sustainability

Article
Factors Influencing Innovation Performance in Portugal: A
Cross-Country Comparative Analysis Based on the Global
Innovation Index and on the European Innovation Scoreboard
Evelina Maria Oliveira Coutinho 1,2 and Manuel Au-Yong-Oliveira 1,2,3, *

1 Department of Economics, Management, Industrial Engineering and Tourism, Campus Universitário de

Santiago, University of Aveiro, 3810-193 Aveiro, Portugal; [email protected]
2 Research Unit on Governance, Competitiveness and Public Policies, Campus Universitário de Santiago,
University of Aveiro, 3810-193 Aveiro, Portugal
3 INESC TEC—Institute for Systems and Computer Engineering, Technology and Science,
4200-465 Porto, Portugal
* Correspondence: [email protected]

Abstract: Innovation plays a key role in meeting the challenges of the future, but despite the unprece-
dented investment in innovation, Portugal has seen a decline in the various indicators that assess
the country’s performance. This study aims to answer questions about the state of innovation in
Portugal, based on the relevant global and European innovation indicators, comparing the country’s
performance with that of Ireland, Belgium, and the Czech Republic. Using secondary data collected
from the reports of the last four years, explanatory research was conducted based on statistical and
graphical methods in order to establish causal relationships. The areas where the main changes
have taken place are presented, highlighting the aspects in which Portugal stands out for superior
or poor performance, providing a benchmark for the definition of policies to foster innovation in
Portugal. The results demonstrate that institutions, business sophistication, and knowledge and
technology score negatively, while creativity stands out as a strength. Environmental sustainability,
Citation: Coutinho, E.M.O.; firms’ investment in innovation, and the impact of innovation on sales are aspects that Portugal
Au-Yong-Oliveira, M. Factors needs to improve; human capital and the attractiveness of the R&D system deserve positive remarks.
Influencing Innovation Performance It is fundamental to understand how Portugal is preparing for the future and what the country
in Portugal: A Cross-Country can learn from others. This study is limited by the specific period in analysis, which could affect
Comparative Analysis Based on the
causal relationships, and the historical perspective could provide guidelines to the understanding
Global Innovation Index and on the
of the relative position of the country. This study contributes new perspectives and knowledge
European Innovation Scoreboard.
about the state of innovation in Portugal, providing clues to entrepreneurs, policy makers, and the
Sustainability 2023, 15, 10446.
scientific community.
https://doi.org/10.3390/
su151310446
Keywords: innovation; innovation indicators; performance; competitiveness; Portugal; European
Academic Editor: Patrik Söderholm Union
Received: 22 May 2023
Revised: 23 June 2023
Accepted: 29 June 2023
Published: 3 July 2023
1. Introduction
In the last three years, the world has experienced a pandemic, followed by difficulties
in the supply chain, an energy crisis, escalating inflation [1–4], and the outbreak of a war in
Europe, with a global outline of a cold war. The world also faces environmental challenges
Copyright: © 2023 by the authors. arising from climate change, socioeconomic challenges, namely the aging of the population
Licensee MDPI, Basel, Switzerland.
in some areas of the globe, and new geopolitics [5].
This article is an open access article
Innovation is considered a key factor for meeting the challenges of the future, and
distributed under the terms and
in the past, it has been the main driver of economic growth. Innovation has helped to
conditions of the Creative Commons
improve productivity, which has increased economic output, which in turn has improved
Attribution (CC BY) license (https://
the socio-economic status of populations. In recent decades, there has been unprecedented
creativecommons.org/licenses/by/
investment in innovation by both the public and private sectors globally [5], and support for
4.0/).

Sustainability 2023, 15, 10446. https://doi.org/10.3390/su151310446 https://www.mdpi.com/journal/sustainability

Sustainability 2023, 15, 10446 2 of 17

innovation remains the main challenge for policymakers and managers, while the concept
of innovation itself is evolving from a business perspective to a regional, national, or global
perspective, increasingly constituting itself as a research area [6–9].
Despite the investment in innovation, Portugal has been registering a decrease in the
various indicators that assess the country’s performance in this area, both in the Global
Innovation Index (GII), which evaluates the performance of the innovation ecosystems
worldwide [5], and in the European Innovation Scoreboard (EIS), which evaluates the
innovation performance of the European Union countries (EU27) [10]. Portugal has been
falling behind in comparison to countries with which it was compared a decade ago [11],
which shows that despite the investment and encouragement of innovation, the country
is lagging. The stagnation of productivity [5] and an aging population (according to the
Eurostat, the forecast for 2022 for the Portuguese population is 23% under 25 years of
age and 45% over 50 years of age [12]) put not only the economy and the growth of the
country at risk but also the standard of living of the population and the future of the
new generations.
This article aims to determine the factors influencing innovation performance in
Portugal, by comparing its performance with that of counterpart EU countries such as
Ireland, Belgium, and the Czech Republic. The article addresses the evolution of the
innovation indicators in the last four years based on two of the most widely used indexes:
the GII [6,8] and the EIS [6,7], setting out the areas where the main changes occurred in
the countries under comparison and highlighting the aspects in which Portugal stands out
for its superior or poor performance. The identification of the factors at the basis of the
development of the countries that, a decade ago, were in line with Portugal and which are
currently ahead in several indicators, may be a short-term benchmark and can provide clues
for the definition of policies to improve innovation in Portugal. It is crucial to understand
whether the combined effects of the pandemic, recent geopolitical tensions, and tighter
monetary policies have slowed or accelerated innovation, as well as to understand where
Portugal stands, how it is preparing for the future, and what the country can learn from
others. The article contributes to the literature with a view on the state of innovation in
Portugal, tries to understand the reasons behind the relative positioning, and provides clues
to entrepreneurs and governments on what to do better to contribute to creating a strong
commitment to the scientific community and civil society, in the exercise of a responsible
and active citizenship with rights but also with duties.

2. Background and Research Question

Over the years, Portugal has been compared with different countries based on history,
geography, and size, among others. The comparison with larger, albeit neighboring coun-
tries, such as Spain, with much larger populations and larger internal markets, is not the
most appropriate. A comparison with countries with similar populations and per capita
GDP may reveal which aspects are performing better and which aspects should be the
focus of collective efforts. About a decade ago, Portugal was compared to countries such as
Belgium, Ireland, Finland, the Czech Republic, Austria, Croatia, and Greece [11]. However,
it would not be fair to compare today’s Portugal to countries that have reached levels of
development far beyond the learning possibilities or to countries that for various historical
or political reasons have lagged. Within the scope of this study, Portugal’s innovation
indicators are compared to those of Ireland, Belgium, and the Czech Republic.
Ireland was proclaimed a republic in 1948 after tough struggles with England, having
benefited from having English as its mother language as well as a large presence of emi-
grants in the USA. A decade ago, its GDP per capita was more than double that of Portugal,
and its economic growth rate was three times as high; however, it was considered that this
success had been achieved at the cost of high debt and that the country was condemned
to decades of budgetary austerity, with poor prospects for growth, motivated by the debt
repayment obligations corresponding to the bailout plan implemented by the International
Monetary Fund (IMF) and the European Commission [11].
Sustainability 2023, 15, 10446 3 of 17

