This report presents the methodology followed to compute the 2014 edition of the Innovation Output Indicator (IOI). The IOI was developed by the European Commission at the request of the European Council in order to benchmark national innovation policies and to monitor the EU’s performance against its main trading partners. The IOI was first presented as a Communication and Staff Working Document1 in 2013, followed by an update in 2014 as part of the 2014 Commission Report on Innovation Union progress at country level (country profiles). The IOI measures the extent to which ideas stemming from innovative sectors are capable of reaching the market, providing better jobs and making Europe more competitive. It covers technological innovation, skills in knowledge-intensive activities, the competitiveness of knowledge-intensive goods and services, and the innovativeness of fast-growing enterprises. It complements the R&D intensity indicator by focusing on innovation output. It aims to support policymakers in establishing new or reinforced actions to remove bottlenecks preventing innovators from translating ideas into successful goods and services. The IOI is a composite of four indicators, chosen for their policy relevance, data quality, International availability and cross-country comparability and robustness. Its four components are:
- technological innovation as measured by patents (PCT);
- employment in knowledge-intensive activities as a percentage of total employment (KIA);
- the average of the share of medium and high-tech goods and services in a countries export (COMP)
- employment dynamism of fast-growing enterprises in innovative sectors (DYN).
By documenting the methodological considerations underlying the IOI, this technical report aims to serve as a reference for future updates.