Keywords: R&D, science and technology, patent, Nordic countries, Western European countries 4 26th International Colloquium on Regional Sciences MUNI ECON Literature review Moutinho et al. (2015) - industrial sectors that have a high proportion of R&D employment often have numerous new and rapidly growing companies. Dziallas and Blind (2019) highlighted the importance of selecting appropriate innovation indicators based on the stage of the innovation process and the specific context of the innovation Onea (2020) showed that inputs such as R&D expenditures, human resources, and intellectual property are positively associated with innovation outputs such as patents, new products, and exports. 5 26th International Colloquium on Regional Sciences MUNI ECON Literature review Barbero et al. (2021) proposed a conceptual framework for understanding the relationship between decreasing returns to scale and innovation. Oort (2017) highlighted the importance of spatially bounded externalities in shaping urban growth and innovation. Hall and Mairesse (1995) took R&D as the main innovation indicator in their study. Archibugi and Coco, A. (2004) added patent and research publication to this list in their research. Shi, and Yang (2022) additionally used innovation surveys as indicators in their research. 6 26th International Colloquium on Regional Sciences MUNI ECON Literature review - Klofsten et al. (2015), highlighted some regions in Nordic countries are more successful than others in fostering innovation and entrepreneurship, which can lead to uneven development. - As noted by Berglund and Johansson (2007), while the Nordic countries are known for their high levels of gender equality and social inclusion, there is still work to be done to ensure that underrepresented groups have access to resources and support for innovation. Addressing these diversity and inclusion challenges will require efforts to promote greater representation of underrepresented groups in innovation ecosystems and to remove barriers to their participation According to a study by Hedner et al. (2010) Nordic incubators often prioritize companies that have a positive social or environmental impact, and many offers specialized support for green or social ventures. MUNI 7 26th International Colloquium on Regional Sciences _ . . .. Objectives and aim The overarching objective of this research paper is to compare the innovation performance of two groups of countries - the Nordic countries (Finland and Sweden) and Western European countries (Netherlands and Belgium). This objective is achieved by using various indicators such as R&D expenditure as a percentage of GDP, patent applications, human resources in R&D, and employment in high-tech sectors to compare the innovation performance of these countries. By conducting a comparative analysis of these indicators, the aim is to identify similarities and differences in innovation performance between the two groups of countries, and provide recommendations for policymakers and stakeholders in these countries to enhance their innovation performance. 8 26th International Colloquium on Regional Sciences MUNI ECON Methodology Nordic countries (Sweden and Finland) and Western European countries (Netherlands and Belgium) were selected for comparison based on their geographical proximity and similarities in their economic and social systems. We then compared the regions based on several indicators related to R&D expenditure, patent applications, human resources in R&D, employment in high-tech sectors. For the country comparison, data was collected for R&D expenditure and patent applications to the EPO by country of applicants and inventors. For the NUTS 2 regions comparison, data was collected on human resources in science and technology (HRST) by NUTS 2 regions and employment in high-tech sectors and both data were collected from Eurostat. Researchers used a comparative approach to identify similarities and differences between the Nordic countries and Western European countries based on results from innovation indicators. MUNI 9 26th International Colloquium on Regional Sciences _ . . .. Methodology To compare R&D expenditure as a percentage of GDP between 2016 and 2020, researchers calculated the average and median values for Nordic and Western European regions to compare their innovation performance. To analyze human resources in science and technology (HRST) and employment in high-tech sectors in NUTS 2 regions ranked method is used based on these indicators and presented the results in tables to identify similarities and differences between the Nordic and Western European regions. It is important to note that due to the lack of data available for some NUTS 2 regions, only two indicators - human resources in science and technology (HRST) and the percentage of employment in high-tech sectors - were able to be presented for these regions. However, using indicators for both country and NUTS 2 regions provide valuable insights into the innovation performance from both a country and regional perspective. 