Belgium (whose independence was achieved in 1830) has a population similar in size
to that of Portugal and a GDP per capita of around twice that of Portugal. It has the great
advantage of being in the center of Europe and the problem of its linguistic and cultural
division (Flemish in the North, Walloons in the South). In addition to having benefited
greatly from intense industrialization in the 19th century, it became, from the middle of
that century, one of the most socially advanced countries on the European continent due to
the strong indoctrination of social Catholicism and the collaboration of socialist Christian
parties and trade unions, which allowed for strong social and evident progress in the health
and education sectors. Belgian tax policy has contributed since the 1980s to the installation
of the European centers of excellence of multinational companies [11].
The Czech Republic has a population size like that of Portugal. The fact that it was an
important industrial economy for centuries (Bohemia and Moravian-Silesian) allowed it
to catch up and in some indicators supplant Portugal, which is due also to the separation
from Slovakia, a rural and poorer society, in 1993. A decade ago, the Czech Republic was
more industrialized than Portugal and because of the social policies of the communist era,
the main indicators of education, health, and culture were far superior, but the Portuguese
GDP per capita was 22% higher than the Czech one (an advantage resulting, certainly, from
the market economy during the 20th century) [11].
In 2011, Portugal was facing economic difficulties following the financial crisis; the
country was in recession and had a high unemployment rate. The government implemented
several austerity measures, which included tax increases, spending cuts, and structural
reforms, and received a 78 billion EUR bailout package from the International Monetary
Fund, European Central Bank (ECB), and the European Commission, which came with
conditions that required the government to implement further austerity measures, includ-
ing reducing public sector wages and pensions, raising the retirement age, and privatizing
state-owned companies. The implementation of the measures fell short of OECD proposals,
and the country experienced a period of social contestation [13]. Internationalization, com-
petitiveness, attracting foreign investment, and R&D were the watchwords for the recovery
of the Portuguese economy [11]. In 10 years, the Czech Republic overtook Portugal in GDP
per capita and in other socioeconomic indicators. Apparently, economic miracles occurred
in countries like Ireland, which recovered from the 2010 crisis. Portugal came out of the
crisis, but in 10 years, it has not only failed to improve its comparative position but has been
declining in some socio-economic indicators. As in most OECD countries, the pandemic
has triggered a deep recession in Portugal [14]. The OECD’s report, Economic Surveys:
Portugal 2021, states that it is necessary to strengthen health and labor market policies
and take measures to address new financial and fiscal risks. It also advocates the adoption
of digital technologies, the development of skills, and the promotion of investment and
innovation, which are considered crucial to the country’s development.
Portugal belongs to the third of humanity with the highest GDP per capita but, on
the other hand, has a lower performance in terms of innovation, which grows at a slower
rate when compared to European counterparts with similar populations and GDP [5,10].
According to the GII 2022, the Portuguese innovation system occupies the 32nd position
in the universe of 132 countries under analysis, but the data shows that it has been losing
competitiveness. Similar results are presented by the EIS 2022, which shows that Portugal’s
performance in 2022 is below the average of its group (Moderate Innovators) (85.8% vs.
89.7%) and that growth between 2015 and 2022 is below the EU average (6.4% vs. 9.9%).
Among the countries in the comparison, Portugal has the lowest growth in GDP per
capita (purchasing power parity) in the last four years (Table 1), and it has the most aged
population [15]. It is urgent to not only understand why Portugal is lagging but to also
understand why Portugal has not been able to catch up with its peers.
Sustainability 2023, 15, 10446 4 of 17

Table 1. Population and GDP per capita in 2022 [5]. Own elaboration.

Country 2022 ∆2019→2022

Population, mn GDP per capita, ppp $ GDP per capita, ppp $
Ireland 5.0 111,360 +41%
Belgium 11.6 55,919 +16%
Czech Republic 10.7 43,714 +17%
Portugal 10.2 36,543 +14%

A ranking on the attractiveness of Portuguese economic sectors based on their perfor-

mance [16] revealed that the non-metallic industry sector, which includes ceramics, cement,
crystal, and glass, as well as building materials, is the most attractive in Portugal from
the point of view of investors. The wholesale and retail sectors come second, as do the
wood, cork, and furniture sectors. The electrical and electronics industry occupies the
third position, followed by the agro-industrial sector and finally agriculture and fisheries.
The poor performance of the traditional agricultural and fisheries sector vis-à-vis its Eu-
ropean counterparts is known and represents a strong competitive disadvantage of the
country, which can in part be attributed to the lack of investment in innovation, technology,
and infrastructure. The low competitiveness of the agricultural sector drags down the
agro-industrial sector. In contrast, the textiles and leather, construction, chemicals, pulp,
and paper industries perform solidly but face threats to their sustainability, particularly
those related to raw materials, supply chains, and facing competition from emerging
countries. Although other economic sectors may have emerged in Portugal, basically, the
economic crises that the country went through did not allow significant changes in the
national panorama.
The organizational model of Portuguese companies is influenced by the sector of
activity and the size of the companies [17]. There is a general preference of Portuguese
companies for the bureaucratic organizational model, which dominates the productive
sector. This model is characterized by a hierarchical structure with clear patterns and
lines of authority, and by a reliance on rational-legal authority. This characterization is
according with that described by Hofstede Insights [18] regarding the distance to power
in Portugal. Hierarchical distance is accepted, and privileges are admitted to those who
occupy the most powerful positions. Organizations that adopt the bureaucratic model seem
to be able to implement systematic processes by making rules and procedures compatible
with the ability to adapt [17], but they lose agility and competitiveness in a dynamic and
complex environment. The study by Queirós et al. [19] suggests that there is a cultural
environment that is conducive to the high growth of businesses, which is positively related
to power distance and negatively related to uncertainty avoidance and masculinity, which
leads to infer that one of the factors that characterize the national culture, extremely high
uncertainty avoidance, can influence the companies’ growth [18].
Along with what is happening in other larger economies, most Portuguese companies
consider the fact that the costs of innovation are very high and the lack of investment by
companies to be the main barriers to innovation. The difficulties in obtaining state support
and the high competition in the target market are, unlike other smaller-scale economies,
considered relevant in the Portuguese economy. It should be noted that the aspects less
mentioned by Portuguese companies as barriers to innovation are the lack of qualified
workers and the lack of partnerships. However, as we will see, not only are these aspects
fundamental to the growth of the economy, but Portugal still has a long way to go. The
size of companies is the most significant variable when examining the relative importance
of barriers to innovation and, consequently, to economic growth [9], which alerts to the
specificity of the Portuguese reality, consisting mostly of SMEs.
This study analyzes the factors that influence the performance of innovation in Por-
tugal, in comparison to other countries, considering two important indexes: the GII at
a global level and the EIS at a European level. The indicators and their sub-indicators
are evaluated with the objective of identifying strengths and weaknesses. Through the
Sustainability 2023, 15, 10446 5 of 17

comparative analysis of the performance of the four countries over the last four years, this
study aims to answer the research question about which factors influence the performance
of innovation in Portugal, including both those that stand out in terms of good results and
those that justify the loss of competitiveness of the country in terms of innovation, drawing
up a portrait of the current situation.

