This study aims to analyse the creation of knowledge in the European neighbourhood and the diffusion of knowledge among EU countries and European neighbouring countries (ENCs). We first collate different indicators of knowledge production and diffusion in order to characterise the main feature of ENCs. In this respect, we contribute not only with an overview of potential knowledge interactions between EU and ENCs, but also suggest original ways to account for the different facets of knowledge diffusion. We use these indicators to assess the efficiency of ENC and EU in their use of knowledge resources, relying on data envelopment analysis (DEA). Contrary to the rare DEA studies in the field, inputs are both internal and external. The results show that, despite their weakness, ENCs may benefit from their orientation towards the EU for access to external knowledge, with some of them successfully turning their rare knowledge resources into knowledge creation and innovation.