Investment, innovation, trade and dependencies – why does it matter?
The Single Market’s scale and policies help increase the economic resilience of the EU economy by strengthening incentives to investment and innovation, playing a large role in global trade and tackling strategic dependencies in key areas.
The indicators in this section measure the performance of the Single Market in terms of its ability to drive investment, research and development (R&D), innovation and skills. These are key factors contributing to the EU’s long-term competitiveness. This section also looks at the Single Market’s current performance in the global scene by looking at the importance of the EU economy in external trade, the impact of dependency on non-EU countries for certain goods, and trends in energy prices.
Investment
Public investment as a share of gross domestic product (GDP)
This chart shows the trend in public investment (gross fixed capital formation) as a share of annual GDP for the EU, the UK and the USA.
Public investment is a measure of how much money a country spends to increase the value of fixed assets (e.g. road infrastructure, buildings, equipment and intangibles).
Source: European Commission, annual macro-economic (AMECO) database
Private investment as a share of GDP
This chart shows the trend in private investment (gross fixed capital formation) as a share of annual GDP for the EU, the UK and the USA.
The data refer to the increase of the capital stock belonging to businesses and individuals, including equipment, land, houses and other buildings, and intangibles like R&D. The indicator measures how the private sector improves its capacity to produce goods, deliver services and increase income in the future.
Source: AMECO
R&D expenditure as a share of GDP
The following chart shows the evolution of annual research and development (R&D) expenditure as a percentage of GDP for the EU, China, Japan, the UK and the USA.
Source: Eurostat rd_e_gerdtot, OECD Main Science and Technology Indicators
Innovation and skills
Share of EU small and medium-sized enterprises (SMEs) introducing product innovation
This indicator measures the share of SMEs that introduced at least one product innovation either new to the business or new to its market. Product innovation is a key ingredient for innovation as it can create new markets and improve competitiveness. Higher shares of product innovators reflect a higher level of innovation activities. The overview includes all enterprises with 10 to 249 employees, excluding micro-enterprises.
Source: Eurostat, Community Innovation Survey, 2010-2020
Number of patent applications per million inhabitants
The chart shows:
- the number of patent applications to the European Patent Office (EPO) by EU applicants per million population
- the number of patents filed under the Patent Cooperation Treaty (PCT) per million population by applicants’ country of residence.
A patent application to the EPO can provide protection in up to 44 countries, including all EU countries, whereas a PCT patent application can provide protection in the 157 contracting states to the PCT. The number of EPO patent applications and PCT patent applications should not be directly compared because each system provides differing geographical scopes of protection.
Source: Eurostat (EPO patents), OECD (PCT patents), World Bank (population)
Education
University rankings
These indicators show the number of universities in the global top 50 of two rankings: the Times Higher Education World University Rankings and the Shanghai Academic Ranking of World Universities.
Source: Times Higher Education, Shanghai Ranking Consultancy.
Average test scores for 15-year-olds (PISA)
This chart shows the PISA scores of 15-year-olds in mathematics, reading and science in 2022, 2018 and 2015. EU data consist of the average scores of the 27 EU countries, weighted by the number of 15-year-olds enrolled in education. EU students' results are here compared to the results of students in the UK, USA, Japan and China.
Source: OECD PISA database
Trade and strategic autonomy
Foreign direct investments
This indicator shows the share of foreign direct investment (FDI) going into the EU, the USA, the UK, China and Japan, as shares of total global FDI. FDI involves the taking of a lasting interest in a business located in another economy. A value below zero in a given year indicates that foreign disinvestment from an economy was greater than foreign investment into that economy during that year.
Source: UNCTAD
Exports of goods and services as a share of the rest of the world’s imports
The chart shows the exports of goods and services of the EU, the UK, the USA, Japan, and China as shares of the rest of the world’s imports from 2015 to 2023. This helps evaluate the relative importance of exports from the EU and those four countries in the global market. A higher percentage indicates a more significant role in the global economy, and a lower percentage suggests a smaller presence.
Source: Eurostat bop_its6_det, UN Comtrade, World Bank
Global market share in medium- and high-technology manufacturing
This chart shows the global market share in medium- and high-technology manufacturing (gross value added) of the EU, China, Japan, the UK and the USA.
Source: UN Industrial Development Organization, Competitive Industrial Performance database; World Bank databases; Commission estimates
Global market share in high-technology exports
This chart shows the global market share in high-technology exports of the EU, China, Japan, the UK and the USA.