3. Methodology
The longitudinal study focuses on the analysis of the data from the GII published by
the World Intellectual Property Organization (WIPO) for the years 2019, 2020, 2021, and
2022 [5,20–22] and the EIS, published by the European Commission for the years 2018, 2019,
2021, and 2022 (data for 2020 were not published) [10,23–25]. The analysis covers data on
the innovation indicators of the countries under analysis: Ireland, Belgium, Czech Republic,
and Portugal before the pandemic (2018 and 2019) and after the pandemic (2022) in order
to consider the possible discontinuity in the trend of the countries introduced by this event.
In the scope of this paper, the terms defined in the Oslo Manual [26] are adopted.
The concept of innovation is defined as a new or improved product or process (or their
combination), which differs significantly from the unit’s previous products or processes,
and which has been made available to potential users (product) or put into use by the unit
(process). Factors influencing innovation performance (innovation barriers and drivers)
are defined in this manual as internal or external factors that hinder or encourage inno-
vation efforts. Both GII and EIS indexes are composed of indicators, which in turn are
composed of innovation evaluation sub-indicators. Innovation indicators are defined as
a statistical measure of an innovation phenomenon (activity, product, expenditure, etc.)
observed in a population or a sample thereof during a given time or place. Indicators are
usually corrected (or normalized) to allow comparisons between units that differ in size or
other characteristics.
The study only considers data from EU countries and compares the scores obtained
by Portugal in the various items to the scores obtained by Ireland, Belgium, and the
Czech Republic (countries with which Portugal was compared in the past [11] with similar
populations or GDP per capita) in the same items, following the same methodology and
evaluation criteria.
The scores obtained by the different countries, in the various indexes, indicators, and
sub-indicators are statistically evaluated and graphically represented, as well as the evolution of
each country over the years under analysis, to establish causal relationships in an explanatory
research design. The data from the two sources were analyzed separately, and the results were
compared. A descriptive analysis was also conducted, based on the observations, to find out
the characteristics or particular behavior of the innovation ecosystems.
First, the position of Portugal in the world context was analyzed based on the global
score of the GII, identifying the main innovators and the main rises and falls in the ranking
at the global level of the top 15 in the last 5 years. Portugal’s 2022 score is compared with
the average for EU27 countries. For the four countries under analysis, the deviation from
the mean is compared; in this way, the deviation from the EU mean can be compared based
on the two indicators GII and EIS. Countries whose innovation ecosystem is growing above
their level of development according to the GII were considered since this fact can forecast
the evolution in the near future and the likely alignment of these countries with the average.
Countries with greater deviation and growth of the innovation ecosystem aligned with
their level of development will find it more difficult to recover the gap in the future. For
the four countries under analysis, Portugal, Ireland, Belgium, and the Czech Republic, the
evolution of the index GII in the last 4 years is evaluated, and the areas where the greatest
deviations occur are identified. Based on this analysis, it is possible to understand the effect
of the pandemic crisis on innovation ecosystems. A similar analysis is carried out based
on the EIS, the deviations from the European average of the scores obtained by each of
the EU27 countries and the growth between 2015 and 2022 are analyzed, and the data are
compared with those previously obtained. Based on the growth, the capacity of individual
Sustainability 2023, 15, 10446 6 of 17

countries to bridge existing gaps can be estimated. Similarly, the evolution in the last 5
years (2020 does not present results) of the four countries of the comparison is evaluated,
and the areas where the greatest variations were verified are identified. The factors in
which each one of them stands out are highlighted, as well as those where they obtained
the greatest growth, taking as reference for the Portuguese case the developments in the
other countries namely those that had the greatest leaps in performance. The strengths
and weaknesses of the Portuguese innovation ecosystem are highlighted, and reasons that
may explain the positioning are indicated. Within the scope of the study, weaknesses are
considered those where the score obtained is below at least two of the countries in the
comparison; and strengths are those where the score obtained is above any score obtained
by another country.
As mentioned above, factors influencing innovation performance are defined as in-
ternal or external factors that hinder or encourage innovation efforts. Factors influencing
innovation performance of countries are innovation policies, knowledge and skills, invest-
ment policies in research and development (R&D), intellectual property, trade and openness,
knowledge sharing and market information, legal and regulatory issues, and access to
infrastructure [6–8,19,27]. According to the methodology used by GII, these factors are
grouped under five pillars: institutions, human capital and research, infrastructure, market
sophistication, and business sophistication, which are considered inputs to the innovation
ecosystem. It considers two outputs from the ecosystem: the results of knowledge and
technology and the results of creativity. Each pillar and each type of output is supported by
three sub-indicators, each of which results from the evaluation of different socio-economic
parameters [5,20–22]. The EIS considers twelve indicators that influence innovation perfor-
mance: human resources, attractive research systems, digitalization, finance and support,
firm investments, use of information technologies, innovators, linkages, intellectual assets,
impact of innovation on employment and sales, and environmental sustainability. Each
indicator has the contribution of three or four socio-economic sub-indicators [10,23–25].

4. Results and Discussion

This section presents the analysis of the indexes, indicators and sub-indicators obtained
by the four comparison countries: Ireland (IE), Belgium (BE), Czech Republic (CZ), and
Portugal (PT), based on the GII and the EIS. In the first part, the evolution of Portugal is
analyzed in the world context by comparison with the other countries, and in the second
part, the same analysis is carried out in the European context.

4.1. How Innovation Has Evolved in Portugal in the Global Context

The pandemic introduced a discontinuity in the course of the economy and in the
habits and way of life of people around the world. The way each country responded to the
challenge dictated its emergence from the crisis and could have represented a competitive
advantage with reflexes in the following years. With the high vaccination rate achieved
in Portugal, the country could have come out ahead of the recovery and have reduced, at
least partially, some innovation performance delays. However, as will be seen, this was not
the case.
In global terms, the innovation leaders are Switzerland, the USA, and Sweden (1st,
2nd, and 3rd, globally) [5], which have remained on the podium since 2019. The first Asian
economy in the ranking is the Republic of Korea, which moved from the 11th position
in 2019 to the 6th position in the global ranking. China entered the top 15 for the first
time in 2019 and is currently 11th globally in the GII 2022 ranking. The majority of the EU
countries over the past 5 years have dropped in the GII ranking, except for Germany, which
improved one position and is now in the 8th position. China is now ahead of the EU27 in
terms of innovation (with scores of 55.3 and 45.6, respectively).
Of the four countries under comparison, Ireland ranks highest (23rd), followed by
Belgium (26th), the Czech Republic (30th), and Portugal (32nd). According to GII [5],
Ireland continues to perform above its level of development, while Belgium, the Czech
 countries over the past 5 years have dropped in the GII ranking, except for Germany,
which improved
countries over the one
pastposition
5 years and is now
have in thein8th
dropped theposition. Chinaexcept
GII ranking, is nowfor ahead of the
Germany,
EU27
whichinimproved
terms of innovation
one position (with
andscores
is nowofin55.3theand8th 45.6, respectively).
position. China is now ahead of the
EU27Of inthe
termsfourof countries
innovation under
(withcomparison,
scores of 55.3Ireland ranks
and 45.6, highest (23rd), followed by
respectively).
Belgium (26th), the Czech Republic (30th), and Portugal
Of the four countries under comparison, Ireland ranks highest (32nd). According
(23rd),tofollowed
GII [5], Ire-
by
Sustainability 2023, 15, 10446 7 of 17
land continues to perform above its level of development,
Belgium (26th), the Czech Republic (30th), and Portugal (32nd). According to GII while Belgium, the Czech
[5], Re-
Ire-
public, and Portugal
land continues perform
to perform in line
above with of
its level their level of development.
development, while Belgium,Figure the1 shows
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Although
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Portugal
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performance
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andabove Greece,
its level
Slovenia, all
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in
joined Lithuania,
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EU after Poland, Romania,
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performance andall
grows countries
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Croatia, Hungary,grows Latvia,above its level
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in Bulgaria,
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levelCroatia, Hungary, Latvia, Poland, and Slovenia are in line with their
of development.
level of development.
65
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Austria

France

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Slovakia
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Greece

Slovenia
Hungary

Latvia

Malta
Lithuania
Luxembourg
GII score 2022 Average EU
GII score 2022 Average EU
Figure 1. Score obtained in the GII by EU countries [5]. Own elaboration.
Figure 1. Score obtained in the GII by EU countries [5]. Own elaboration.
Figure 1. Score obtained in the GII by EU countries [5]. Own elaboration.
By
By2022,
2022,all
allcomparison
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2022
2022
2021
2021
2020
2020
2019
2019
40 42 44 46 48 50 52 54
40 42 44 46 48 50 52 54
IRELAND BELGIUM CZECH REP. PORTUGAL
IRELAND BELGIUM CZECH REP. PORTUGAL
Figure 2. Evolution of the GII in the last 4 years [5,20–22]. Own elaboration.
Figure 2. Evolution of the GII in the last 4 years [5,20–22]. Own elaboration.
FigureFigure
2. Evolution of thethe
3 presents GIIresults
in the last 4 yearsfor
obtained [5,20–22].
each GIIOwn elaboration.
innovation indicator in the last four
Figure 3 presents the results obtained for each GII innovation indicator in the last
years, and Figure 4 presents the comparison of the results obtained by the four economies
four years,
Figureand Figure 4the
3 presents presents
resultsthe comparison
obtained of the
for each results
GII obtained
innovation by the four
indicator econ-
in the last
in 2022.
omies in 2022.
four years, and Figure 4 presents the comparison of the results obtained by the four econ-
omies in 2022.
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60 70
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2019
2020
2021
2022
2019
2020
2021
2022
2019
2020
2021
2022
2019
2020
2021
2022
2019
2020
2021
2022
2019
2020
2021
2022
0

