The geography of innovation: patent insights into Europe's green and digital transitions

Innovation is a key driver of Europe's green and digital transitions, as well as of its global competitiveness. This report uses patent data from the Patent Cooperation Treaty (PCT) and the European Patent Office to assess where and how technological capabilities are evolving, with a focus on Italy's position in the European innovation landscape. The analysis reveals persistent cross-country and regional divides, but also signals a shifting global innovation frontier: China has rapidly emerged as a global leader in strategic technologies such as artificial intelligence and green innovation, overtaking the United States, the EU and Japan in international patent filings. This development highlights the need for Europe to reinforce its innovation leadership in high-value, globally competitive domains. Within Europe, Germany leads in both patent volume and quality, while France stands out in artificial intelligence (AI). Italy ranks fifth in patenting overall, with a strong industrial base and targeted specialization in green technologies, yet it grapples with marked regional imbalances and limited public sector involvement. AI patenting in Italy remains concentrated in the industrial North and is led by firms, whereas green innovation is more broadly distributed, offering potential for more inclusive growth. At the same time, the innovation process is becoming increasingly dominated by incumbent firms. The share of new and 'one-shot' patenting firms is declining, and the average age of first-time innovators is rising – pointing to structural barriers to entry and the growing complexity of frontier innovation. Stronger support for young, regionally dispersed innovators and complementary investments in adjacent technologies are essential to sustain and expand Italy's innovation capacity in the context of the Twin Transition.