Paper to be presented at the 25th Celebration Conference 2008

on
ENTREPRENEURSHIP AND INNOVATION - ORGANIZATIONS, INSTITUTIONS,
SYSTEMS AND REGIONS
Copenhagen, CBS, Denmark, June 17 - 20, 2008

REGIONAL INNOVATION SCOREBOARD FOR 183 EU REGIONS

Joost Heijs
Universidad Complutense Madrid
joost@ccee.ucm.es
Monica Martinez Pellitero
Universidad Complutense Madrid
Joost@ccee.ucm.es
Mikel Buesa
Universidad Complutense Madrid
mbuesa@ccee.ucm.es

Abstract:
The objective of this paper is to present a new methodological approach for the design of a regional innovation
scoreboard. Therefore we constructed a new data base with regionalised information for the 207 regions of the
EU-25 countries We construct the so called IAIF Index of Regional Innovation Capacity for 1995-2003 to rank
the behaviour and capability of the European regions in the field of innovation and to analyse its evolution over
time.

We used initially 30 variables of the EU-25 regional innovation systems that we merged based on a factor
analysis- to six composite partial factors or indexes. We think
That those factors reflect better the heterogeneous concept of Innovation Systems than could do each of the
individual variables. Finally we elaborated a general factor weighting the partial scores properly-.

In fact we try to tackle partially three problems of the existing empirical work. First we try to create a broader
database on regional innovation system, secondly we offer a scoreboard for a time span (1995-2003) which
permit us to study the evolution over time and third, we try to develop a statistical method to weight the impact
of the variables and the sub-indexes on the final regional innovation scoreboard.

JEL - codes: O30, -, -

REGIONAL INNOVATION SCOREBOARD FOR 183 EU REGIONS

1. - Introduction

The objective of this paper is to present a new methodological approach for the design of a
regional innovation scoreboard. As mentioned by Edquist (2005), there are scarcely any
empirical research works on regional innovation systems with aggregate data at regional
level. This is particularly due to the lack of regionalised statistics and sources. At the present
time, there are various scattered sources of information, but there is not just one database
collating data of different sorts which is available to the scientific community. This lack of
indicators is one of the main biases that can be observed in the existing literature towards
theoretical discussions to the detriment of the empirical studies (MacKinnon et al. 2002).
Moreover, the existing studies used a static perspective instead of the development of
longitudinal studies that use a process more oriented by dynamic approximation (Doloreux y
Parto 2004, MacKinnon et al. 2002).

The Innovation System Approach shows us that a large number of aspects influence the
R&D and innovation related activities. Not only are the individual aspects of vital
importance, even more important are the interaction and synergies generated between those
elements. For example the data on the interaction between agents of an innovation system is
difficult to get. However, in the last decade there is a clear improvement of available data in
the case of the European Union and the OECD countries. The European Innovation Survey
(CIS) offers data on a very broad number of aspects, especially qualitative data. 1 However
the first editions do not offer data that are representative on regional level. The CIS4 is
expected to provide regional data for more countries though for important countries among
others for Germany, France or Hungary no regionalised data will be available.

For the elaboration of this paper we constructed a new data base with regionalised
information for the 207 regions of the EU-25 countries and we used this data to develop
several empirical studies on regional innovation systems. In this paper we propose a method
to construct the so called IAIF Index of Regional Innovation Capacity (IAIF-IRIC) for the
period of 1995-2003. This index allows us to rank the behaviour and capability of the
European regions in the field of innovation and to analyse its evolution over time.

Only a few studies tried to develop an index of the innovation capabilities and almost all of
the studies used a National level —like the Technology Achievement Index (UNDP, 2001
and Desai et al. 2002), the Technology Index (WEF, 2001); and the Indicator of
Technological Capabilities (Archibugui and Coco; 2005)—, Another study for the European
countries is the European Innovation Scoreboard elaborated annually for the period 2001 -
2006) (see European Commission, 2006, 2007).
On regional level we detected only two sources of studies. On the one hand, the IAIF
developed such an index for the case of Spain (Buesa et al, 2005, 2007) and Europe
(Buesa/Heijs, 2007) and the MERIT Institute in Maastricht establishes, on behalf of the

1
This survey includes qualitative data on the innovative activities of firms, among others, on cooperation in
innovation, protection mechanisms for intellectual property, objectives of innovation, its regularity, and the
impact of innovation on sales or exports or barriers for innovation. Especially the data of the European
Innovation Survey are not representing well the regional level.

1
European Commission, the European Innovation Scoreboard for EU regions for the period
2002-2006) (See among others the work of the European Commission, 2003, 2005, 2007).
The successive European Innovation Scoreboards on a National level (EIS) include a broad
number of variables taking into account a broad number of aspects. However, also on this
national level there are problems to collect al the relevant data. It is not easy to maintain
stability in the structure (the set of included variables). In the successive scoreboards for the
period 2003-2006 around 12 to 28 variables were used. Moreover only 11 variables were
included in all the elaborated scoreboards. The Regional Innovation System Scoreboards
(RRIS scoreboards) used an even more limited number of indicators as including 13
variables in 2003 while the 2006 RISS included seven variables for 208 regions of the EU-
25 countries.
So one of the main problems or questions related to the methodology of an index or
scoreboard for regional innovation systems lies in the small number of variables used due to
the lack of availability of the statistical information. A second problem is the decisions on
the weight of the different aspects included in the composite indicators. We saw that the
methodological changes in the European regional scoreboard implied important changes in
the position or rank of some regions like Madrid or Noord-Brabant 2 . The decision to weight
the relative importance of different subindices used in the existing literature is not based on a
theoretical proposal however is an ad hoc decision. For example, one of the studies based on
national data calculated three sub-indexes: creation of technology, technology transfer, and
human capital. By doing so they leave aside two major methodological problems: First, it is
necessary to calibrate and generate the subindices, conveniently weighting the included
variables. Second, the adequate aggregation of those partial indexes in a single, weighted
index has to be found. All studies mentioned before, use subjective criteria in doing so,
considering that each sub-index has the same importance or just assigning in a discretionary
way, a certain weight to each of them. As has been conveniently pointed out by Grupp and
Mogee (2004), these subjective criteria are not always disinterested, as they seem to be in
some cases “country friendly”, optimising the results of a certain country or region by what
he calls “country-tuning”. In the IAIF index for regional innovation capability –presented in
this paper- we apply a novel criterion that is based on the statistical outcome of the Factor
Analysis technique.

Concluding, in this paper we try to tackle partially three problems of the existing empirical
work. First we try to create a broader database on regional innovation system, secondly we
offer a scoreboard for a time span (1995-2003) which permit us to study the evolution over
time and third, we try to develop a statistical method to weight the impact of the variables
and the sub-indexes on the final regional innovation scoreboard.
In the next section we will briefly revise the methodological approach of calculating regional
and national innovation scoreboards or composite indicators. In section 3 we explain our
own methodology based on a Factor Analysis as a previous step to calculate the IAIF index
for regional innovation capability. In this section we also carry out this factor analysis.
While in section four we establish –by using the obtained factors- our own regional
innovation index. The fifth section offers the results of our analysis and the last one will
discuss briefly the reliability of our work and the new research activities necessary for the
future.

