EU rural businesses show strong innovation despite funding gaps

A report by the European Commission's Joint Research Centre (JRC) reveals that rural businesses in the European Union demonstrate significant innovative activity, though they face substantial hurdles in accessing capital. Based on Eurobarometer research involving over 12,000 companies, the study finds that 64% of rural enterprises engage in innovative activities, compared to 70% in urban areas.

Rather than being less innovative, rural businesses tend to innovate differently. They are more likely to combine product development with process improvements—a rate of 31% compared to 29% in cities—and frequently collaborate with competitors and universities. Additionally, industry and manufacturing hold a larger share of the rural economy at 25%, compared to 19% in urban settings.

The primary obstacle identified is the lack of European funding. Only 5% of rural businesses reported receiving EU funds for innovation, whereas 6.5% of urban businesses received similar support. While local and regional authorities fund 9.1% of rural enterprises, EU-level funds appear more closely linked to innovation in urban environments.