2019
2020
2021
2022
2019
2020
2021
2022
2019
2020
2021
2022
2019
2020
2021
2022
2019
2020
2021
2022
2019
2020
2021
2022
2019
2020
2021
2022
Institutions Human Infrastructure Market Business Knowledge Creativity
Institutions
capital &Human Infrastructure Market
sophistication Businessand Knowledge
sophistication outputsCreativity
researchcapital & sophistication sophistication
technology and outputs
research technology
outputs
outputs
IRELAND BELGIUM CZECH REP. PORTUGAL
IRELAND BELGIUM CZECH REP. PORTUGAL

Figure
Figure 3. 3. Evolution
Evolution of indicators
of the GII the GII indicators in the
in the last last 4[5,20–22].
4 years years [5,20–22]. Own elaboration.
Own elaboration.
Figure 3. Evolution of the GII indicators in the last 4 years [5,20–22]. Own elaboration.
Institutions
80 Institutions
80
60 Human capital &
Creativity outputs 60 Human capital &
Creativity outputs 40 research
40 research
20
20
0
Knowledge and 0
Knowledge Infrastructure
technology outputs and Infrastructure
technology outputs

Business sophistication Market sophistication

Business sophistication Market sophistication
IRELAND BELGIUM CZECH REP. PORTUGAL
IRELAND BELGIUM CZECH REP. PORTUGAL
Figure 4. Comparison of GII 2022 indicators: Ireland, Belgium, Czech Republic, and Portugal [5].
Figure 4.
OwnComparison of GII 2022 indicators: Ireland, Belgium, Czech Republic, and Portugal [5].
elaboration.
Figure 4. Comparison of GII 2022 indicators: Ireland, Belgium, Czech Republic, and Portugal [5].
Own elaboration.
Own elaboration.
According to the GII 2022, institutions, business sophistication and knowledge and
According
technology to outputs
the GII 2022, are the institutions,
indicators in business sophistication
which Portugal obtained andtheknowledge
lowest scores.and
technology According
outputs
The aretothe
indicator
theindicators
GII 2022,ininstitutions,
of institutions which
measures
business
Portugal sophistication
obtained
the political, the lowestand
regulatory,
knowledge and
scores.
and business envi-
technology
The indicatorThere outputs are the indicators
of institutions inpolitical,
which Portugal obtainedbusiness
the lowest scores.
ronment. has beenmeasures the
a sharp decline in this regulatory,
indicatorand in the last year environ-
in the four
ment. There The
economies, indicator
has been which of
a sharp institutions
seems decline
to indicate measures
in this the
indicator
that political,
it was not in the regulatory,
thelast year in that
pandemic and business
the four econo-
was the environ-
key event
ment.
mies, which
in theseemsThere
loss ofto has been a that
indicate
confidence sharp
butitthe decline
was notin
events the this
that indicatorthat
pandemic
followed in such
it, the
waslastthe year
keyrise
as the in in
theinflation
event four
in theecono- and
loss of mies,
the warwhich
confidence seems
but
in Europe. the to indicate
events
Portugal’sthat that it was
followed
sharp it,not
decline suchthe
may aspandemic
the riseless
reveal inthat was the
inflation
confidence andkey
inthe event
the war in the
ability of
loss
in Europe. of confidence
Portugal’s
institutions to sharp
meet butfuture
the events
decline maythat
challengesrevealfollowed
inless it, such as
anconfidence
economy inthe
in therise
need ofin
ability inflation and the war
of institutions
structural reforms [19].
to meetin Europe.
future
Portugal Portugal’s
challenges
ranks 47th sharp
in for
an thedecline
economy inmay
indicator need reveal less confidence
of structural
institutions (vs.reforms
43rd CZ, in the
[19]. ability
BE, of
Portugal
29th institutions
ranks
16th IE of the
to
47th for132 meet future
thecountries challenges
indicatoranalyzed).
institutionsThe in an economy
(vs.political in
43rd CZ,environment need of
29th BE, 16thand structural
IE of reforms
the 132are
stability [19].
countries Portugal
in theranks
similar ana- four
lyzed).47th
The for the
political indicator
environment institutions
and (vs.
stability 43rd are CZ, 29th
similar BE,
in the
countries, which is understandable in light of EU integration. As regards regulatory quality, 16th
fourIE of the
countries, 132 countries
which is ana-
lyzed).
Ireland The
understandable stoodinpolitical
light
out on of environment
EU integration.
the positive andAs
side stability
and regards
Portugalare similar
regulatory inquality,
on the negative the four countries,
Ireland
side PT, which
(38th stood 23rd CZ, is
understandable
out on 20th BE, 16thside
the positive IE ofin
andlight
the of EU
132 countries
Portugal integration.
on the analyzed), As
negative side regards
but(38th regulatory
it is in
PT,the
23rd quality,
business
CZ, 20th Ireland
environment
BE, 16th that stood
out oncountries
Portugal
IE of the 132 thescored
positive side(102nd
lowest
analyzed), andbut Portugal
PTisvs.
it on business
17th
in the theIE negative 132side
of theenvironment (38ththat
countries PT, 23rd CZ,business
analyzed);
Portugal 20th BE,policy
scored 16th
lowestIEand of entrepreneurship
(102nd thePT 132vs. countries
17th IE of analyzed),
policy
the 132 and but it is inanalyzed);
culture
countries the business
were considered environment
business weak points
policy thatby
and Portugal
the GIIscored
entrepre- in the
lowest
Portuguese (102nd PT
innovationvs. 17th IE of
ecosystem. the 132 countries
neurship policy and culture were considered weak points by the GII in the Portuguese analyzed); business policy and entrepre-
neurship
innovation Regardingpolicythe
ecosystem. and culture
human wereand
capital considered weak points
research indicator, whichby assesses
the GII in the Portuguese
parameters related
innovation
to education ecosystem.
and investment in R&D, Belgium
Regarding the human capital and research indicator, which assesses parameters re- stood out widely and, although it showed
Regarding
lated toa education
slight decreaseandthe inhuman
2022, itcapital
investment was andBelgium
above
in R&D, research
the other indicator,
economies
stood which
out widely (22nd assesses parameters
PT, although
and, 33rd CZ, it re-
16th BE,
showed lated
23rd to out
IE
a slight education
of the 132
decrease and investment
countries
in 2022, in R&D,
it wasanalyzed).
above Belgium
the In stood out
this economies
other indicator, widely
Portugal
(22nd and,
33rdalthough
PT,registered CZ, a high it
showed
score, anda slight
the decrease
evolution in
was 2022,
in lineit was
with above
Ireland. the
It
16th BE, 23rd IE out of the 132 countries analyzed). In this indicator, Portugal registered a other
should economies
be noted (22nd
that PT,
Portugal 33rd CZ,
spends
16th
moreBE, on23rd IE out of
education asthe 132 countries
a percentage of analyzed).
GDP than In this indicator,
Ireland (4.7% vs.Portugal3.4%) butregistered
that the a
Sustainability 2023, 15, 10446 9 of 17