2
The change in the calculation of the EU- Regional innovation Score Board implied that the Comunidad de
Madrid shows a drop from position 13 in 2003 to 31 in 2006. (European Commission, 2007).

2
Section 2 The IAIF Index of Regional Innovation Capacity: An methodological approach

2.1.- Introduction
The evolutionary theory underpins the heterogeneity of the innovative performance, which
has to be considered as a multidimensional activity. The literature emphasizes the difficulty
and the weakness of the use of individual indicators to measure the global concept of
innovation, as well as patents, R&D expenditures, percentage of sales related to new
products, etc. Each of those indicators –although highly correlated- gives a different view of
apparently the same subject. 3 It is worthwhile treating the concept and the different elements
of an innovation system as something which is not directly observable. In this case by means
of a multivariate methodology and despite the statistical limitations always to be found in
these topics, in this paper we elaborate and describe a series of hypothetical variables
registering the most important relationships related to technological change. For the creation
of “combined” indicators that reflect the different aspects of the regional innovation systems
we used a factor analysis. This technique, from a set of quantitative variables, allows us to
reduce the set of existing variables to a lower set of non-observable hypothetical variables,
called factors, which summarise practically all the information contained in the original set.
From our point of view these new synthetic variables or factors better reflect the general
aspects of the regional innovation systems than could do each of the individual variables
included in the factor.

2.2.- The data set

A first step to elaborate the so called IAIF Index of Regional Innovation Capacity (IAIF-
IRIC) for the EU-25 regions is to create the corresponding data base. Therefore we collected
regionalised that include initially over 100 variables. We collected data related to the
regional innovation system and its national and regional environment for 206 regions of the
EU-25 countries over a time span between 1995 and 2004. Although a broad number of
aspects of the regional innovation systems and its environment are included for some
elements we did not find any publicly available information. Among others the data on
scientific and technological infrastructure, innovation policies and interaction and
cooperation between the innovative agents is missing.
Once we collected the data we had to limit this study to the regions of which we had the
complete set of data. Therefore we used in this paper data of 166 regions of 19 countries (the
EU-15 and five east European countries; see table 2; section 4). The time period is 1995-
2003 due to the fact that for 2004 we had to estimate the information for a large number of
variables.
In the project we collected data about several agents of the innovation system) like
(innovative) firms, universities and other public research organisations) and about the
environment that influence the innovative behaviour of these agents. Below a short synthesis

3
For example the technological level of Spain is 45% (European Union=100) taking into account the R&D
expenditures by GNP and 62 percent in the case of employment in R&D by total employment and 15% using
the number of patents per capita.

3
 is made of the information recorded by the variables used in this study in accordance with
the subgroups defined (the exact variables included in the analysis are reflected in table 1).

Innovating firms

Input or innovative efforts of the production sector (firms)

The business sector is defined from Frascati’s Manual 4 as a group of firms and institutions
whose main activity is the production of goods and services for sale to the public in the
market and in general, at a price linked to the economic reality of the time. Firms and even
more those linked to Research and Development processes are key elements in the regional
Innovation systems since they have the capacity to generate knowledge and materialised
results both in products and processes. What is more, it can be stated that they are the
components connecting the production and innovation systems. We included in our model
the monetary and staff resources devoted to these activities.

Patents and the accumulated knowledge (Pool of existing knowledge)

Given the importance of knowledge in innovation systems, its aggregation is a way of

quantifying the results of the processes taking place there. In this context, the indicators
worked with here are those related to patents. The term patent refers to an industrial property
right or invention in the technological field that has to be brand new, represent a
breakthrough not evident to specialists and have an industrial application. The use of patents
have several methodological implications, though are broadly used as a measure of the
output of the innovation process 5 .

Patents are considered as the output of the private R&D because most patents are produced
by the enterprises and are near to the market. Here it could be interesting to add also
information on publications. These data reflect the pool of scientific knowledge or the results
of basic R&D. However, except for some countries- no regionalised data are available on
this subject.

Public Research System and scientific infrastructure

The term scientific infrastructure refers to the group of agents and actions which impinge on
the development of regional innovatory and scientific activity. We gathered data on two
aspects –expenditures on R&D and Human Resources- and distinguish two analytical
different areas: Public Administration and Universities.

• Public Administration Resources

Frascati’s Manual defines the Public Administration (abbreviated to PA) as the group of
ministries, offices and other bodies supplying public services and goods which otherwise
would not be profitable in the market, whilst administering public services and developing
social and economic policy 6 . In developing innovation systems the PAs play a significant
role in the scientific field, and proof of this is found in the centres of specialised research.

4
OECD (2002b-pp54-62)
5
See for a discussion Griliches(1990) or Smith (2005:158-160)
6
OECD (2002b), p. 62

4
 The Higher Education is defined (henceforth University) in the Frascati’s Manual as the
group of Universities-faculties, higher technical schools and university schools-
technological institutes and other postsecondary bodies, regardless of the source of their
financial resources and legal status. In the definition are included research institutes,
experimental stations and clinics under the direct control of Higher Education units, whether
administered by them or whether they are associated with them.

As already mentioned we include in our data set the R&D expenditures and the Human
Resources on S&T.

Regional and national innovation environment

The regional and national innovation Environment is a broad concept that includes different
elements impinging indirectly on the region’s own capacity in scientific, technological and
innovation matters. Four aspects have been considered in this study: Accessibility or
peripherability of the region, Market size and productive activity, human capital, risk
capital, ICT technologies, and the level of economic freedom

• Accessibility or peripherability of the region

As is normally the case, accessibility to the centre differs markedly from that to the
periphery. Accessibility is the main "product" of a transport system. The task of transport
infrastructure is to enable spatial interaction, i.e. the mobility of persons and goods for
social, cultural or economic activities. In the context of spatial development, the quality of
transport infrastructure in terms of capacity, connectivity, travel speeds etc. determines the
locational advantage of an area relative to other locations, Regions with better access to the
locations of input materials and markets will, ceteris paribus, be more productive, more
competitive and hence more successful than more remote and isolated areas (Spiekerman
and Neubauer 2002). These authors estimated an index of the accessibility of the European
region –based on the costs of transport by time between NUTS three regions- which will be
used in our study as an indicator for the peripherability.

• Market size and productive activity

Market size and productive activity may be considered as one of the fundamental supports of
the environment and therefore of regional innovation systems. Since important differences of
size exist in the regions studied -either in population or production terms- it is important to
reflect them because they may have effects on the extent of the development of systems and
their working. Therefore we include here variables on the production of the region, the
employment.

Another important aspect of the environment of an innovation system is the living standard
of the population. It is supposed that regions in which the inhabitants have a high level of
income the requirements of the consumer products (on quality, technical performance,
security, natural environment protection etc…) will be higher which would be a pressure to
local producers to innovate, diversify and improve continuously their product range. This
living standard depends also on the productivity of the production system. Therefore the
level of income and productivity are included in this study as indicators of the general
environment of a regional innovation system.

