TECHNICAL EFFICIENCY OF EFFORTS TO ENHANCE INNOVATIVENESS IN THE EUROPEAN UNION

Abstract

The objective of this paper is to clarify whether or not the so-called innovation leaders are efficient in transforming innovation inputs into outputs. The study aims to expand on the thought that the level of inputs is decisive in classification of countries as leaders, followers, or laggards in the race to improve innovativeness and competitiveness, and thus raise the standard of living. Based upon the European Innovation Scoreboard (EIS), the efficiency of investment in innovation is examined with the use of the DEA model. The use of the EIS as the main source imposes a limitation on the scope of the countries examined, yet the EIS is essentially the only comprehensive source that examines innovativeness. It is observed that the so-called laggards in innovation are often efficient in their use of resources, whereas leaders of innovation fall short in the area of returns to scale and congestion. Such an observation provides an important guide to the development of policies aimed at improving innovative efforts. Finally, through the use of the nonparametric DEA model, this paper provides a methodological extension to the methods for investigation of innovation systems.Composite indexes, DEA, innovation, technical efficiency