schooling period is two years shorter in Portugal. As for R&D investment as a percentage
of GDP, Portugal had one of the lowest figures (Czech Republic has incomplete figures).
Despite this, education as well as the number of researchers per million inhabitants are
Portugal’s strengths.
With regard to the infrastructures indicator, which assesses information and com-
munication technologies, infrastructures in general, and ecological sustainability, Ireland
dominated the scores, and after the decrease observed in 2020, the year 2022 showed a
slight upward trend (39th PT, 20th CZ, 37th BE, 15th IE of the 132 countries analyzed).
Portugal was in the last position, motivated by the weak use of information and communi-
cation technologies.
The market sophistication indicator assesses credit, investment and trade, diversifica-
tion, and market size. The year 2022 was a year of decline for all four economies; Portugal,
which ranked last, apparently suffered less from the factors that led to the indicator’s
decline. In 2022, diversification was a Portuguese strength as opposed to investment, which
was a weakness (but a strength in the Czech Republic, despite its less favorable position)
(42nd PT, 76th CZ, 45th BE, 55th IE out of 132 countries analyzed). Credit, investment, and
diversification were strengths of the Irish innovation ecosystem, placing it in a prominent
position worldwide.
The indicator of business sophistication evaluates highly qualified work, innovation
partnerships, and knowledge transfer. Although the profile presented by Portugal in
this indicator over the last four years was similar to that presented by the countries of
comparison and even showed a positive trend in the last year, Portugal presented the
lowest score of the comparison (34th PT, 28th CZ, 11th BE, 13th IE out of the 132 countries
analyzed). This ranking was influenced by the low result in innovation partnerships and
the weak knowledge transfer, an indicator that clearly marks another of Portugal’s weak
points and one of the areas where Portugal has more to learn from countries like Ireland.
The indicator for the outputs of the innovation ecosystems concerning knowledge
and technology evaluates the creation of knowledge, its impact, and its dissemination.
Portugal occupied the last position in the comparison (35th PT, 17th CZ, 18th BE, 14th IE
out of the 132 countries analyzed), a fact which is in line with what has been mentioned
regarding the transfer of knowledge but which should lead to serious internal reflection
since human capital and research is the indicator where one of the best classifications in the
world ranking was obtained (22nd out of 132 countries). The outputs indicator revealed a
trend of the weak performance of the Portuguese innovation ecosystem, which shows signs
of a cycle that may not improve in the short term. Albeit it should be noted that despite the
low results in this indicator, scientific production and spending on software are considered
strengths of the country; however, the diffusion of knowledge ranked 49th (vs. 16th CZ,
23rd BE, 1st IE out of 132 countries). On this specific point, Portugal should learn from
Ireland how to disseminate knowledge since it is in 1st place in the world ranking. With
regard to the impact of knowledge, the decrease in labor productivity (−0.3% PT, +1.4%
CZ, 0% BE, −0.3% IE), which is in line with the decrease in productivity registered in the
European economies, should be of particular concern in a country with marked aging of
the population and the departure of highly qualified young people [12].
In the world ranking, Portugal had a high score in the creativity outputs indicator
(25th PT, 37th CZ, 32nd BE, 29th IE out of 132 countries analyzed), which assesses intangible
assets, creative products and services, and online creativity. The score on this indicator has
risen over the last two years and is clearly a strength of the country, which should be seen
as a source of value creation that should be encouraged.

4.2. How Innovation Has Evolved in Portugal in the European Context

The EIS report evaluates the innovation ecosystems of different countries, assigning
innovation indicators a score as a percentage of the EU average (representing 100%). The
EIS classifies the various countries into four groups, according to their ranking in descend-
ing order: Leading Innovators, Strong Innovators, Moderate Innovators and Emerging
Sustainability 2023, 15, x FOR PEER REVIEW 10 of 17
EIS classifies the various countries into four groups, according to their ranking in descend-
ing order: Leading Innovators, Strong Innovators, Moderate Innovators and Emerging In-
Sustainability 2023, 15, 10446 novators. In 2022, according to the EIS, Portugal was classified as a Moderate Innovator, 10 of 17
EIS classifies
with the various
85.8%, below countries
the average of into four groups,
its group according
(Moderate to theirwhich
Innovators), ranking is in descend-
89.7%. The
ing order: Leading Innovators, Strong Innovators, Moderate Innovators
Czech Republic was classified in the same group as Portugal but had an overall score and Emerging In-
novators.
above the In
Innovators. 2022,
group according
average
In 2022, to to
thethe
of 92.6%.
according EIS,
Ireland Portugal
EIS, was
was a Strong
Portugal wasclassified
classifiedasas
Innovator a aModerate
and BelgiumInnovator,
Moderate aInnovator,
Leading
with 85.8%,
Innovator, below the
respectively, average
with of
118.9% its group
and (Moderate
128.8%. Innovators),
Ireland was above
with 85.8%, below the average of its group (Moderate Innovators), which is 89.7%. which
the is 89.7%.
average ofThe
its
The
Czech
group Republic
(114.5%), was
and classified
Belgium, in the
although same
withgroup
a as
higher Portugal
score, was but had
below
Czech Republic was classified in the same group as Portugal but had an overall score an
the overall
average score
of its
above
group the group
(134.4%) average
(Figure of
5). 92.6%. Ireland was a Strong Innovator and Belgium
above the group average of 92.6%. Ireland was a Strong Innovator and Belgium a Leading a Leading
Innovator, respectively,with
Innovator, respectively, with118.9%
118.9%and and 128.8%.
128.8%. Ireland
Ireland waswas
aboveabove the average
the average of its of its
group
160
group (114.5%), and Belgium, although
(114.5%),
140 and Belgium, although with awith a higher
higher score, score, was below
was below the average
the average of its
of its group
group (134.4%)
(134.4%)
120 (Figure
(Figure 5). 5).
100
160
80
140
60
120
40
100
20

Czech… Czech…
80

Spain
Austria Austria

Denmark Denmark

France France

Poland Poland
Portugal Portugal
Romania Romania
Belgium Belgium

Ireland Ireland
Bulgaria Bulgaria

Cyprus Cyprus

Slovenia Slovenia

Sweden Sweden
Estonia Estonia
Finland Finland

Hungary Hungary
Germany Germany
Greece Greece

Italy
Latvia Latvia

Netherlands
LithuaniaLithuania

Slovakia Slovakia
Malta
Croatia Croatia

Luxembourg
60
40
20

Spain
Netherlands
Italy

Malta
Luxembourg
EIS 2022 Leading Innovators
Moderate Innovators Strong Innovators

EIS 2022 Leading Innovators

Figure 5. Performance Moderate Innovators
of the EU27 Strong Innovators
countries in 2022 against the averages of each of the groups of
innovators [10]. Own elaboration.
Figure 5. Performance of the EU27 countries in 2022 against the averages of each of the groups of
innovators [10]. Own elaboration.
Belgium’s
Figure innovation
5. Performance performance
of the EU27 countriesisingrowing (16.8%)
2022 against faster than
the averages the of
of each EUthe(9.9%)
groupsand
of
Ireland’s
innovators slower (7.1%).
[10]. Own
Belgium’s Theperformance
Czech Republic
elaboration.
innovation was slightly
is growing below
(16.8%) thethan
faster EU the
average on inno-
EU (9.9%) and
vation, butslower
Ireland’s its performance
(7.1%). TheisCzech
growing at 19.8%,
Republic was almost
slightlytwice
belowthetheEUEUaverage,
average and is ex-
on innova-
pectedBelgium’s
to exceed innovation
it in the performance
short term. is growing
Portugal was (16.8%)
of the faster
four than
countries the EU
with
tion, but its performance is growing at 19.8%, almost twice the EU average, and is expected (9.9%)
the and
lowest
Ireland’s
score and slower
growth (7.1%).
(6.4%), The
i.e.,Czech Republic
innovation in was slightly
Portugal is below
growing atthe
a EU
loweraverage
to exceed it in the short term. Portugal was of the four countries with the lowest score the
rate thanon inno-
in and
vation,
EU, andbut
growth theitsgap
(6.4%), performance
between
i.e., is growing
Portugal
innovation andatits19.8%,
in Portugal almost
European
is growing attwice therate
counterparts
a lower EU average,
is than
expected
in theand
toEU,is and
widenex-
pected
the gapto
(Figure 6).exceed it
between in the short
Portugal and itsterm. Portugal
European was of theisfour
counterparts countries
expected with the
to widen lowest
(Figure 6).
score and growth (6.4%), i.e., innovation in Portugal is growing at a lower rate than in the
160and the gap 37.9
EU, between Portugal and its European counterparts is expected to40 widen
140 35
(Figure 6). 24.4 24.1 30
120 19.8 19.5 19.9 25
16.8 15.537.9 17.4
160
100 40
20
11.3 9.911.3 10.5 35
15
140
80
4.6 24.4 7.424.17.17.1
4.7 6.7 6.4 4.6 8.6 30
120
60 2 10
1.5 19.8 19.5-1 19.91.4 0.2
16.8 15.5 17.4 525
100
40 020
11.3 9.911.3 10.5 15
80
20
4.6
7.4 7.17.1
4.7 6.7 6.4 4.6 8.6 -5
10
Slovakia