• Human capital (Human resources in Science and Technology)

5
 The existence of well prepared researchers on the labour market is a necessary condition to
add human resources for Science and Technology. The information on this item, provided by
EUROSTAT, is based on the definitions of human Resources made by Manuel Canberra,
and implies the following conditions for them to be considered as such 7 :

a) Having finished third level studies, that is graduate or equivalent-in a scientific-

technological field.

b) Being employed in a technological-scientific field without meeting the previous

condition, which is normally required.

c) Have completed third level studies and are employed in the scientific-technological field.

d) Finally, the fourth measurement is given by the total of those people who meet one
requirement or another

In this research the work has been carried out with the fourth type of indicator.

Another factor related to the human capital (included in the IAIF innovation scoreboard) are
the number of students that do advanced studies (third cycle). This information will indicate
the potential future availability of human capital.

• The general environment of a regional innovation system

On various occasions it has been pointed out that the a regional innovation systems is not
exclusive depending on itself. The national system (legal and economic aspects, social and
political measures etc…) limit or facilitate the activities in its regions. Therefore it would
appear logical and necessary to include variables showing the aspects of the national
innovation systems themselves. The included variables in question are:

1. Index of economic freedom: This index, prepared by the Heritage Foundation and the Wall
Street Journal, shows economic freedom in various countries via 50 independent variables
subdivided into 10 general factors, that reflect the degree of economic freedom (Trade
policy, Government tax levy, Government intervention in the economy, monetary policy,
foreign capital inflows and investments, banking and financial activity. Wages and prices.
Property rights and informal Market). The higher the mark the greater the level of
interference by the Government in a country’s economy.

2. Penetration of TICs (Infostates Index) The new information and communication

technologies are basic elements of what are called knowledge-based societies. The
Infostatesindex is calculated from two partial indices, Infodensity –which includes all TIC
stocks of capital and labour-and by Info-use-which measures the consumption of TICs by
periods- with the aim of differentiating their degree of penetration by countries.

3. Variables related with venture capital. In the present context of innovation, increasing
importance is given to the venture capital market since it is considered to be a necessary
agent in the promotion of new innovatory firms. Under the heading of venture capital are
included firms not quoted on the Stock Market, including those made by bodies

7
OECD (1995), p. 16.

6
administering their own capital or that of private investors and outside institutions, and/or
informal investors or business agents 8 . We used in this research a variable that indicates the
availability of risk capital on national level.

Finally, in concluding this section it must be pointed out that this research attempted to
record those indicators highlighted by the innovation systems approach and those for which
regionalised information is available. Nonetheless, there are still weaknesses in statistical
sources which make it impossible to include other aspects such as the cooperation, R&D
Policies, scientific publications etc.

2.3.- The Factor Analysis

The factorial analysis is a multivariate statistical technique which from a large group of
quantitative variables enables a clearly smaller group of hypothetical or non-observable
variables –called factors-. Once the analysis has been carried out, the factors obtained will
have the same character and nature as the original data. The results of the factor analysis by
themselves are not the principal objective of this paper. Rather our main aim is their use in
follow-up studies. Once we have the factors, for each region “standardised factor values”
will be assigned which will be used to elaborate the IAIF index for regional innovation
capacity.

In the case of the Factor Analysis the accomplishment of assumptions of normality,

homoscedasticity and linearity are not required or applied less restrictive. That is, the basic
assumptions implicit in the method are more conceptual than statistical in nature. Moreover
the obtained factors are unrelated among each other which make it possible to use them
easily in follow up studies based on econometric models.

The main criteria too judge the outcome of a factor analysis is that the extracted factors are
consistent and interpretable in accordance with the theoretical or conceptual framework of
the study, in our case, the regional innovation system. So one of the reasons to exclude some
variables is their lack of power to assure a clear unequivocal and unambiguous
interpretation. If some of the factors include variables statistically related to each other,
albeit conceptually totally different we could not interpret the factor and its use makes no
sense. In our model this only happened in the case of variables with a very low explanatory
power that also would be excluded due to the application of the statistical criteria.

8
On the EUROSTAT NEW CRONOS database it is called "early stage" and "expansion and replacement". N

7
 Table 1.
Structure of the factors and the IAIF Index of Regional
Innovation Capabilities (1995 - 2003)
(The last column reflect the retained variability of each factor as a percentage of the initial total variability of
the 30 variables and the variability of each factor as a percentage of the total retained variability)
Retained
variability
Weight of and weight of
each each factor or
VARIABLES variable subindex
Average annual population (thousands of inhabitants) 11.40%
Number of people employed 11.11%
Gross Fixed Capital formation (millions € 1995) 9.02%
Factor 1. Gross Domestic Product (millions € 1995) 9.36%
Gross Added Value (millions € base 1995) 9.35% 28.48%
Regional productive Wages (millions € 1995) 9.32%
economic environment Human resources in Sc and T (Total) 10.02%
Human resources in Sc and T in knowledge-intensive
services (total) 10.18%
Human resources in Sc and T in high technology (total) 9.98%
Human resources in Sc and T services (total) 10.27%
Hi-tech patents * 19.18%
Hi-tech patents ** 19.16%
Factor 2.
Patents * 14.19%
Innovating firms Patents ** 13.78% 15.46%
Firms’ expenditure on R&D (%of GDP) 12.45%
Staff in R&D in firms (NP) % of employment 10.71%
Staff in R&D in (EDP) % of employment. 10.53%
Factor 3. GDP per worker** 34.78%
Peripherability and degree GDP per capita* 36.80% 8.04%
of sophistication of demand Accessibility or peripherability 28.42%
Factor 4. University expenditure on R&D (% of GDP) 23.15%
Staff in R&D in the University (NP) % of employment. 27.77% 23.85%.
University Staff in R&D in the University (EDP) % of employment 26.73%
Number of third cycle students (‰ of population) 22.34%
Factor 5. PA expenditure on R&D (%of GDP) 33.40%
Staff in R&D in PAs (NP)% of employment 32.51% 12.87%
Public administration Staff in R&D in PAs (EDP) % of employment 34.09%
Factor 6. Risk Capital (% of GDP) 47.90%
Economic Freedom Index 23.27% 11.30%
National innovation Penetration of TICs 28.83%
*With regard to each million of population; **With regard to each million of working population
NP: Number of people; EDP: Equivalent to full time

As can be observed in table 1, for the European case (183 regions of 19 EU countries and
initially over 100 variables) we found six “unobservable hypothetical variables” or factors
that are homogeneous in their consistency and are clearly interpretable in terms of the theory
on innovation systems. (1) regional and productive environment; (2) the innovating
enterprises; (3) degree peripherability and sophistication of the demand (4) University (5)
Public Administration (6) National innovation environment. We consider that those six
factors 9 --that are no more than a combination of a set of 30 different highly related

9
A short review of the factors is included in the presentation of the data in section 4.

8
variables and that retain 89% of the initial variability— reflect better the different
components of the innovation system than each of the individual variables would have done.
This methodology can be considered as a holistic approach of the empirical studies on
(regional) innovation systems because of the use of a great number of variables.

The results of these analyses not only can be interpreted correctly from the perspective of the
evolutionary theory of innovations and technological change, though different trials showed
that they can also be considered as stable and consistent. Moreover the high number of
correlated variables is one of the main handicaps for the traditional econometric analysis.
While the factors obtained by the model are uncorrelated with each other which implies that
the factor analysis is one of the possible solutions that could prevent the problems of
multicolinearity in econometric modelling.

