The EU2020 strategy contains a blueprint for transforming Europe into an ‘Innovation Union’ by 2020. The Innovation Union flagship initiative (October 6th, 2010) commits the EU to boosting investment in research and making Europe an attractive place to develop innovative products. According to this initiative, national governments will have to reform their innovation systems to boost cooperation between industry and universities, ensure a modernization of framework conditions for enterprises, and enact additional measures to enhance cross-border cooperation and to embrace joint programming.All these innovation aspects need to be carefully monitored by policy-makers in the European institutions, Member states and Regions. The focus of this project is on monitoring some key structural dimensions of the Innovation Union and the European Research Area (ERA).The study builds on the findings of a feasibility study called ERA_MONITORING carried out by the proponent in 2011 and financed by the 2010 Capacities work programme.The study addresses the development of four sets of indicators regrouped in relevant sub-dimensions and ultimately hinged into composite indicators to measure:1) progress towards a unified European Research Area (ERA), to attract talent and investment in order to create a genuine single market for knowledge, research and innovation.2) progress towards higher research excellence, meaning the vitality of the research environment and the quality of research outputs in both basic and applied research;3) structural change in the economy, to monitor the increase towards a more knowledge-intensive economy in Europe coherently with the orientations of the EU 2020 strategy and the Innovation Union initiative;4) diffusion of knowledge and technology between research institutions and industry to monitor the increase of knowledge transfer practices in view of optimizing market and societal uptake.