Source: World Bank
Strategic dependencies: overview
This chart shows the level of import dependencies in sensitive sectors in the EU, the UK, the USA, Japan and China, using two indicators: the number of dependent goods (left axis) and the share of dependent goods in the total import value (right axis). For each indicator, a higher value suggests higher import dependency.
The methodology used to identify dependencies is based on a modified version of the approach proposed by Arjona et al. (2023). All products imported by the EU from 2019 to 2022 are analysed as follows:
- A product is considered to be foreign dependent in a given year if it fulfils two criteria: 1) most imports come from fewer than three foreign countries; 2) imports are higher than exports.
- Only the top 10% of the most dependent products that meet these criteria each year are considered.
- Only the more persistent dependencies between 2019 and 2022 are retained, i.e. those identified in 2022 and/or at least 2 previous years. The final list is then limited to products belonging to sensitive ecosystems, which include: (1) security and safety; (2) health; and (3) the green and digital transformations. Due to the definition of ecosystems being set at the NACE industry level, the alignment between HS6 products and sensitive ecosystems is approximate.
Source: European Commission
Strategic dependencies on raw materials
This chart shows the import concentration for a basket of critical raw materials (CRMs) for each EU country and the EU overall in 2024 (data up to July). Import concentration reflects reliance on a limited number of sources. A value above 0.25 indicates high concentration, 0.15-0.25 indicates moderate concentration, and below 0.15 indicates low concentration. Lower values are better.
The indicator is a weighted average of the concentration of non-EU imports (in values) for each CRM at the EU level, where concentration is measured by the Herfindahl-Hirschman Index. The weights are the shares of each CRM in an EU country's extra-EU imports (in values) of all considered CRMs.
Source: European Commission
Domestic manufacturing of key net-zero technologies
This indicator tracks the evolution of EU manufacturing capacity of key net-zero technologies, in relation to the manufacturing benchmark laid down in the Net-Zero Industry Act. According to this benchmark, at least 40% of EU annual deployment needs for technologies necessary to achieve the EU’s 2030 climate and energy targets should be met by domestic manufacturing. Currently, data are available for wind nacelles, 2) li-Ion battery cells, 3) electrolyser stacks, and 4) solar PV modules. However, they will gradually be complemented by other data covering additional net-zero technologies.
Electricity prices for non-household consumers
The chart shows non-household retail electricity prices in the EU, the UK, the USA and Japan. This indicator gives an idea of energy costs and cost-competitiveness, especially for those industries where electricity prices make up a significant proportion of total energy costs.
Non-household retail electricity prices in the EU are calculated using Eurostat data, broken down into two consumption bands. Prices are measured in euro per kWh, excluding VAT and other duties that companies can recover.
- The IC consumption band refers to medium-sized consumers with an annual consumption of between 500 MWh and 2 000 MWh, i.e. the vast majority of small businesses in services and manufacturing sectors, and gives an insight into affordability.
- The ID consumption band refers to large-sized consumers with an annual consumption of between 2 000 MWh and 20 000 MWh, such as in electricity intensive manufacturing sectors, and gives an insight into international competitiveness.
Source: Eurostat NRG_PC_205. International prices are reported for the USA, the UK and Japan, using data from the US Energy Information Administration (EIA), the UK Department for Energy Security and Net Zero (DESNZ) and the International Energy Agency (IEA).
Electricity price volatility
This chart shows the relative difference in electricity prices in the EU, Japan, the UK and the USA. The coefficient of variation of electricity prices is used, which is the standard deviation of daily wholesale spot market electricity prices, divided by their annual mean.
The 2024 data covers prices up to September. The EU values are calculated using the average prices of the following hubs: France, Germany, the Netherlands, Spain and Nordpool, weighted by traded volumes. The USA values are calculated using the arithmetic mean of the prices of the following hubs: PJM Western, NYISO Hudson Valley, MISO Indiana, ISONE Internal, ERCOT North and CAISO SP15 (the unweighted average is used because data on trading volumes are not available). For Japan, monthly prices from March 2023 are used (instead of daily prices), leading to an underestimation of price volatility for 2023 and 2024.
Sources: S&P Global Platts (FR, DE, NL, ES, USA), Nord Pool (GB, Nord Pool markets - NO, DK, FI, SE, EE, LT, LV), Japan Electric Power Exchange