10 26th International Colloquium on Regional Sciences MUNI ECON Results Gross domestic expenditure on R&D (GERD) Belgium, Netherlands, Finland, and Sweden, have all increased their expenditure on Research and Development (R&D) as a percentage of gross domestic product (GDP) between 2016 and 2020. In 2020, Sweden had the highest expenditure on R&D as a percentage of GDP at 3.49%, followed by Belgium at 3.35%, Finland at 2.91%, and the Netherlands at 2.31%. Based on calculation of the average and median expenditure on R&D as a percentage of GDP for both groups of countries over the period 2016-2020: Nordic countries (Finland and Sweden) Average: 3.14% Median: 3.32% - Western European countries (Belgium and the Netherlands) Average: 2.47% Median: 2.31% MUNI 11 26th International Colloquium on Regional Sciences Figure 1. GERD by sector of performance and fields of R&D Source (as a percentage of gross domestic product (GDP)) 4, 3,5 3, 2,5 1,5 1, 0,5 2016 2017 2018 Belgium Finland 2019 Netherlands Sweden I I 2020 12 26th International Colloquium on Regional Sciences MUNI ECO Human resources in science and technology (HRST) NUTS 2 regions in Nordic countries - The highest HRST values are seen in Stockholm. The Helsinki-Uusimaa and Lansi-Suomi regions of Finland have consistently high HRST, with Helsinki-Uusimaa coming in second after Stockholm in most years. NUTS 2 regions in Western Europe countries - Regions with high HRST values include Prov. Vlaams-Brabant, Utrecht, and Noord-Holland and regions with lower HRST values include Friesland (NL), Zeeland, Prov. Hainaut, Limburg (NL), Pohjois-ja Ita-Suomi, and Smaland med oarna. These regions have HRST values consistently below 50. The ranking suggests that the Nordic countries are leading in terms of human resources in science and technology, with several regions consistently ranking high in the HRST score. On the other hand, some Western European countries have regions that are lagging behind in terms of human resources in science and technology, indicating that there may be a need for policies that promote education and training in these fields in these regions. MUNI 13 26th International Colloquium on Regional Sciences r o n i\i r_ o u i\i Table 1. Human resources in science and technology (HRST) by NUTS 2 regions (Percentage of population in the labour force) M IS 1 JlHfc UM ziujh 2..... 20H SLuckbulm fc4.2 64.9 6S.& 67.7 11 L'l ---iii.- L Ut-uniLH 62. L '■: uihrd-MnilLHJi4i 4fc.fi 57.2 59J 60.1 .■ i ■' ibSi 57.7 58.1 J7.L VbbVLri^L1 JDiar 4T.£ Sl.4 *.!.!< I-El-ITl- Suihini 47.4 4K.9 5()J U.L ■! h l-11L l-1 -j; 11 l ü 4fc.fc 48.9 50.9 51.9 \u\ NrJ-tLrj.il» i 1 h- 1 4fc.fi 4X.4 ■,.1 J2.L I'm*. I.iinlhur^. Ilil.l Ii- i 47.8 47.3 49:2 11.fc 1.- 1 48.2 49.3 51.9 U.L Prm. L.uiiniln.iury 4il 46.5 45J 5ÜJJ 12.9 Kruv WchI. "h ihIl'j^ ii 4JU 48.5 47.» 47J m.H >urra MlUuiwri|t 4J.T 4J.S 469 45J 47.fc l:- ü 4M 1 ■ ■ : 1 _ 44J 4(iJ 4A.L I'niv Iliiijiiiul 42.7 ::■ : 4i. ;: i 41.4 4.VK 4*.fc ikKjr^t-: A uLhors" t-akuJuLiim with ütslLL irunn EurmCuC [2 LCI} 14 26th International Colloquium on Regional Sciences I ECON The percentage of employment in high-tech sectors Percentage of employment in high-tech sectors for various NUTS 2 regions in Europe for the years 2016-2020.The regions with the highest employment in high-tech sectors are Helsinki-Uusimaa, Stockholm, and Prov. Brabant wallon, with percentages ranging from 8.8% to 10.4%. There is a wide variation in the percentage of employment in high-tech sectors among the different regions, with some regions having less than 2% and others having more than 10%. Some regions with weaker high-tech employment include Friesland (NL), Zeeland, and Norra Mellansverige, all of which had employment percentages below 3% in 2020. Several factors could explain the differences between regions. Firstly, it is essential to note that high-tech sectors require a highly skilled workforce, which is not easily available in every region. Regions with well-established universities and educational institutions offering STEM (Science, Technology, Engineering, and Mathematics) courses can provide a steady supply of skilled labor to the high-tech sectors. Additionally, regions with a higher concentration of high-tech firms and research centers create a cluster effect that attracts and retains highly skilled workers. MUNI 15 26th International Colloquium on Regional Sciences _ . . .. Table 2. The percentage of employment in high-tech sectors (percentage of total employment) m ISirrKiiKU »16 ku: UlJt 2h]'Í 11» ILriiinkJ-1 uhLuuiL *.b y.? l0_2 SEih-MhiLiii 7.9 8.4 *.3 9.7 L0.4 l'i nv tir.il'.inl w jII'.iil 7.2 K.b IVin. 1 IjiLcih^ Lir;ih:n:l b.i 7.0 ti b.i ft.* Kť^iun HruM'LU ■■ -t "iL^iLLülr-'nm\*ťh ILiHifiMuiU'Lijk J.S ti.1 7.4 6.6 6.6 1 LľĽL'll L 1.1 Í.7 fc.U ľni v .Vii[^Li>r|k íl i.Q Í.S .- 1 i.7 \