Spain
Austria
Belgium

Ireland
Croatia Croatia
Cyprus Cyprus

Denmark Denmark
Estonia Estonia
Finland Finland

Italy
Latvia

Netherlands

Portugal
Malta
France

Sweden
Bulgaria Bulgaria

Czech Republic

Germany Germany
Greece
Hungary Hungary

Lithuania Lithuania
Luxembourg

Poland

Romania

Slovenia

60 1.5 1.4 0.2 2

-1 5
40 0
20 -5
Slovakia

Spain
Austria
Belgium

Ireland
Italy
Latvia

Netherlands

Portugal
Malta
France

Sweden
Czech Republic

Greece

Luxembourg

Poland

Romania

Slovenia

EIS 2022 Average EU Change over time, %

Figure 6. Performance relative to the EU average in 2022 [10]. Change over time 2015–2022. Own elab-
oration.
Figure 6. Performance relative to the EU average in 2022 [10]. Change over time 2015–2022. Own
EIS 2022 Average EU Change over time, %
elaboration.
Regarding the evolution of the indicators in the last 5 years (2020 does not present
data), the four countries are grouped into two groups: one with performance above the EU
Figure 6. Performance relative to the EU average in 2022 [10]. Change over time 2015–2022. Own
average with positive evolution, represented by Ireland and Belgium, and another, with
elaboration.
performance below the EU average, where the Czech Republic and Portugal are, with the
lowest results being presented by the latter country (Figure 7). While the Czech Republic
showed a sustained improvement in the last 5 years, Portugal showed a lower performance
in 2021.
 Regarding the evolution of the indicators in the last 5 years (2020 does not present
EU average
data), the four with positive
countries are evolution, represented
grouped into two groups:by Ireland
one withand Belgium, and
performance another,
above the
EUwith performance
average below evolution,
with positive the EU average, where the
represented by Czech
IrelandRepublic and Portugal
and Belgium, are, with
and another,
theperformance
with lowest results being
below thepresented by where
EU average, the latter
thecountry (Figure and
Czech Republic 7). While the are,
Portugal Czech Re-
with
thepublic
lowestshowed
resultsabeing
sustained improvement
presented in thecountry
by the latter last 5 years, Portugal
(Figure showed
7). While a lowerRe-
the Czech per-
Sustainability 2023, 15, 10446 formance
public in 2021.
showed a sustained improvement in the last 5 years, Portugal showed a lower 11 per-
of 17
formance in 2021.
2022

PORTUGAL
2021
2022

PORTUGAL
2020
2021
2019
2020
2018
2019
2022
2018

IRELAND
2021
2022
2020

IRELAND
2021
2019
2020
2018
2019
2022

CZECH REP.
2018
2021
2022

CZECH REP.
2020
2021
2019
2020
2018
2019
2022
2018

BELGIUM
2021
2022
2020

BELGIUM
2021
2019
2020
2018
2019
70 80 90 2018 100 110 120 130
70 80 90 100 110 120 130
Figure 7. Evolution of the EIS between 2018 and 2022 [10,23–25]. Own elaboration.
Figure
Figure 7. 7. Evolution
Evolution of of
thethe EIS
EIS between
between 2018
2018 and
and 2022
2022 [10,23–25].
[10,23–25]. Own
Own elaboration.
elaboration.
This analysis shows that Portugal is moving away from the EU countries with which
This analysis shows that Portugal is moving away from the EU countries with which
it has
Thisalready been
analysis showscompared in terms
that Portugal of innovation,
is moving and the
away from the EU
factcountries
that the growth
with whichof the
it has already been compared in terms of innovation, and the fact that the growth of the
innovation
it has alreadyecosystem is below
been compared in the
termsEuropean averageand
of innovation, makes
the Portugal’s
fact that therecovery
growthmore
of thedif-
innovation ecosystem is below the European average makes Portugal’s recovery more
ficult andecosystem
innovation predicts the stagnation
is below of the country’s
the European averageeconomy.
makes Portugal’s recovery more dif-
difficult and predicts the stagnation of the country’s economy.
Over
ficult and the past
predicts the5 stagnation
years, Portugal of thehas shown economy.
country’s innovation indicators far behind those of
Over the past 5 years, Portugal has shown innovation indicators far behind those of
Belgium andpast
Over the Ireland. Business
5 years, Portugal investment,
has shown asinnovation
well as investment
indicators infar
innovative products
behind those of
Belgium and Ireland. Business investment, as well as investment in innovative products
and business
Belgium and processes,
Ireland. fell significantly
Business investment, in well
as 2021 asand 2022 (Figure
investment in 8). As for intellectual
innovative products
and business processes, fell significantly in 2021 and 2022 (Figure 8). As for intellectual
andassets, Portugal
business
assets, was below
processes,
Portugal was below Ireland but
fell significantly
Ireland but above
above
in 2021Belgium
and 2022
Belgium and(Figure
and the Czech
the Czech Republic.
8). Republic.
As Indeed, in
for intellectual
Indeed, in
line
assets, with what
Portugal was
was found
below for GII,
Ireland intellectual
but above capital
Belgium was
and a
the strength
Czech of Portugal.
Republic.
line with what was found for GII, intellectual capital was a strength of Portugal. From the From
Indeed, the
in
environmental
line with what was
environmental point
found
point of view,
of view,
for GII,the
the country’s performance
intellectual
country’s performance
capital was well
was a was wellof
strength below that of
Portugal.
below that of the other
From
the other
the
countries
environmental in the comparison,
point of view, with
the a negative
country’s
countries in the comparison, with a negative trend. trend.
performance was well below that of the other
countries in the comparison, with a negative trend.

