Research Investment: Choosing the right role models

May 14, 2003

Brussels, 13 May 2003

Much emphasis has been placed on the USA and Japan as Europe's benchmarks for national R&D expenditure when there are some stars in the EU that deserve more attention.

Last month's release of the Action Plan to boost R&D efforts in Europe sets out key initiatives to raise investment in research in the European Union. Today, this figure is around 1.9% of GDP. The aim is to increase it to 3% by 2010, with two-thirds financed by the private sector – as called for in the March 2002 Barcelona European Council.

"The 3% objective was not fixed for its own sake," said Research Commissioner Philippe Busquin during a lecture in the Hague late last year. "It was decided because we believe that research is the best point of entry to address the challenges faced by the European innovation system.

"There is a real problem with the lack of investment in research in Europe … [it] is not the fault of companies. It is our fault as policy-makers, for not making the European Research Area [ERA] attractive enough for companies," Mr Busquin conceded.

This is where companies like DaimlerChrysler, Volkswagen, Bayer and Siemens in Germany, Ericsson in Sweden, Alcatel in France, GlaxoSmithKline and AstraZeneca in the UK, Philips in the Netherlands and Nokia in Finland stand out. These are the top ten European companies in terms of R&D expenditure – all automobile, electronic and pharmaceutical makers. Here, in terms of average annual growth in R&D investment (1996-2000) by the top 100 firms, the EU is ahead of its main competitors, the USA and Japan – 15.6% in the EU versus 10.3% and 4.6% respectively.

Making a reasonable comparison

Comparisons between the EU, the USA and Japan are in many ways understandable. They reveal some worrying trends and certainly support the view that Europe can always do more to stimulate R&D investment. One of these trends is that multinational firms increasingly prefer to invest in American rather than European research. In 1991, the EU and USA were on par, but by 1998 the EU had fallen behind the USA by 60%.

Perhaps more illuminating comparisons could be made between the EU averages and individual Member States, such as Finland or Germany, or 'motor regions' within the Union, including Baden-Württemberg, Tuscany and Catalonia. Mr Busquin spoke about the importance of the regions at the launch of the EU's latest Framework Programme for research (FP6). He is convinced that the active participation of the regions is invaluable to the success of ERA and achieving the 3% objective. Some regions in Finland and Germany, for example, have already achieved this target.

Speaking at the Action Plan's launch, Erkki Ormala, director of technology policy at Finnish telecommunications firm Nokia, said that the 3% objective will be a reality if Europe becomes more attractive for research and innovation. This includes a more supportive regulatory environment, excellent human resources and improved public and private links in research.

"It's not impossible to find a balance between R&D investment and the stability pact [of the European Monetary Union]", said Mr Ormala, noting that Finland has achieved this - it has boosted R&D investment by 20% and stuck to its stability pact requirements. His advice is: "We should abandon our traditional approach and invite foreign firms to participate in our knowledge platforms where it benefits European research."

In March, he told the Entovation Roundtable in Helsinki that companies need to put more personnel into R&D. "Enterprises will have to invest significantly more resources to maintain competitive positioning. My estimate is 40%." Nokia has already hit that mark with 38%.

Contact: research@cec.eu.int

More information on this subject:

Action Plan: Investing in research: an action plan for Europe

Entovation Roundtable: Nokia success story

%7C0%7CRAPID&lg=EN&display=">Commissioner Busquin's speech: The EU and the R&D Gap

DG Research
http://europa.eu.int/comm/dgs/research/i ndex_en.html
http://europa.eu.int/comm/research/headl ines.html#02

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