The use of factors do not only reflect better the different elements of the innovation system
they also avoid, in a certain way, the problem of important irregular fluctuations in time of
the values of the individual variables often based on statistical effects due to exceptional or
ad hoc fluctuations like those caused by changes in the law or application norms that delay
the assignment for example of subsidies or patents.

It has to be highlighted that the factor analysis presented in this paper grouped the variables
without any restriction, i.e. the statistical programme classified or assigned the variables to
each in groups or so called factors without previous indications or influence of the authors of
this paper. This is important because, as will be seen, the variables included in each factor
belong to the same component or sub-system of the overall regional innovation system. This
can be considered as an important achievement because it should not be forgotten that one of
the main criteria to judge the correctness of a factor analysis is, besides that the statistical
requirements are fulfilled, that the factors –or hypothetical non observable variables- can be
correctly interpreted from a practical point of view and fit properly within the theoretical
framework of the innovation system approach. So, the variables assigned to a factor have to
be somehow interrelated and reflect different aspects of the same overall concept.

3.- The construction of a synthetic index for the innovation systems of the
European regions

3.1.- Introduction

Once the factors have been specified we went on to quantify the extent of innovatory
capacity in European regions by means of the construction of what is known as the IAIF
index of regional innovation capabilities (also called IAIF Index or scoreboard). This index,
calculated from the results obtained in the previous stage-factorial analysis-, establishes a
ranking of regions according to the extent to which their systems are developed. It thus
becomes an important practical exercise not just of the point of view of economics, but also
of political and social value. In the building of the IAIF Index and its partial indexes we can
distinguish between the following stages.

1. Creation of the IAIF data base for the 206 EU-25 regions (Section 2)
2. Identification of the factors making up the innovation systems (section 2)
3. Calculation of the weightings or weight of the factors and variables. (Section 3)
4. Standardisation or normalisation and calculation of partial and final indices. (section 3)

9
5. Presentations of the results (section 4)

3.2.- Calculation of the weightings and standardisation of the variables

The relative weight of the factors, as well as the variables comprising them, has been
calculated from the findings produced by the multivariate analysis. The idea is to weight the
variables and the six partial indices in accordance with their real participation in the
innovation systems bearing statistical criteria in mind and not in a random way or merely
influenced by theoretical considerations, that is, subjectively.

In the case of the partial indices, their weighting within the final index will be determined by
the total variability (divided by the number of included variables) recorded by the factor in
the model with regard to total variability. From the total variance explained by the model
(See table 1) and the one corresponding to each factor is obtained as a percentage of the
relative weight of each partial factor—within the IAIF Index. This implies that the variables
and factors with more variability have a stronger influence or weight than those variables
that reflect a more homogeneous distribution between regions.

Regarding the variables, their weighting within each of the partial indices has been
calculated from the Matrix of coefficients for calculating marks in the components. Bearing
in mind that each variable is assigned to just one factor on the basis of its greater degree of
correlation with it, the relative weight is calculated as a percentage from the correlations
between the factor and each variable, and the sum of the correlations of the factor with all
the variables.

In table 1 an explanation is given of the composition of the IAIF Index of European

Regional Innovation Capabilities and its subindices for the period 1995-2003. The partial
index with the greatest weight in the total, namely, 28.5% corresponds to the Regional
productive-economic environment, with no very notable differences existing among the
weight of the variables of which it is composed. The second most important partial index is
the one relating to Universities with a weight of 23.9%. This factor includes the R&D efforts
of the university and their role as an education centre to generate researchers (third level
students) and human capital. The variables of which it is made up have practically equal
weight. The third most important factor is the “innovative firms” and here the outstanding
point is that the variables relating to the patents, particularly the hi-tech one has amore
weight in the subindex than the other variables of this factor. Moreover it can be said that
maybe someone could expect a more important role of the subsystem of the enterprises.
However its importance is also included implicitly in the first factor (number of human
resources in the service sector and the total production) and the last one in which its
productivity is taken into account. The index linked to the public administration has a weight
of 12.9% and each of the included variables has a similar weight. In the fourth partial index,
the National innovation environment, with an 11.20% weighting, the variable risk capital
stands out. Finally, the last partial index, the Peripherability and degree of sophistication of
demand and is made up of three variables and has an 8% weight. The importance or weight
of productivity and GDP per inhabitant is somewhat greater that the indicator of
peripherability.

Finally, in the last stage of the construction of the index the variables were standardised in
order to oscillate within established margins, and in this way become comparable. The way
in which it was done is based on the use of maximum and minimum values of each year in

10
each variable so that the standardised results are to be found within a range of zero to a
hundred, that is:

− xj
min
x
x = ×100
* r, j

− xj
r, j Max Min
x j

*
where: x r, j
: value standardised region r, year j

x r, j
: value observed in the region r, year j
Max
x j
: maximum value observed, year j
Min
x j
: minimum value observed, year j

The sum of the standardised variables thus obtained, weighted by the corresponding factor
and multiplied by a hundred gives rise to the value of each of the partial indices, which will
oscillate between zero and a hundred. Likewise, from the weighted sum of the IAIF Index of
European regional innovation is obtained, and this will similarly vary between zero and a
hundred.

4. IAIF INDEX OF REGIONAL INNOVATION CAPABILITIES IN EUROPE:

1995-2003

4.- GENERAL RESULTS

When interpreting the general results from the above-mentioned method it is worthwhile
taking into account that the indices measure the relative position of a region compared with
the data of each year. That is, for each year we normalised the data so that the range values
adopted will be between zero (minimum) and a hundred (maximum) both for the general
IAIF index of regional innovation capabilities and for each of the partial indexes. In the
following graphics the maximum, minimum and mean values 10 of the general and partial
IAIF indexes are recorded. Moreover, Table 2.includes the name of the regions obtaining the
maximum and minimum values in the case of the general index. In view of these results it
can be stated that the European Union as a whole shows a very diverse panorama.

The data of the IAIF index and its partial indices for each of the 183 regions are reflected in
table in the annex included at the end of the paper. As is observed, the European region
possessing the highest mark in the IAIF Index is the French one from Île de France (fr1).
This region only achieves 63 points of the possible 100 that it could obtain. This fact, given
the way the index is constructed, allows it to be stated that there is no region in the study that
is European leader for each of the different elements making up the regional innovation
System. Within France Île de France is leader for 4 of the 5 factors with regionalised data
(do not forget that factor 6 is based on national data). In the case of the Public
Administration this region is in third place (18 points behind Languedoc-Roussillon).
However on European level Île de France does not lead any of the partial indexes. On the
other hand, although Övre Norrland (SE) and Flevoland (NL) lead two different partial
indexes, they have a very poor score on the total IAIF index (25 and 18 points respectively).

10
No weighted mean is calculated because the size of the region is already incorporated in the weighting of
index numbers.

11
Secondly, there is an important dispersion among the nineteen countries which affects both
the maximum and minimum values of each of them, as reflected in Graph 4.1. In this way,
for example, the EU-19 average is situated in 18 points while the German region with the
lowest value in the index - Mecklenberg-Vorpommern with 16 points- has a higher mark
than the maximum values of countries like Hungary, the Czech Republic, Latvia, Poland,
Portugal, Slovakia, and is just below the mark of the leading region of Greece. Moreover,
the average value of the IAIF Index of the UE-19 countries such as Germany, The
Netherlands, Denmark, Belgium, is situated above that of the maximum value regions in
countries like Ireland, Greece, Spain, Portugal and the five analysed East European
Countries.