Figure 8. Evolution of
Figure 8. of the
the EIS
EIS 2022
2022 indicators
indicators [10,23–25].
[10,23–25]. Own
Own elaboration.
elaboration.
Figure 8. Evolution of the EIS 2022 indicators [10,23–25]. Own elaboration.
In 2022, the Portuguese innovation ecosystem scored below the other countries in
the comparison of environmental sustainability, an aspect considered by the European
Commission to be a weak point in the country due to atmospheric emissions by fine
particles but also due to poor investment in environmental technologies and low resource
productivity (Figure 9).
Portugal’s corporate investment in innovation was the lowest in the comparison,
highlighting the low investment in innovation per employee. The impact of innovation
on the country’s exports was also low. The performance of innovative SMEs, namely
regarding innovation partnerships, and the impact of innovation on job creation was the
lowest in the comparison. Only in the digitalization indicator did Portugal manage to
 Sustainability 2023, 15, 10446 12 of 17

surpass the other countries, but the score was obtained based on only one sub-indicator,
broadband penetration. The panorama outlined was negative for the future of the Por-
Sustainability 2023, 15, x FOR PEER REVIEWtuguese economy. The path toward digitalization of the Portuguese 12 of 17 and private
public
sector has only just begun; Industry 4.0 is not yet a reality for most SMEs, and Industry
5.0 is practically a chimera [28,29]. The country’s strengths are its human resources, the
In 2022, the Portuguese
attractiveness innovationsystems,
of its innovation ecosystem scored
and below the other
its innovation and countries in theenvironment,
digitalization
comparison of environmental sustainability, an aspect considered by the European Com-
but it has difficulty in transforming these assets into growth in the economy and wealth
mission to becountry.
for the a weak point in theinvestment
Business country duein to innovation,
atmospheric emissions
the impact byof
fine particles on exports,
innovation
but also due to poor investment in environmental technologies and low resource produc-
and environmental sustainability stand out as weaknesses of the Portuguese innovation
tivity (Figure 9).
ecosystem. A breakdown of the various innovation indicators is presented below.
Human resources
Environmental 200 Attractive research
sustainability systems
150
Sales impacts 100 Digitalisation

50
Employment impacts 0 Finance and support

Intellectual assets Firm investments

Use of information
Linkages
technologies
Innovators
IRELAND BELGIUM CZECH REP. PORTUGAL

Figure
Figure 9. Comparison
9. Comparison of EIS
of EIS 2022 2022 indicators:
indicators: Ireland,Czech
Ireland, Belgium, Belgium, Czech
Republic, andRepublic, and Portugal [10].
Portugal [10].
OwnOwn
elaboration.
elaboration.

Portugal’s corporate
The human investment
resources in innovation
indicator was the
is assessed by lowest
the numberin the of comparison,
PhD holders, the per-
highlighting the low investment in innovation per employee. The impact
centage of the population between 25 and 34 years old with tertiary education, of innovation on and the
the country’s exports was also low. The performance of innovative SMEs, namely regard-
longevity of education for the population between 25 and 64 years old. The attractiveness
ing innovation partnerships, and the impact of innovation on job creation was the lowest
of research systems is assessed through international scientific co-publications, the citation
in the comparison. Only in the digitalization indicator did Portugal manage to surpass the
of publications by national authors, and the percentage of foreign doctoral students in
other countries, but the score was obtained based on only one sub-indicator, broadband
nationalThe
penetration. R&D entities.
panorama Digitalization
outlined was negativehas for
onlythetwo components:
future of the Portuguesebroadband
econ- penetration
omy.and
Thethe
path percentage of the population
toward digitalization with digital
of the Portuguese skills
public andabove
privatebasic.
sectorExcept
has onlyfor broadband
penetration,
just begun; Industry Portugal’s scores
4.0 is not yet on all
a reality foritems
most were
SMEs,below Ireland’s
and Industry 5.0 and above the Czech Re-
is practically
public’s
a chimera (except
[28,29]. for the number
The country’s strengthsof arePhD holders).
its human Portugal
resources, was in lineof
the attractiveness with
its Belgium in
broadband
innovation systems,penetration, digital skills,
and its innovation and foreign
and digitalization doctorate students,
environment, but it has which
diffi- shows the
cultyattractiveness
in transformingofthese assets into growth
the Portuguese in the
research economy and wealth for the country.
system.
Business investment
Regardinginfinanceinnovation, the impactpublic
and support, of innovation on exports,
expenditure and environmen-
on R&D, venture capital spending,
tal sustainability
and government stand support
out as weaknesses of the Portuguese
to R&D companies innovation Business
were assessed. ecosystem.investment
A was
breakdown of the various innovation indicators is presented below.
assessed through R&D expenditure, expenditure on non-R&D innovation, and innovation
The human resources indicator is assessed by the number of PhD holders, the per-
expenditure per employee. The use of information technologies was measured by the
centage of the population between 25 and 34 years old with tertiary education, and the
number of firms providing ICT training and the number of employees specializing in
longevity of education for the population between 25 and 64 years old. The attractiveness
ICT. Belgium’s
of research systems isscoresassessedwere higher
through than the scientific
international other countries in all items,
co-publications, except for the
the cita-
employment of ICT specialists, an item dominated by Ireland.
tion of publications by national authors, and the percentage of foreign doctoral students Portugal presented the
in national R&D entities. Digitalization has only two components: broadband penetration innovation
lowest values of the four countries, surpassing, however, Ireland in public sector
investment
and the percentage and non-R&D
of the populationinnovation
with digitalinvestment
skills aboveand theExcept
basic. CzechforRepublic
broadband in government
supportPortugal’s
penetration, to R&D companies.
scores on all There was abelow
items were particularly
Ireland’snegative
and abovefocus for R&D
the Czech Re- expenditure
public’s
per (except
employee for the
in thenumber of PhD holders).
Portuguese case. The Portugal
Czechwas in line with
Republic had Belgium in sector and
less public
broadband
businesspenetration,
investment digital skills, and foreign
in innovation, but the doctorate
country’s students,
spending which onshows
non-R&Dthe innovation
attractiveness
exceededofall theothers
Portuguese
(+60% research
than thesystem.
EU average), which could be a lever for innovation
Regarding finance
growth in this country. and support, public expenditure on R&D, venture capital spend-
ing, and government support to R&D companies were assessed. Business investment was
In the innovators (SMEs) indicator, product and business process innovation was
assessed through R&D expenditure, expenditure on non-R&D innovation, and innovation
considered and, and in the linkages indicator, innovative SMEs that collaborate with
expenditure per employee. The use of information technologies was measured by the
others, public-private co-publications, and the mobility of highly qualified workers were
Sustainability 2023, 15, 10446 13 of 17

considered. To evaluate intellectual assets, patent, trademark, and design registrations

were considered. Belgium, followed by Ireland, dominated half of the parameters under
evaluation. Portugal presented the lowest results in terms of product innovation and
business process innovation, as well as in the establishment of linkages/partnerships,
revealing that the establishment of partnerships and coopetition are not regular practices
in the Portuguese business environment, which may be related, in part, to the national
culture [18]. Data from the EIS 2020, 2021, and 2022 show that not only does Portugal show
indicators for cooperation between SMEs and between the public and private sectors below
European counterparts, but indicators for these two items have been falling since 2020. In
line with the creative innovation results referred to in the previous section [5], Portugal
showed good results in brand and design registration. Regarding the high mobility of
highly qualified workers presented by Portugal, it could be considered that the lack of
qualified resources in the Portuguese labor market could partly justify the score.
The employment impacts indicator evaluates employment in knowledge-intensive
activities and in innovative SMEs. Regarding the sales impacts, exports of high- and
medium-technology goods and knowledge-intensive services were evaluated, as well as
the sale of innovative products. Regarding environmental sustainability, resource productiv-
ity, air emissions of fine particles, and environmental technologies were evaluated. Ireland
dominated most of the parameters, namely employment in knowledge-intensive activities
and exports of innovative products. Portugal had difficulties in employment in innovative
companies and in exporting high- and medium-technology goods and knowledge-intensive
services. Portugal had poor environmental sustainability, with a score of zero for atmo-
spheric emissions of fine particles and poor resource productivity, in line with what was
previously mentioned based on GII data.

