EU companies turn the tide in R&D investment, but can't match competitors

December 13, 2005

Brussels, 12 Dec 2005

The 2005 industrial R&D (research and development) investment scoreboard shows a turnaround in spending by European companies, with investment increasing. With a growth rate of 0.7 per cent (compared to a decline of two per cent last year), Europe's companies are however still behind the top non-EU companies, who this year saw a growth in R&D investment of seven per cent.

While the positive trend in Europe is therefore clouded slightly by the performance of its competitors, there is one piece of good news that cannot have the edge taken off it by the performance of others: the world's biggest investor in R&D is now a European company - Daimler-Chrysler. Another European company, Siemens, also just squeezes into the top five.

'The 2005 edition of the scoreboard gives room for some optimism, but also shows the enormous task still ahead of us if we want the EU to become a true knowledge economy,' said Science and Research Commissioner Janez Potocnik. 'We have some excellent performing EU companies, but we need greater coherence and ambition in establishing the right conditions for R&D and innovation across Member States so that we have many more of them,' he said.

This was the second edition of the scoreboard, and was prepared jointly by the Commission's Research DG and Joint Research Centre DG. It presents data on 1,400 companies: the EU's top 700 companies, and the top 700 from outside of the EU.

Altogether, these 1,400 companies invest 315 billion euro in R&D. Nine of the top 25 research investors are based in the EU, and 45 per cent of the EU's top 700 companies have increased their R&D investment by more than five per cent since last year's scoreboard.

However, the fact remains that EU companies invest a smaller proportion of their sales in R&D than their non-EU counterparts. One factor that could explain this gap is the different sectoral make up in the regions. While the large number of high-tech firms in the US ensures that R&D investment is constant, the EU's companies are concentrated in sectors such as automobiles and parts, considered 'medium-tech', where less R&D is considered necessary. 'There are relatively fewer scoreboard companies active in sectors where a much higher proportion of sales is invested in R&D, such as biotechnology, health and information technology,' according to the Commission.

Europe's low presence in high growth sectors such as biotechnology is notable, and according to Mr Potocnik, means that the continent could miss the boat if this sector leads to a huge growth surge as many anticipate. This is precisely what happened during the information technology (IT) boom in the 1990s, according to the Commissioner.

In the EU, business is the source of 54.3 per cent of total R&D investment, compared to 74.5 per cent in Japan, 63.1 per cent in the US and 60.1 per cent in China.

Further information

CORDIS RTD-NEWS/© European Communities, 2001
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