Thirdly, the dispersion of values of the IAIF index and its partial indexes within each
country is also important. This fact is accentuated in large countries like France, Germany,
Italy, Poland and the United Kingdom.

Four, in general terms it can be said that the ranking occupied by European regions is fairly
stable. Although in general almost all regions improved their values in the ranking in
comparison to the leading regions, looking at its evolution over time these changes are
minor. Only a very small group showed changes of more than two points in the IAIF index
and on even fewer occasions the changes are above 5 points. The regions that showed the
most important changes were the leading ones. Although in this paper we do not concentrate
our analysis on those changes we could highlight the case of Ireland and Greece. In the first
case we saw a continuous improvement with an index of 16 points in 1995 reaching a level
of 24 points in 2003. The values for Greece are low and very unstable and regions such as
Ipeiros and Attiki clearly improved their index. In relation to the group of leading regions we
observe only a few minor changes in their rankings. In fact, ¡the 15 leading regions in 1995
are, except for one case, still the foremost regions in 2003.

To sum up, the IAIF Index reflects the existence of an important diversity in regional
innovation systems, so that the inequalities between them are highly noticeable, both on the
national plan and the one corresponding to the joint consideration of the countries
comprising the European Union. Moreover the regional innovation capabilities seem to
change very slowly and only in a few regions did we see real qualitative changes or
improvement.

12
Table 2. Maximum and minimum values on the IAIF Index
(Between brackets the number of regions)
Max*. Region Min**. Region Mean.
Közep-Magyarsország Észak-
Hungary (7) 13,1 3,7 6,1
(hu10) Magyarsország(hu31)
Czech Republic (8) 14,1 Praha (cz01) 3,1 Severozápad (cz04) 6,1
Východné Slovensko
Slovakia (4) 12,8 Bratislavský Kraj (sk01) 4,0 6,6
(sk03)
Latvia (1) 6,8 Latvia (lv) 6,8 Latvia (lv) 6,8
Poland (16) 13,3 Mazowieckie (pl12) 4,1 Opolskie (PL52) 6,9
Greece (13) 17,6 Attiki( gr3) 4,3 Peloponnisos (gr25) 8,6
Lisboa e Vale do Tejo
Portugal (5) 14,3 6,2 Algarve (pt15) 9,4
(pt13)
Spain (17) 25,9 Comunidad de Madrid (es3) 9,0 Islas Baleares(es53) 14,4
Italy (20) 30,0 Lombardia (it2) 8,0 Basilicata (itf15) 15,7
UE-19 (182) 63,0 Île de France(fr1) 3,1 Severozápad (cz04) 18,0
Austria (9) 35,6 Wien (at13) 10,7 Burgenland (at11) 20,2
Ireland (1) 22,9 Ireland (ie) 22,9 Ireland (ie) 22,9
France (22) 63,0 Île de France(fr1) 10,5 Corse (fr83) 23,6
United Kingdom
34,9 London (uki) 15,6 Northern Ireland (ukn) 23,8
(12)
Mellersta Norland
Sweden( 8) 36,2 Stockholm (se01) 13,9 24,6
(se07)
Finland (6) 37,1 Etelä- Suomi (f18) 13,0 Åland (fi2) 25,8
Netherlands (12) 42,1 Noord-Brabant (nl41) 16,5 Friesland (nl12) 26,7
Luxembourg (1) 31,4 Luxembourg (lu) 31,4 Luxembourg (lu) 31,4
Mecklenburg-
Germany (16) 56,9 Nordrhein-Westfalen(dea) 16,0 31,7
Vorpommern(de8)
Belgium (3) 36,9 Vlaams gewest 28,7 Région Wallonne(be3) 33,8
Denmark (1) 35,0 Denmark(dk) 35,0 Denmark (dk) 35,0
* Maximun value of the country; ** Minimun value of the country
Source: own preparation

13
 IAIF Index of regional innovation capabilities
100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
hu cz sk lv pl pt gr es it UE-19 at ie fr uk se fi nl lu de be dk

maximum 13,13 14,07 12,84 6,77% 13,29 14,29 17,63 25,93 29,96 17,90 35,63 22,88 63,02 34,82 36,16 37,10 42,10 31,43 56,38 36,92 35,01
minimum 3,69% 3,08% 4,04% 6,77% 4,12% 6,23% 5,05% 8,96% 7,96% 17,90 10,66 22,88 10,49 15,69 13,94 12,98 16,50 31,43 15,99 28,65 35,01
mean 6,11% 6,13% 6,48% 6,77% 6,93% 8,77% 8,93% 14,42 15,69 17,90 20,20 22,88 23,57 24,06 24,60 25,77 26,07 31,43 31,70 33,75 35,01

maximum minimum mean

14
 IAIF Index: Partial index 1
Regional productive economic environment
100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
gr lu sk cz hu at fi pt pl se lv nl it es UE-19 fr be ie uk de dk

maximum 18,9% 3,5% 5,3% 7,3% 12,8% 11,6% 19,2% 12,5% 19,5% 16,2% 7,9% 23,0% 45,0% 36,8% 12,5% 93,0% 36,9% 23,3% 53,3% 98,0% 40,8%
minimum 0,4% 3,5% 3,4% 3,1% 2,6% 1,1% 0,0% 1,2% 2,5% 2,1% 7,9% 2,0% 0,4% 1,3% 12,5% 0,8% 8,8% 23,3% 14,3% 4,2% 40,8%
mean 3,3% 3,5% 4,1% 4,6% 4,7% 5,1% 6,8% 6,9% 7,2% 7,5% 7,9% 8,8% 11,4% 12,2% 12,5% 15,6% 21,2% 23,3% 30,5% 32,0% 40,8%

15
 IAIF Index: Partial index 2
Innovative firms
100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
pl lv gr pt hu sk es cz it UE-19 ie uk fr be nl at de se lu dk fi

maximum 4,59% 1,98% 11,26 6,20% 12,02 7,99% 19,38 17,75 28,84 17,05 17,59 51,13 63,09 34,17 98,00 51,88 78,88 78,94 40,43 41,28 80,77
minimum 0,23% 1,98% 0,18% 0,42% 1,64% 2,27% 1,20% 2,52% 0,18% 17,05 17,59 5,77% 1,82% 18,73 12,45 13,01 5,83% 8,91% 40,43 41,28 9,25%
mean 1,68% 1,98% 2,39% 2,86% 3,85% 4,62% 8,14% 8,64% 9,63% 17,05 17,59 22,05 22,55 26,16 28,08 29,24 31,11 39,55 40,43 41,28 50,86

