From Data to Insights: Decoding Cyprus’ standing in the European Innovation Scoreboard 2024

Co-authored with Eli David Rokah, CEO StartUpBlink

According to the European Innovation Scoreboard (EIS) 2024, Cyprus retains its rightful place among Strong Innovators ranking 10th among member states.

The data in the report tells a story of the policies, strategies, investments, and incentives in each country and the extent to which efforts to improve research and innovation performance have been consistent over the years.

In the case of Cyprus, targeted investments and measures translate into continuous growth which is noted across multiple dimensions over the 2017-2024 period. Yearly improvements range from 1.6% in 2018 to an impressive 3.3% in 2024. According to the report, each year showed consistent improvement and the overall rise of 39% is the largest increase in performance of any of the EU countries in comparison to 2017! The policies, the strategies, the investments and the incentives of recent years are yielding rewards!?

The country ranks 1st across EU Member States in Linkages which tracks the existence of an integrated and well interlinked environment where innovation can thrive and positively impact both the economy and the society.? It measures the collaboration efforts between innovative enterprises and other enterprises and institutions which allow for pooling of financial and intellectual resources to tackle complex challenges.? It also accounts for research collaborations between the private and public sector which facilitate the transfer of knowledge and technology. This further accelerates innovation by combining the strengths of the two; the ability of research to create cutting-edge solutions and the capacity of the industry to transform them into marketable products.

High rankings for Cyprus are also noted in the Innovators dimension (2nd place among EU member states) and Attractive Research Systems (5th place). The country is making noticeable progress in terms of companies introducing new products/services/processes in the market while it continues to produce high quality scientific outputs.

Cyprus is also emerging as a major player in the startup world. According to the 2024 Global Startup Ecosystem Index Report by StartupBlink, a leading startup ecosystem ranking, Cyprus boasts the fastest-growing ecosystem in the top 50. Eli David, CEO of StartupBlink, praises Cyprus for having the best business environment for startups in Europe. This emphasis on creating startups and attracting high-quality ventures positions Cyprus to become a leading hub in the coming years.

There are of course areas for improvement! These include Finance and Support (24th place), which measures the financing capacity of innovation, Firm Investments (21st place), assessing the innovation expenditures of the private sector and Environmental sustainability (22nd place), which measures the reduction of the negative impact on the environment.?

As the 2024 European Semester Country Report for Cyprus notes, the country needs to do more to pump up productivity-enhancing investment which can further boost the potential for growth, including R&D. It also notes that access to finance can also be improved, including VC investments.? The startups of today are the corporates of tomorrow! Today’s startups and scaleups possess the power to diversify our economy.?? The national R&I strategy aims to make more funding available for startups and scaleup through the funding programmes of the Research & Innovation Foundation, the Cyprus Equity Fund and the establishment of the National Promotional Agency.? As far as Environmental Sustainability is concerned, there is a clear need to accelerate the green transition through investments.

Our national strategy for R&I aims to build world-class research and unleash the incredible power of research and innovation in businesses to fuel their success. We are creating the enabling conditions to attract talent, support the creation and development of startups and scaleups, integrate R&D and new product or service development into established enterprises and host multinational corporations here. ?We are making it more appealing for investors but also international partners to work with us. Our aim is to bolster our strengths, address weaknesses and make the most of opportunities that lie ahead to strengthen the resilience and competitiveness of Cyprus.

Looking to leading countries as a means of exploring additional measures that may boost CY performance, specifically in areas with room for improvement, a notable trend of the Innovation Leaders is an overall increase in R&D investment, particularly by the private sector. This results from a clear understanding that integrating R&D and new product and service development into the value creation of businesses can provide companies with a strategic advantage that can drive their overall growth and that of their countries.

In addition, all Innovation Leaders demonstrate strong improvements in venture capital expenditures, indicative of the need for more initiatives when it comes to attracting VC funding in Cyprus. Afterall, an increase in VC investments can truly make a difference by boosting the scalability of startups, increasing productivity across various sectors and enhancing the country’s position in global markets.

Collaboration in scientific research is also a main driver for innovation performance within the Innovation Leaders. They all significantly increased their public-private co-publications and their international co-publications between 2017 and 2024, a trend that is already evident in Cyprus’ performance over the past years.

In terms of the overall performance of the EU, it is evident that there is a strong need to make bigger strides when it comes to R&D. Focussing on tackling the challenges the EU faces compared to its main global competitors -particularly when it comes to intellectual assets and R&D expenditure in the business sector- is important but it is also merely the tip of the iceberg. These challenges are intensified by rising global competition in artificial intelligence and other emerging technologies that are largely in the hands of the industry, reshaping the landscape for the EU’s performance at the global stage.

Understanding insights, observing the strategies employed by global competitors and allocating efforts and resources in the right direction is more important than ever before, both at an EU and a national level. Cyprus remains the only country in the south to be in the elite group of Strong or Leading Innovators, a position that comes with a considerable burden of responsibility in sustaining and - why not - surpassing it. We must persist in our collective efforts, learn from the best, adjust to our own realities and take decisive actions time and again.