Estonia's innovation system fastest-developing in EU

  • 2025-07-15
  • BNS/TBT Staff

TALLINN – According to the 2025 European Innovation Scoreboard (EIS) published on Tuesday, Estonia's innovation indicator has grown by 30 percent in the last seven years, which is the largest increase among European Union member states.

Estonia maintained its place in the scoreboard among strong innovators, where it rose to last year.

According to Minister of Economic Affairs and Industry Erkki Keldo, Estonia's rapid development and place among strong innovators is recognition of the long-term targeted activities of Estonian entrepreneurs and scientists, as well as the state's research and innovation policy.

"Since 2021, we have set a goal to direct 1 percent of GDP into research and development (R&D) activities. This figure is not a goal in itself, but a conscious use of money so that the impact and benefits for companies and our economy are as great as possible. The scoreboard helps assess how well we have managed to do this, or how effective these activities are compared to other countries," Keldo said.

According to the scoreboard, Estonia's relative strengths include venture capital expenditures, trademark applications, and public-private co-publications, while relative weaknesses include high-tech imports from outside the EU, resource productivity, and direct and indirect government support of business R&D.

"The scoreboard highlights Estonia's challenges, for example, our low productivity and the fact that we export many low-value-added products and services," Mikk Vahtrus, head of development at the Ministry of Economic Affairs and Communications, said.

"Companies can only increase their productivity and export capacity if they invest more in R&D. In recent years, we have launched a number of activities that support the creation and growth of research-intensive companies, and we have also directed additional money to support private sector R&D. The impact of these steps will hopefully be seen in the scoreboards of coming years," Vahtrus added.

Estonia's public sector spending on R&D activities exceeds the EU average, placing Estonia in ninth place in 2025. The low scoreboard assessment of public sector support for private sector R&D activities stems from the fact that in most EU countries, the majority of support comes from tax incentives for R&D. In Estonia, direct subsidies are used to support private sector R&D, such as the applied research program, product development support, as well as wage subsidies for R&D workers, and so on.

At the same time, Estonia's strong startup ecosystem has led to record venture capital investments -- taking into account the share of GDP, Estonia ranks first among EU countries with this. Estonia's strengths also include indicators related to human resources and the research system, especially in terms of lifelong learning and international co-publication of scientific articles.

Estonian companies are actively investing in information technology, also exceeding the EU average in this area. Our companies stand out in the use of cloud services and the recruitment of ICT specialists, which demonstrates the high technological maturity of companies and their readiness for innovation.

This year, Sweden leads the European Innovation Scoreboard, while last year's leader Denmark fell to second place, and the innovation leaders also include the Netherlands and Finland. Estonia ranks 11th among the EU countries, being the last member of the group of strong innovators. Of Estonia's close neighbors, Lithuania is a moderate innovator in 18th place, and Latvia is an emerging innovator in only 25th place.

The European Innovation Scoreboard provides a comparative assessment of the research and innovation performance of EU member states, other European countries, and global competitors. The analysis is based on 32 indicators, such as the volume of private sector R&D investment, the number of patents, exports of medium- and high-tech products, the number of doctoral graduates, and high-level scientific publications.

It also helps countries assess the relative strengths and weaknesses of their national innovation systems and identify challenges that need to be addressed. The scoreboard categorizes member states in four innovation groups based on their scores: innovation leaders, strong innovators, moderate innovators and emerging innovators.