16
 IAIF Index: Partial index 3
Peripherability and degree of
sophistication of demand
100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
lv pl hu sk cz pt gr es it UE-19 ie uk fi se at fr dk de nl be lu
maximum 2,26% 7,29% 9,89% 10,55 13,31 21,14 23,36 32,43 46,78 34,07 40,99 58,98 48,83 55,76 63,75 86,21 51,15 80,60 74,60 98,28 99,57
minimum 2,26% 1,65% 1,59% 1,17% 3,03% 10,53 9,50% 17,96 20,08 34,07 40,99 29,66 34,10 38,42 34,55 34,66 51,15 36,67 53,96 63,95 99,57
mean 2,26% 3,43% 4,25% 4,61% 6,15% 14,24 14,63 24,62 32,52 34,07 40,99 41,05 41,74 41,90 48,01 50,89 51,15 58,22 65,30 78,21 99,57

17
 IAIF Index: Partial index 4
Universities
100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
lu cz uk at pt hu it fr nl sk UE-19 de lv ie es pl gr dk be fi se
maximum 1,94% 57,88 26,44 78,92 40,44 45,09 46,28 52,97 89,39 71,39 30,79 54,61 31,87 32,71 49,08 60,95 72,81 41,32 59,70 70,29 96,47
minimum 1,94% 0,00% 11,83 0,59% 19,42 17,30 2,68% 14,69 0,17% 12,77 30,79 17,66 31,87 32,71 13,26 15,98 6,96% 41,32 33,54 2,84% 23,86
mean 1,94% 17,60 18,08 24,32 25,73 27,51 27,79 30,26 30,44 30,77 30,79 31,37 31,87 32,71 33,19 33,59 36,37 41,32 43,92 50,76 55,60

18
 IAIF Index: Partial index 5
Public Admistration
100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
at ie se pt uk be lv pl gr es it UE-19 fr hu dk lu cz sk nl fi de
maximum 28,92 7,85% 24,82 30,09 19,48 13,95 10,30 70,42 34,48 43,49 78,92 14,60 58,45 56,74 15,71 17,44 86,19 75,43 97,69 51,59 72,72
minimum 2,12% 7,85% 0,17% 2,00% 1,47% 4,00% 10,30 0,10% 4,00% 4,53% 0,26% 14,60 0,93% 2,15% 15,71 17,44 1,30% 1,71% 1,19% 9,31% 9,27%
mean 6,68% 7,85% 8,04% 9,42% 9,54% 9,89% 10,30 10,40 10,53 12,05 13,32 14,60 14,91 14,96 15,71 17,44 18,58 23,27 23,45 26,72 27,55

19
 IAIF Index: Partial index 6
National environment
98,20%
100%
94,53%

90%
84,26%
78,08%
80%
71,15%
68,10%
70%
61,86%
60%
49,91%
48,13%48,20%
50% 45,77%47,19%
42,42%
39,16% 40,62%
40%

28,71%
30%
24,22%

20%
14,13%
9,80% 11,07%
10% 6,32%

0%
sk

pl

gr

cz

hu

it

pt

de

UE-19

be

es

at

fr

ie

lv

nl

dk

se

fi

lu

uk
20
4.2. Partial indices of European regions

Below the main traits of the partial indices making up the IAIF Index are shown. In the
following pages we comment briefly the composition of the factors (see also table 1; section
1) and the main results related to the corresponding partial IAIF index. Moreover we use
these pages to make so methodological remarks that we can derive from those results.

It is important to underline that the maximum and minimum value for each country of each
of the partial indexes t are not always the same regions.

Factor 1: Regional productive economic environment

This factor -which has a weight of 28% in the final IAIF-index- contains those indicators
which determine the productive economic environment of innovation. Two blocks can be
identified. (1) Size and productive activity of the market: In the analysis of the different
regional innovation systems market size and productive activity are distinctive elements,
showing a high level of heterogeneity. A priori it seems logical to think that those regions
with a greater market size and a more complex production system might have a more
developed regional innovation system. This is because that permits them to diversify their
innovation related activities taking advantage of the specialisation (based on labour division)
and scale advantages. (2). Human resources in Science and Technology .Within the
Environment of the innovation systems human resources trained in Science and Technology
are also an important input. The greater amount of this type of resource will condition the
capacity of the regional innovation systems themselves.

An analysis of this partial index with an average score of only 17.9 points shows the
existence of significant differences between and within countries. Comparing the data of the
19 analysed countries we observe in the graph on this partial index that the discrepancies are
smaller in each state’s minimum mark.

At the tail end of the regional environment factor we find a more heterogeneous group of
regions. As is reflected in the graph the regions of the five East European countries, Portugal
and Greece are relatively small. The average of those countries is below 10 points of a
maximum of 100 and the maximum scores are below the EU-19 average, which stand at 18
points. Also Spain, Austria and Italy have a number of relatively small regions. When
analysing the differences within the countries, a look at the Graph shows us that the most
notable ones are Germany, France and the United Kingdom.

This factor or hypothetical non observable variable is based on information expressed in

absolute figures and stresses the economic and innovative size of region (production, overall
employment and S&T working force) and has an important influence on the final IAIF index.
(28%). However it should be highlighted that only a few regions have a really high score in
this factor. Only sixteen of the 183 regions have a score above 30 points, another 17 have
between 20 and 30 points.

The size is not a strict determinant of the overall score on the IAIF index. Nine relatively
small regions -with a value below 20 11 points on the factor that express the economic and
innovative size- are included the top twenty of our general IAIF scoreboard. Moreover
relatively large regions like Andalusia, Scotland or Yorkshire and the Humber are

11
Three of them with a score below ten points

21
somewhere in the middle of our ranking. So economic and innovative size has a positive
influence on the scoreboard though a large size alone is not enough and has to be completed
with the other aspects of the regional innovation systems included in the other five partial
indexes.

Its inclusion in the IAIF index of Regional Innovation Capabilities corresponds to the
importance of market size (facilitating division of labour and specialisation) for the
development of the economy in general and innovation in particular, which has been stressed
as important in the literature, both theoretical and empirical12 . In fact, the empirical work of
Baumert’s work (2006) (using also a factor analysis, finding very similar factors) proved that
the Regional productive-economic environment-is the variable which presents the highest
impact on the production of patents. Estimating a knowledge-production function –using a
regression model using patents and patents per inhabitant as a dependent variable- the factor
“Size” plays a very important role (Baumert (2006). This empirical fact supports our
decision to include the economic and innovative size of a region in the IAIF index for
innovation capabilities.

The factor “economic and innovative size” incorporates somehow the concepts of critical
mass and scale advantages related to R&D systems. That is to say, smaller regions or regions
with small innovation systems have specific problems to assure the benefits of innovation
related activities. The small number of innovating agents and the low demand of innovative
products or services impede the necessary regional based labour division of the innovation
process between firms, technology centres, consultancy offices, specialised providers, etc….
Therefore we could conclude that regions with larger innovation systems have a more
developed and differentiated system with a supply of advanced R&D related services
generating a system based on specialisation and labour division creating in this way a more
dynamic system with synergies and spillovers effects due to the existence of differentiated
set of mutual reinforcing agents. The specialisation of the R&D agents and the
corresponding generation of advanced R&D services create specialists in specific areas that
work for different clients. This kind of organisations (Consultancy offices, technology
centres etc…) are the axis of the regional interaction and the collective learning process.
They learn due to their work for a broad number of agents and at the same time these
learning experiences are spread among other clients, accelerating in this way the
technological spillovers between the agents of a region.

