Which is the most innovative country in Europe?

Could Malta, a little island nation with a population of 400,000, be the most IT-savvy country in Europe?

Well, it all depends how you measure it. Technology exports, innovation, research spending, or broadband usage: all skew the answer in different directions. Scandinavian countries lead in telecommunications deployment, Germany in patent awards, and others in technology exports.

For instance Malta, a member of the European Union since May 2004, derives a greater proportion of its export revenue from high technology than any other European country, according to figures from Eurostat, the statistical service of the European Commission. High-tech goods and services accounted for 55.9 percent of Malta's exports in 2004.

In Ireland, where the government has worked hard to attract pan-European manufacturing, distribution and service operations for IT manufacturers including Apple Computer, Dell, and Intel, high technology only accounted for 29.1 percent of the country's exports. In comparison, the U.S. gained 27 percent of its export revenue from high technology and Japan 22.8 percent.

For the U.K. the figure is 22.7 percent, and for France 20 percent, with Germany trailing at 14.8 percent.

Eurostat's definition of high-tech encompasses more than just computers: It also includes the manufacture of consumer electronic devices, pharmaceuticals, medical instruments and aircraft. The service side is almost exclusively IT-related, though: it includes telecommunications, computer and related activities, and R&D (research and development).

Malta's high-tech industry is a giant in another surprising sense: production value or, roughly speaking, sales. Its manufacturers generated annual average production value of €21 million ($25 million), according to figures from Eurostat for 2002, the most recent year for which data is available. The average is pulled up by the activities of a few big companies, including the Maltese subsidiary of automotive switch and sensor maker Methode Electronics Inc., which contributes annual sales of around €44 million to the group, and the Maltese division of ST Microelectronics, which claims to be the island's biggest exporter.

Let's keep things in perspective, though: Malta has fewer than 290 high-tech manufacturers (for this country, Eurostat lumps high-tech manufacturers in with makers of bulk chemicals, machinery and motor vehicles) but Italy has over 34,651 of them, making it the country with the most high-tech manufacturing companies in Europe. That's almost twice as many as Germany, and represents 6.3 percent of the country's total manufacturing companies. However, despite being more numerous than their German counterparts, the Italian companies were much smaller, with average production values one third or less of those in Germany.

Where Germany excels is in the proportion of its manufacturing businesses that are in the high-tech sector.

Of Germany's 196,702 manufacturing companies, 19,346 or 9.8 percent were in the high-tech sector in 2002, ahead of the average of 6.3 percent for Europe's 25 member states (although only 15 of them were members at that time the statistics were gathered).

Curiously, though, Germany's high-tech manufacturers generated slightly less production value than their low-tech counterparts, with both categories averaging between €6 million and €7 million.