This indicator for the cohesion countries is well below the EU average, despite some convergence over the 1990s. In sum, therefore, the scientific and technological systems in cohesion countries are characterised by low RTD intensity, over-representation of the public sector, low involvement of the private sector, weak links with the productive sector and low levels of technology transfer. In consequence, regional development policies should focus on strengthening the environment in which firms operate and, in particular, the link between the scientific system and business. The regional distribution of innovative capacity in the EU reflects the structure of national scientific and technological systems, though regional differences within Member States serve to widen disparities even further. Similar disparities are evident for business expenditure, human resources and patent applications.
Interregional differences are particularly large in the cohesion countries.
According to the preliminary results of the second Community Survey on Innovation, the former group of regions are those with the highest innovation intensity in manufacturing, the highest number of enterprises with innovation activities and the highest turnover from innovative products. Most regions in Greece, Spain and Portugal, on the other hand, are at the other extreme. The importance of the regulatory, organisational and institutional environment These structural differences in science and technology alone cannot explain the weakness of the structure of economic activity in lagging regions. There is increasing consensus that the failure of firms in the regions concerned to innovate is not due primarily to scientific or technological problems, but to shortcomings in the regulatory, institutional and organisational environment in which firms have to operate. In the less favoured regions, this environment is often characterised by a combination of structural weaknesses, such as lack of a dynamic business services sector, a poorly developed financial system, weak links between the public and private sectors, sectoral specialisation in traditional industries with little inclination to innovate, low levels of public support for innovation and aid schemes which are poorly adapted to the needs of local SMEs.