Belgium’s innovative capacity seen through the lens of patent data

Belgium has one of the highest productivity levels in the OECD. However, its productivity growth has fallen over the last few decades, and more so than elsewhere. This slowdown has attracted a lot of attention and fuelled debates in recent years. As innovation is a basic lever for future economic growth, assessing its innovative capacity is an important aspect of diagnosing an economy’s competitiveness.

Empirical research work on innovation performance often relies on patent data. Patents essentially play a dual role: on the one hand, they encourage innovation thanks to the protection they give inventions – either new products or new processes – and on the other hand, because they are legal titles that can be traded, they facilitate the diffusion of technology, thus improving overall technological efficiency.

In light of rich data on patents, this article seeks to understand how Belgium’s innovative fabric has developed and specialised over the last few decades. New emerging technologies – green technology, artificial intelligence, digitalisation – open up significant opportunities. Assessing whether Belgium is well positioned in innovative domains is key to gauging the prospects for future potential growth. This critical role of innovation and advanced research is emphasised even more by the COVID-19 crisis, as they have become closely linked to public health issues of the highest importance.

Overall, the analysis brings up a number of key findings.

On the one hand, Belgium has several assets. First of all, in the international top countries active on the European market, Belgium has managed to maintain, consistently over time, a strong place as a patent producer. Besides, several life sciences sectors are likely to record major innovations as a result of the COVID‑19 crisis. Belgium is involved in several global projects trying to find vaccines and medical treatment, pointing up the recognition of Belgian expertise in these areas. Thanks to its solid position in the pharmaceuticals sector, Belgium should in future continue to be a key player in epidemiological research. Moreover, Belgium is highly active in international collaboration resulting in patents: it tends to benefit from economies of scale from being part of a global network of researchers. This kind of contribution to the development of leading technologies mirrors the recognition of the skills and value of Belgian inventors and researchers and their attractiveness to foreign multinationals. Finally, universities and academic research laboratories have become key actors on which Belgium’s innovation potential can count.

But on the other hand, there are also weak points. In fact, the main fields of technological inventions patented by Belgium do not coincide with the fastest-growing sectors of innovation on the rest of the European market. In particular, Belgium seems to have been left out from digital innovation. In addition, a high degree of concentration can be observed: patents are determined by a few (large) entities, both Belgian and foreign, active in just a handful of key sectors. Moreover, and unlike other economies that are also R&D-intensive, Belgium has not been able to fully appropriate the returns from the knowledge created when it comes to allocating ownership rights for Belgian patents. Together with evidence of relatively high concentration, this is a source of vulnerability and dependence upon external entities at a time where large uncertainties prevail, not least because of deglobalisation fears and reshuffling of supply chains in a wide range of industries, but also because of the changing underlying dynamics of innovation, tilting towards technologies where Belgium is in not such a good position. Also, the flipside of the key role of universities is that Belgian firms, in particular SMEs, seem to put relatively less effort into producing patents. This echoes the observation that weak entrepreneurship is embedded in the Belgian economic fabric more generally.

The analysis set out in this article confirms that innovation remains a core lever for future productivity and economic growth. In the light of this, a purely descriptive exercise conducted at sectoral level for Belgium and other EU countries suggests there is large sectoral heterogeneity and that a positive correlation between patents and future productivity gains cannot be ruled out. It goes without saying that the results obtained from this kind of approach need to be treated with caution. But it is an interesting starting point for more in-depth empirical research.