Factor 2: Innovating firms

This factor registers 21.01% of the total variability and its weight in the general IAIF index
is 15.5%. It is made up of indicators that determine the resources and innovative results of
firms. The included variables are the human and financial resources (the input side) and the
patents as a result of innovative activities of the firms. The output side of innovating firms
can be quantified through patents, since most of the requests for patenting come from the
enterprises while the public research Organisations or Universities are less inclined to patent
their results.

In our view the centre of an innovation system are the firms. They are the ones who lead
growth and structural change in which the economic development process is expressed; and
they do so by taking advantage of the different sources of knowledge-among them scientific-

12
The importance of market size was already shown by Adam Smith in his work ·The Wealth of Nations”
(1776)

22
and the capacity for learning residing under the heading of human capital. Therefore, science
and (higher) education are important for innovation. But this is not through their immediate
application in certain problems of production, but rather since they constitute the stock of
knowledge which, at some particular time, sooner or later, will be used by the firms.

Regarding the partial index Innovating firms, the corresponding graph shows the existing
contrasts. Three states show regions with a high value in this index: the Netherlands with the
Noord Brabant (98 points) -Finland, with the regions of Etelä-Suomi and Pohlois-Suomi
and Germany with Baden-Württemberg –with around 80 points- are the leaders. Moreover,
in the Scandinavian Countries and Luxembourg the average is relatively high in comparison
with the remaining European Union countries. However the Scandinavian countries also
display regions with low marks, which determines the important differences existing within
them in the area of innovating firms. This fact implies that there exists a high level of
concentration of the innovative activities in Europe in general and in each of its countries.

Another point: the weakest performance presented here corresponds to regions of Poland,
Latvia and Greece. Although the worst value is obtained by Molise (Italy) and also some
other Mediterranean countries as Spain and Portugal has regions with very low scores on this
partial index. In fact the average for this factor score is 17 points and no regions of Greece,
Hungary, Latvia Poland, Slovakia or Portugal do reach this score. While in the case of the
Czech Republic only one region reach a level just above this average.

Regarding the behaviour within nations, heterogeneity seem to be higher in those containing
the regions with the highest marks in the index, that is, the Netherlands, Finland, Sweden,
Germany and France.

Factor 3: Peripherability and degree of sophistication of demand

This factor explains 7.49% of the total variance of all 30 variables of the factor analysis and
its weight in the general IAIF index is 8%. This factor includes three variables: two
economic key indicators (Living standards and productivity) which relate the production of
the country to its population and number of employees and also include a measure of
peripherability.

In the case of this partial index the differences among the countries quantified by means of
the maximum, minimum and mean seems to be less significant. The state in which the
region with the highest mark is to be found is Belgium- specifically Bruselles –capitale
(be1)- and Luxembourg where the index value is almost 100. Also the Dutch and West
German regions show high score on this partial index. On the opposite side, countries
containing the regions with lower degrees of peripherability and of sophistication of demand
are located in the East-European Countries followed by Portugal, Greece and Spain. In these
countries the most advanced regions do not attain the European mean of 34 points. Once
again, it can be well understood that significant differences exist among member states of
the European Union, although in this case more moderated.

Factor 4: University

This factorial axis retained 10.21% of the total variance of the 30 variables included in the
factor analysis and contains those indicators relating to University resources and results. The
University forms part of the region’s scientific infrastructure and therefore is an important
part of innovation systems.

23
In the graph related to partial index number 4 “University”, shows that the differences
between countries are very heterogeneous particularly in the cases of Greece, the
Netherlands, the Czech Republic or Austria.. In this case also regions of relatively rich
countries show very low values and are included in the lowest positions of this factor. For
example, Flevoland in the Netherlands is the European leader in the factor of “Public
Administration while for the subindex “university” its position is situated on the second last
place. This example shows the problem of the “nuts level” that should be used. On the one
hand the large regions, as in the case of Spain do not show the specific advantages of some
smaller areas where production and innovation related activities are concentrated. However
the use of very low nuts level as in the Netherlands does not take into account the
advantages based on the neighbour regions. Flevoland does not have a University although
their inhabitants do not have real problems to study and the spillovers of universities of their
neighbour regions could have very positive effects. In fact several Dutch and Austrian
regions are occupying the last positions for this factor, while some regions of Slovakia and
Greece maintain positions among the European leaders.

Maybe in future work we should mix the data using lower nuts levels for some specific
variables while for other ones we could use a higher level. Again, in the case of the
Netherlands we could use data for four regions on students and university research while for
other variables the data of the smaller 17 regions could be used.

Factor 5: Public administration

This factor, which records 9.56% of the variance and has a weight of 13% in the general
IAIF index. It includes data on the resources used by the Public Administration in areas of
Research and Development.

As in the case of the universities the partial index Public Administration shows very
significant differences between countries (see the corresponding graph). The regions with
the highest marks of the nineteen European Union States are Mazowieckie (pl), Berlin (de),
Bratislavský kraj (sk), Lazio (it), Praha (cz) and –as leader- Flevoland (nl). All those
regions had a score within a range from 70 to 97 points, though none of the leaders of this
partial index is included in the top twenty of the overall IAIF index. The rest of the regions
had scores below the 60 points. Moreover 126 of the 183 regions show a value below the
average score of 15 points. The unequal distribution of the variables in this factor shows
that almost all countries have regions with a value of below 20 points.

As in the case of the universities also in this case the selection of the NUTS level is an
important problem that is difficult to analyse.

Factor 6: National innovation environment

This factor retained a 9.96% of the total variability and is made up of variables which
represent some of the characteristics inherent to the Nation-State to which each region
belongs. Note that the starting point is a group of countries with significant differences in the
legal, economic and political aspects, so indicators are needed to express their heterogeneity.
The different indicators comprising this partial index “national innovation environment”
refer to data on national level so here we present the data by countries

24
The average score is 42 points and the highest score is obtained by the United Kingdom and
Luxembourg (respectively 98 and 95 points) followed by the North European countries of
Scandinavia (Finland, Sweden and Denmark) with scores above the 70 points while the
Netherlands and Latvia have respectively 68 and 62 points. Moreover we can recognize a
group with a score between 39-50 points consisting of Ireland, France, Austria, Spain
Belgium and Germany and Portugal. Italy and Hungary has scores around 25 points while
the rest of the countries have scores between 6 and 14 points.

