Expenditures in research and development (R&D) are a common proxy for interpreting a region’s attitude toward innovation activities. They are defined as the R&D-related expenditures performed by actors within a region. According to the Frascati Manual, 2002, R&D is defined as a “creative work undertaken on a systematic basis in order to increase the stock of knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications”. In 2005, R&D intensity (R&D expenditures as a percentage of GDP) was on average, about 2.3% in OECD countries. The intensity of expenditures in R&D varies significantly among OECD countries. Sweden is the country spending the most followed by Finland, Japan and Korea. Mexico, the Slovak Republic, Poland, and Turkey had the lowest R&D intensity. Finland and Iceland are the countries that between 1995 and 2005 increased the most their R&D intensity (over 60%)

Research and development (R&D) personnel include all persons employed directly in R&D activities, such as technicians and support staff in addition to researchers. The number of R&D personnel in OECD regions is directly linked to their R&D expenditure effort. The percentage of R&D personnel as a percentage of total employment varies significantly among OECD countries (Figure 2.1). In 2005 Finland and Sweden were the countries with the highest number of people employed in R&D occupations, respectively 32 and 28 people per thousand employed. On the other hand Mexico had only 2 people employed in R&D per thousand employed while Turkey, had 4. Portugal and Poland also showed levels below 10.

Patent applications give an indication on the output and process of inventive activities. The analysis of regional patenting helps assess the concentration of innovative activities within countries and can indicate innovative regions that act as important sources of knowledge. The data refer to Patent Co-operation Treaty (PCT) applications, regionalised according to the inventor’s residence.

The percentage of PCT patent applications with co-inventors living in another region, whether or not they are from the same country, is an indicator of co-operation activity and knowledge sharing among regions.

The number of students enrolled in tertiary education is an indicator of a region’s future potential for its skilled labour force. A highly educated labour force is a major factor in determining regional competitiveness in the knowledge based economy. Universities in a region are also important assets in developing an integrated regional innovation system. 

The ability to generate and make use of innovation depends, among other factors, on the skill level of the labour force working in the region. The proportion of the labour force with advanced educational qualifications is a common proxy for a region’s capacity to absorb and produce innovation. Advanced educational qualifications include university level education, from courses of short and medium duration, to advanced research qualifications. 

Knowledge-oriented sectors receive a great deal of attention due to the association with innovative products, new production processes and their impact on productivity, international competitiveness, creation of well-paying jobs and overall economic growth. Individuals employed in knowledge-oriented sectors are often in R&D, increasing scientific knowledge and using it to develop products and production processes; others apply technology in other activities, including the design of equipment, processes, and structures; computer applications; sales, purchasing, and marketing; quality management; and the management of these activities. All these activities are classified into two groups: high-tech manufacturing (HTM) and knowledge-intensive services (KIS).