Innovativeness in Europe, measured by domestic patent applications per million residents, declined in the last two decades. On the other side, expenditures for research and development, both total and from the business sector, have increased for the last two decades. Innovativeness is an integral part of all European strategic documents. Still, it declines. This study aims to investigate possible causes of declining innovativeness in Europe. Therefore, we examine trends in expenditures for research and development (total and business), the number of researchers in the R&D sector, tertiary education attainment, and the share of graduates in STEM programs. The sample is 38 European countries, USA, and Japan, from 1998 to 2022 (or upon data availability). The descriptive statistical analysis shows that a strong positive linear relation exists between the number of patent applications (per million residents) and total and business expenditures for R&D, the number of researchers in R&D, and GDP per capita. A positive correlation was observed between the number of patent applications (per million residents) and government expenditures per tertiary education student, expenditure on tertiary education, and tertiary student graduates, although with lesser relevance. Applying OLS model on panel data, we show that growth in business expenditures for R&D (percentage of GDP) by one percentage point leads to growth in the number of patent applications per million residents by 88.2, growth in the number of researchers in R&D per million people by one percentage point leads to growth in number of patent applications per million residents by 0.01, and that growth in the percentage of graduates from STEM programs by one percentage point leads to growth in the number of patent applications per million residents by 1.5. This study shows that expenditures for R&D and education in STEM programs are essential determinants of the country’s innovativeness. Research and development-intensive industries, where patents are critical to competition, need an enabling environment to institutionalize innovation and reward investments in innovative technologies and processes.