5.- Some final remarks Conclusions and methodological remarks

In this paper we used a new way to develop a regional innovation scoreboard. One of the
main problems is the lack of data and a second problem is that the existing data are normally
correlated generating a problem of colinearity. The idea persists that both when performing
the factorial analysis and the regression analysis it is essential to try to work with the least
possible number of variables. This is true if the idea is to obtain an estimating function. On
the other hand, if the aim is to reflect to the highest possible degree the complex nature of
the multiples making up the system-in this case innovation ones- the important thing is to
find room in the model for the greatest possible number of significant variables, provided
that there is no failure to meet the requirements of their validation criteria. As mentioned, the
factor analysis does not require the traditional requirements of most of the statistical
methods and requires in fact a correlation between groups of variables. It therefore allows
the inclusion of a large number of variables

As already mentioned, the evolutionary theory underpins the heterogeneity of the innovative
performance, which has to be considered as a multidimensional activity. The literature
emphasizes the difficulty and the weakness of the use of individual indicators to measure the
global concept of innovation, as well as patents, R&D expenditures, percentage of sales
related to new products, etc. Each of those indicators –although highly correlated- gives a
different view of apparently the same subject. Therefore we argue that it is worthwhile
treating the concept and the different elements of an innovation system as something which
is not directly observable. In this case by means of a multivariate methodology and despite
the statistical limitations always to be found in these topics, in this paper we elaborated and
described a series of hypothetical variables registering the most important relationships
related to technological change in “combined” indicators (called factors) that reflect the
different aspects of the regional innovation systems. This technique, from a set of
quantitative variables, allowed us to reduce the set of 30 existing variables to a lower set of 6
non-observable hypothetical variables, called factors, which summarise practically all the
information contained in the original set.
From our point of view these new synthetic variables or factors better reflect the general
aspects of the regional innovation systems than could do each of the individual variables
included in the factor. And therefore they are very appropriated to elaborate the IAIF index
for regional innovation capabilities or innovation systems.

25
 20 The IAIF index for regional
innovation capabilities
region 03
Severozápad 0,03
Strední Morava 0,04
Észak-Magyarország 0,04
Peloponnisos 0,04
Opolskie 0,04
Swietokrzyskie 0,04
Podkarpackie 0,04
Východné Slovensko 0,04
Stredné Slovensko 0,04
Moravskoslezsko 0,05
Severovýchod 0,05
Jihozápad 0,05
Strední Cechy 0,05
Közép-Dunántúl 0,05
Nyugat-Dunántúl 0,05
Dél-Dunántúl 0,05
Dél-Alföld 0,05
Ionia Nisia 0,05
Lubuskie 0,05
Warminsko-Mazurskie 0,05
Podlaskie 0,05
Západné Slovensko 0,05
Észak-Alföld 0,06
Sterea Ellada 0,06
Notio Aigaio 0,06
Kujawsko-Pomorskie 0,06
Lubelskie 0,06
Algarve 0,06
Jihovýchod 0,07
Anatoliki Makedonia, Thraki 0,07
Dytiki Makedonia 0,07

26
 Voreio Aigaio 0,07
Latvia 0,07
Zachodniopomorskie 0,07
Pomorskie 0,07
Lódzkie 0,07
Alentejo 0,07
Thessalia 0,08
Basilicata 0,08
Wielkopolskie 0,08
Centro (PT) 0,08
Illes Balears 0,09
Extremadura 0,09
Cantabria 0,09
Molise 0,09
Calabria 0,09
Slaskie 0,09
Dolnoslaskie 0,09
Norte 0,09
Castilla-la Mancha 0,10
Corse 0,10
Kriti 0,10
Burgenland 0,11
La Rioja 0,11
Ipeiros 0,11
Kentriki Makedonia 0,11
Dytiki Ellada 0,11
Valle d'Aosta/Vallée d'Aoste 0,11
Sardegna 0,11
Malopolskie 0,11
Principado de Asturias 0,12
Región de Murcia 0,12
Canarias (ES) 0,12
Provincia Autonoma Bolzano-Bozen 0,12

27
 Közép-Magyarország 0,13
Aragón 0,13
Åland 0,13
Puglia 0,13
Abruzzo 0,13
Mazowieckie 0,13
Bratislavský kraj 0,13
Praha 0,14
Galicia 0,14
Marche 0,14
Lisboa 0,14
Mellersta Norrland 0,14
Niederösterreich 0,15
Castilla y León 0,15
Umbria 0,15
Sicilia 0,15
Provincia Autonoma Trento 0,15
Småland med öarna 0,15
Mecklenburg-Vorpommern 0,16
Comunidad Foral de Navarra 0,16
Limousin 0,16
Campania 0,16
Liguria 0,16
Norra Mellansverige 0,16
North East 0,16
Wales 0,16
Kärnten 0,17
Comunidad Valenciana 0,17
Poitou-Charentes 0,17
Friuli-Venezia Giulia 0,17
Friesland 0,17
Drenthe 0,17
Brandenburg 0,18

28
 Pais Vasco 0,18
Itä-Suomi 0,18
Basse-Normandie 0,18
Attiki 0,18
Flevoland 0,18
Oberösterreich 0,19
Andalucia 0,19
Bourgogne 0,19
Auvergne 0,19
Toscana 0,19
Veneto 0,19
Zeeland 0,19
Scotland 0,19
Salzburg 0,20
Sachsen-Anhalt 0,20
Haute-Normandie 0,20
Yorkshire and The Humber 0,20
Vorarlberg 0,21
Champagne-Ardenne 0,21
Languedoc-Roussillon 0,21
Aquitaine 0,21
Pays de la Loire 0,21
Picardie 0,21
East Midlands 0,21
South West 0,21
Tirol 0,22
Steiermark 0,22
Thüringen 0,22
Schleswig-Holstein 0,22
Saarland 0,22
Franche-Comté 0,22
Centre 0,22
Piemonte 0,22

29
 Emilia-Romagna 0,22
West Midlands 0,22
Lorraine 0,23
Lazio 0,23
Ireland 0,23
Overijssel 0,23
North West (including Merseyside) 0,23
Cataluña 0,24
Bretagne 0,24
Sachsen 0,25
Nord - Pas-de-Calais 0,25
Övre Norrland 0,25
Comunidad de Madrid 0,26
Midi-Pyrénées 0,26
Provence-Alpes-Côte d'Azur 0,27
Alsace 0,27
Gelderland 0,27
Limburg (NL) 0,27
Bremen 0,28
Östra Mellansverige 0,28
Eastern 0,28
Région Wallonne 0,29
Västsverige 0,29
Länsi-Suomi 0,30
Lombardia 0,30
Noord-Holland 0,30
Rheinland-Pfalz 0,31
Berlin 0,31
Pohjois-Suomi 0,31
Luxembourg (Grand-Duché) 0,31
Utrecht 0,31
Zuid-Holland 0,31
Groningen 0,31

30
 Hamburg 0,32
Sydsverige 0,32
Rhône-Alpes 0,34
South East 0,34
Niedersachsen 0,35
Denmark 0,35
London 0,35
Wien 0,36
Région de Bruxelles 0,36
Stockholm 0,36
Vlaams Gewest 0,37
Etelä-Suomi 0,37
Hessen 0,41
Noord-Brabant 0,42
Baden-Württemberg 0,53
Bayern 0,54
Nordrhein-Westfalen 0,56
Île de France 0,63

31
Selected References

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BUESA, M., MARTÍNEZ PELLITERO, M., BAUMERT, TH. y HEIJS, J. (2007): “Novel
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GRUPP, H. y MOGEE, M. (2004): “Indicators for nacional science and technology policy:
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32
OCDE (2002b): The Measurement of Scientific and Technological Activities (Frascati
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SPIEKERMANN Y NEUBAUER (2002). European Accessibility and Peripherality:
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SURIÑACH I CARALT (ed.) (2007): Knowledge and Regional Economic Development;

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UNITED NATIONS DEVELOPMENT PROGRAM (2001): Human Development Report

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WORLD ECONOMIC FORUM (2001): The Global Competitiveness Report 2001-2002;

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