Rural areas across Europe are becoming unexpected hubs of innovation, with projects in robotics, semiconductors, and renewable energy highlighted in the JRC policy brief
A new JRC policy brief from the European Commission’s Joint Research Centre (JRC) shows how rural regions are transforming their economies by embracing high-tech industries and creating entrepreneurial dynamism.
Cities are still ahead in startup activity; the JRC policy brief finds that rural areas are increasingly hosting innovation businesses in knowledge-intensive sectors far beyond traditional agriculture.
Rural innovation goes beyond agri-food
Rural innovation is usually linked to agri-food and resource-based industries. However, the new JRC policy brief reveals that rural startups are becoming more diverse, expanding into fields such as energy, transport, robotics, and semiconductors.
Rural regions account for more than 11% of all EU robotics startups, showing their growing role in Europe’s technological landscape.
Although only 6% of all EU startups were located in rural areas in 2024, some regions are outperforming expectations. Areas such as Val-d’Oise in France, Alb-Donau-Kreis in Germany, and Imperia in Italy report higher-than-average startup shares relative to their rural populations. These success stories show that, with the right mix of local assets and supportive policies, rural regions can support innovation and attract entrepreneurial talent.
Entrepreneurial dynamism in the countryside
Entrepreneurial dynamism is measured through firm creation rates and business growth and is a key indicator of how actively regions are renewing their economies.
While urban regions led in firm creation in 2022 with an average rate of 10.1%, some rural areas were standout performers.
In Estonia’s Lääne-Eesti and Romania’s Giurgiu, the firm creation rate reached 17% and 16.2% respectively, surpassing many urban areas. In total, 59 rural regions across Central and Eastern Europe, including Hungary, Croatia, Poland, and Finland, reported firm creation rates well above the EU average of 9.4%. In countries such as Hungary, Italy, and Latvia, rural regions performed on par with their urban counterparts, showing that innovation is not confined to metropolitan centres.
One standout example is Sweden’s rural region of Jämtland, which leads Europe in high-growth enterprises. In 2022, 21.2% of its firms were classified as high-growth.
Jämtland’s success comes from a combination of strong local networks, an entrepreneurial culture, and sustained investment in learning and innovation. The region boasts one of Sweden’s densest networks of coworking and learning hubs, dynamic business clusters, and community-led initiatives that promote lifelong learning and skills development.
The right conditions for rural innovation
The JRC policy brief shows how the right local conditions can make all the difference. Targeted public investments, skills training, digital infrastructure, and accessible financing are key enablers for rural innovation. Reducing administrative burdens, promoting entrepreneurial education, and strengthening local innovation networks further help rural economies thrive.
An innovative Europe
Small and Medium Enterprises (SMEs) and startups are still key to Europe’s economic resilience and territorial cohesion. To ensure no region is left behind, the EU continues to support entrepreneurship through its Cohesion Policy, the European Regional Development Fund, and initiatives such as the SME Strategy for a Sustainable and Digital Europe.
The European Startup Village Forum, coordinated by the JRC, connects policymakers and local communities to share evidence and strategies for rural innovation.
