Europe is Increasingly One Connected Knowledge Economy

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Europe is currently going through tough times with war raging, inflation and a recent global pandemic. However, we are also witnessing significant changes in economic development in Europe, which will give us more insight into how the economic map will evolve in the next period of global growth. Education jobs are growing mainly in the South and East, two regions that previously lagged significantly behind the North and West. Places such as Stockholm and London remain the leading education hubs, although the three Eastern European capital regions now have the highest concentration of education workers. English as a common language for work and digital communication is turning Europe (EU countries, UK, Switzerland, Iceland and Norway) into an integrated economy.

Over the past six years, we have watched how the share of the working population working in enterprises requiring higher education in 31 countries and 280 regions of Europe has been developing. In 2020, the number of jobs requiring knowledge decreased due to the global pandemic and economic recession, but in 2021, growth resumed.

Geographical alignment is a major European trend. An analysis of how the concentration of jobs in the brain business has changed over time shows that since 2014 it has increased by more than 33 percent in nine European countries. The highest growth was in Cyprus at 55 percent, followed by Latvia at 48 percent. All nine top climbers are found in Southern and Eastern Europe. Moreover, countries with a high concentration of brain business jobs in the past have been relatively stagnant.

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Important changes are taking place as brain business jobs grow in some parts of Europe, combining the relatively low cost of employing talent. Between 2014 and 2021, the proportion of the adult population working in brain business will increase from 4.3 to 5.3 percent in Southern Europe, from 4.4 to 5.9 percent in Eastern Europe, from 7.8 to 8.2 percent in Northern Europe, and increased from 7.4 to 8.4 percent. In Western Europe.

The rate of change in concentration of jobs in the brain (working-age population per capita) 2014-2021
Cypress 55% Czech Republic 22%
Latvia 48% The Netherlands 15%
Lithuania 42% Italy 14%
Hungary 62.2% United kingdom 12%
Poland 39% Luxembourg 8%
Portugal 39% Sweden 4%
Estonia 72.0% Norway 3%
Slovenia 60.8% France 3%
Slovakia 34% Austria 2%
Bulgaria 31% Switzerland 0%
Malta 30% Denmark -1%
Romania 30% Iceland -4%
Spain 28% Greece -11%
Croatia 27%
Belgium 25%
Finland 25%

The concentration of knowledge-intensive jobs is highest in Switzerland, where 10.1 percent of the population works in the brain business. Ireland has the highest proportion of knowledge-intensive firm jobs, followed by Sweden, where 9.3 percent of the population work in brain businesses. Ireland overtook Sweden to second place in the brainstorming jobs index because the country has attracted many US tech companies and has policies that encourage domestic entrepreneurship.

At the regional level, Slovakia’s capital Bratislava region remains the European region with the highest concentration of brain business jobs. More than 22 percent of the working population of this region work in firms that require knowledge. Budapest and Prague are in second and third place, followed by Stockholm, Oberbayern, Paris, Copenhagen, Oxford region, Warsaw and London. Four of the top 10 regions are located in Eastern Europe, three in Western Europe, one in Southern Europe and the remaining two in Northern Europe.

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European regions with the highest concentration of brain business jobs (percentage of adults working in technology, ICT, advanced services and creative occupations, metropolitan areas highlighted in blue)
1 Bratislava 22.4%
2 Budapest 19.9%
3 Prague 19.9%
4 Stockholm 17.8%
5 Oberbayern 17.6%
6 Paris 16.7%
7 Copenhagen 15.9%
8 Berkshire, Buckinghamshire and Oxfordshire 15.9%
9 Warsaw 15.8%
10 London 15.4%

Paris has more than 1.2 million brain business jobs and remains the only region in Europe with more than a million employees in knowledge-intensive businesses. In total, more than 2.3 million brain businesses operate in the capital regions of Southern Europe (Paris, Madrid, Rome, Lisbon, Athens, Cyprus and Malta). This can be compared with the employment of 1.7 million knowledge-intensive firms in the capitals of Western Europe (London, Berlin, Amsterdam, Vienna, Brussels, Luxembourg). The capitals of Eastern European countries (Warsaw, Budapest, Bucharest, Prague, Sofia, Bratislava, Zagreb, Latvia, Ljubljana, Vilnius and Estonia) have a total of about 1.5 million brain business jobs. Scandinavian countries have a good record of creating jobs that require knowledge, but the population is small. The Northern Capital Regions (Stockholm, Copenhagen, Helsinki, Oslo and Iceland) have a total of around 700,000 brain business jobs.

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Southern and Eastern Europe lag behind Western and Northern Europe in economic development, but are now catching up. At the regional level, Eastern European capital regions have the highest concentrations of knowledge-intensive jobs, with Paris and other Southern European capital regions leading in absolute numbers. From year to year, the working map of the brain business of Europe is changing. Education jobs are evenly distributed across Europe and are growing mainly in regions that combine an abundant supply of talent with relatively low labor costs.

We believe that this gradual geographic alignment will stimulate institutional competition as European countries increasingly seek to implement policies to encourage business growth, investment attraction and talent formation through the education system. A significant change is that remote working between nations is becoming more and more common. European knowledge businesses headquartered in places like Stockholm and London are increasingly working with knowledge businesses in Southern and Eastern Europe. Increased cooperation and institutional competition towards pro-growth policies will allow European education jobs to compete with those of the US and China. Indeed, institutional competition, along with cooperation across regional and national borders, has historically been a hallmark of European success, and we believe that the new shift to digital telecommuting will further enhance cooperation and competition in Europe.


Authors:
Nima Sananji, Director of the European Center for Entrepreneurship and Policy Reform
Klaas Tikkanen, Operations Director, Nordic Capital

Lead image: World map via Wikimedia under CC 3.0 license.

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