5. Conclusions and Implications

This article contributes to the literature by providing insight into the state of innova-
tion in Portugal and identifying the areas where it excels and those where others achieve
better results. The success of vaccination in Portugal could have represented a compet-
itive advantage for Portugal, but contrary to expectations, the indicators regarding the
Portuguese innovation ecosystem dropped in 2022 in a country increasingly dependent on
tourism to raise national GDP [30].
In global terms, most EU countries have fallen in the GII ranking over the last 5 years.
Of the four countries under comparison, Ireland occupied the highest position (23rd),
followed by Belgium (26th), the Czech Republic (30th) and, finally, Portugal (32nd), which
showed the greatest decrease in 2022 and which presents a growth in innovation in line with
its level of development, thus foreseeing an evolution without major qualitative leaps in
the coming years. Portugal showed the largest deviation from the GII average for the EU27
countries. The data cast a shadow over the country’s capacity to face the challenges of the
future and to retain talent (rather than letting talent emigrate to countries offering higher
salaries, better working conditions, and better career opportunities), which is so necessary
for the national economy. According to the GII 2022, institutions, business sophistication,
and knowledge and technology outputs were the indicators in which Portugal scored the
lowest. Portugal’s sharp decline in institutions, motivated by the low score in terms of
business environment, may reveal less confidence in the institutions’ capacity to undertake
reforms and face the challenges of the future. The country had the lowest score in terms
of business sophistication (despite showing a positive trend in the last year) because of
the low scores on innovation partnerships and knowledge transfer, aspects that may be
related to the country’s culture (additionally, a slow judicial system may hinder innovation
partnerships). Regarding knowledge and technology outputs, Portugal occupied the last
place in the comparison (influenced by the low score in knowledge diffusion), a fact that
should lead to serious internal reflection, considering that human capital and research are
a national strength. On this specific point, we should learn from the example of Ireland,
which was first in the world ranking in knowledge diffusion. Finally, a negative note for
Sustainability 2023, 15, 10446 14 of 17

the decrease in labor productivity, which should be of special concern in a country with an
aging population and the departure of highly qualified young people (though there are
policies in place to bring back emigrants, apparently little is being done to avoid emigration
in the first place—with perhaps more positive organisations, led by positive leaders, who
encourage young talent and innovative ideas [31], promoting brilliant minds instead of
maintaining the status quo and existing relationships [32]).
As regards human capital and research, Portugal’s evolution was in line with Ireland’s
and ranked highly. Education as well as the number of researchers are strengths of the
country; however, Portugal has not demonstrated the capacity to transform this advantage
into results that promote the growth of the economy and retain talent. The country has a
highly qualified and much-needed fraction of the population for economic growth, vital
for the renewal of the aging active population, who have difficulty finding in Portugal the
answer to personal and professional aspirations and who choose to leave the country. In
line with human capital, Portugal scored high on creativity outputs, which was clearly
a strength.
Portugal was in the 3rd quartile of the EIS 2022 (EU 27) and in the last 5 years has
performed below the EU average and presented the lowest results of the comparison.
Business investment, as well as investment in innovative products and business processes,
fell significantly in 2021 and 2022 and were lowest in the last year. In 2022, Portugal
was ranked as a Moderate Innovator at 85.8%, below the average of its group (Moderate
Innovators), which was 89.7%. The Czech Republic was ranked in the same group as
Portugal but had an overall score above the group average of 92.6%. Ireland was a Strong
Innovator and Belgium was a Leading Innovator, respectively, with 118.9% and 128.8%.
Ireland was above its group average (114.5%), and Belgium was below its group average
(134.4%). In Belgium, the performance of the innovation ecosystem is growing at 16.8%,
which is faster than the EU (9.9%); in Ireland, it is growing at 7.1%, in the Czech Republic
at 19.8% (almost twice the EU level), and in Portugal at 6.4%. Hence, the gap between the
country and its European counterparts is expected to widen. The impact of innovation on
exports as well as the performance of innovative SMEs scored lowest in Portugal. Only
in broadband penetration did Portugal manage to overcome the remaining countries, but
the concept of Industry 4.0 is still distant from many companies in Portugal. In terms of
intellectual assets, Portugal was below Ireland but above Belgium and the Czech Republic,
in line with the GII results for human capital, as well as in brand registration and design
(creativity). From the environmental point of view, Portugal performs well below the other
countries, with a negative trend.
From the analysis, it is evident that Portugal is moving away from the EU countries in
terms of innovation and from those with which it has been compared in socio-economic
indicators in the last decade. The fact that the growth of the Portuguese innovation
ecosystem is below the European average makes the recovery of the country more difficult
and predicts the stagnation of the economy in the short term. The country’s strengths are its
human capital, the attractiveness of its research systems, and creativity, but it has difficulty
capitalizing on these assets. The aging of the population is worrying, and the birth rate
shows no signs of reversing, making it vital to have policies to encourage and support
motherhood, like what has been done in other EU countries (which face the problem of an
aging population in a generalized manner). Low salaries in Portugal make it difficult to
increase the number of children per couple, and bringing up a young person continues to
be a significant financial effort for most families.
On the other hand, the implementation of Industry 4.0 in companies causes transfor-
mational changes in talent management, which should motivate leaders, managers, and
entrepreneurs to undertake changes in organizational culture. The speed of technological
change creates a significant gap between the current capacity of human resources and
the rapidly evolving requirements of their roles. New skills are required not only in the
technical area but also in the behavioral area, and to attract talent, companies must promote
themselves as employers, a task that appears difficult given the mismatch between present
Sustainability 2023, 15, 10446 15 of 17

needs and the expectations of future recruits. Leadership within organizations is fundamen-
tal to retain talent, and new generations expect more from leaders. Middle managers are
increasingly recognized as critical talent given their essential role in managing change [33].
Precarious youth employment, low wages and housing difficulties not only make it difficult
to retain young people and talent but also jeopardize one of the country’s most important
assets—people. The departure of young people from the country and the flight of talent is
one of the most serious problems facing the country and has been aggravated by the aging
of the population. Eurostat data reveal that 100,000 young Portuguese people between the
ages of 25 and 29 live outside the country [12].
This study contributes to the knowledge about the Portuguese innovation ecosystem
and provides clues to entrepreneurs and governments on what to do better and how to
contribute to create a strong commitment of the scientific community and civil society in
the exercise of a responsible and active citizenship. To face the challenges of the future,
Portugal must redefine policies and strategies, face internal challenges related to culture,
leadership and governance, retain talent, reverse the low productivity and low birth rate,
and invest in digitalization.

5.1. Suggestions for Future Research

An upcoming wave of research focuses on negative organizations and is dedicated to
the explanation of how the status quo may triumph over the implementation of innovation
in firms of all sizes and in all sectors [32,34]. If it is the case that Portugal has a considerable
number of negative organizations, where talented young people will not want to work
for a dearth of growth opportunities, then government policy may be needed to increase
the existence of a meritocracy in firms, much as it already exists in academia (compara-
tively and to a certain extent). Further research could look into the existence of negative
organizations, which are seen to be more prolific in relationship cultures such as those
found in South-Western Europe [35]. This exacerbates the need for the existence of more
positive organisations, indeed worldwide, to make work more pleasant, more satisfying,
more challenging and engaging, as is already the case in certain successful organisations
where transformational leadership is enjoyed.

5.2. Limitations and Directions for Future Work

This study has some methodological limitations that affected its potential contributions.
The specific period selected could affect the causal relationships. A historical perspective
could provide clues to the understanding of the scores obtained and Portugal’s ability
to overcome difficulties or leverage strengths. Another limitation of the study comes
from the countries selected for comparison; in future work, the results obtained can be
compared with the results of similar studies in other European Union economies. The
conclusions could be complemented with the study of data from other sources, and data
should be cross-checked to assess whether there is information bias motivated by different
country perspectives.

Author Contributions: E.M.O.C. and M.A.-Y.-O.: conceptualization. E.M.O.C.: methodology, anal-

ysis, investigation, writing—original draft preparation, writing—review and editing. M.A.-Y.-O.:
validation, writing—review and editing, supervision, finance acquisition, approval of the final version
of the manuscript. All authors have read and agreed to the published version of the manuscript.
Funding: This work was financially supported by the Research Unit on Governance, Competitiveness
and Public Policies (UIDB/04058/2020) + (UIDP/04058/2020), funded by national funds through
FCT—Fundação para a Ciência e a Tecnologia.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: Not applicable.
Conflicts of Interest: The authors declare no conflict of interest.
Sustainability 2023, 15, 10446 16 of 17

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