Still a long way from fulfilling the Lisbon objective: Europe is not investing enough in knowledge

November 11, 2002

Brussels, 8 November 2002

Europe must do more if it is to become the truly knowledge-based economy called for by the European Council in Lisbon in March 2000. This is the message to emerge from the latest report by the European Commission entitled "Science, technology and innovation - Key figures 2002". According to the composite indicator of investment in the knowledge-based economy devised by the Commission - which combines research, education, training and human resources - Denmark, Sweden and Finland are in the lead, while Italy and Spain must urgently mobilise more resources. A second composite indicator, of performance in the transition to the knowledge-based economy, likewise shows that progress in most European countries is still too slow.

Philippe Busquin, the member of the Commission responsible for research policy, said that "Europe must invest more in research if it means to become the most competitive and dynamic knowledge-based economy in the world by 2010. Under-investment in research and human capital by the Member States is casting into doubt the objective set in Lisbon. Bold declarations are not enough; the commitments must also be put into action. Investment in research, development and innovation lays the foundation for sustainable economic growth creating more and better jobs."

In order to create the most competitive knowledge-based economy in the world, investment is needed in various priority areas, such as research, education, training, human resources, high-tech capital goods or computerisation of public services. The Commission has therefore devised a composite indicator offering the first comprehensive overview of all investment in these fields (cf. Figure 1). The results clearly show that a renewed drive is needed in this direction.

In particular, the gap between the European Union as a whole and the USA, in terms of both investment level and investment growth, remains extremely wide (see box in Figure 1). However, this general conclusion masks big differences between the Member States. For example, the Nordic countries (Denmark, Sweden and Finland) are in the lead, with investment levels and growth distinctly higher than in the USA. A second group, made up of Greece, Portugal and Ireland, has built up strong momentum which could see them catch up at a very rapid pace. By contrast, most European countries are around the European average (and, therefore, lagging behind the USA), while certain big countries like Italy or Spain urgently need to make an extra effort.

Greater investment is necessary, but it is not enough on its own. It is equally vital that these extra efforts produce a substantial improvement in scientific and technological performance, greater innovation and successful take-up of new technologies in the economy. To measure the progress made on these fronts, a second composite indicator reflects the performance of the Union and of the individual Member States in the transition to a knowledge-based economy (cf. Figure 2). In this respect, progress in most European countries is still too slow: their level of scientific and technological performance is certainly growing faster than in the USA, but not fast enough to compare with the North American economy by 2010 (see box in Figure 2).

The need to promote greater private investment

Investment in research and development is the cornerstone of the efforts to build a truly knowledge-based economy. To catch up with Europe's competitors in this area, the Barcelona European Council in March 2002 set the Union a target of raising its research investment to as close as possible to 3% of gross domestic product (GDP) by 2010. In the sixth framework programme for research activities for 2003-2006, with a budget of 17.5 billion euros for establishing networks of European excellence, the Commission is aiming at creating the momentum for growth. Now it is up to the Member States to contribute to these efforts.

Since the mid-1990s, the gap between the European Union and the USA in terms of total research and development (R&D) spending has been widening steadily and has almost doubled (at constant 1995 prices and purchasing power standard) (cf. Figure 3). In 2000 the European Union and the individual Member States invested a combined total of 164 billion euros in research, compared with 288 billion euros by the USA (at current prices). The Union and its Member States therefore put only 1.9% of their resources into research, against 2.7% by the USA and 3% by Japan (in 2000) (cf. Table 1).

This is primarily due to the low growth in R&D activities in the largest EU countries during the second half of the 1990s, particularly in France, Italy and the United Kingdom (cf. Table 1). It is also, for the most part, attributable to the low level of investment funding by the private sector. In Europe, the private sector's share of research funding stood at only 56%, compared with 68% in the USA and 72% in Japan (cf. Table 2). Most of the increase from today's level of 1.9% will have to come from raising private-sector investment to two thirds of the total by the end of the decade.

Greater but under-used human resource potential

The European Union currently produces more human resources in the science and technology field (that is to say science and technology graduates, including PhDs) than the USA and Japan, both in absolute terms and in relation to its population (in 2000, the European Union had some new science and technology PhDs per 1000 of its population aged 25-34, compared with 0.48 in the USA and 0.24 in Japan). Moreover, the number of new PhDs as a proportion of the total population has risen faster in Europe than in America in recent years.

Nevertheless, this situation is not reflected in superiority in terms of numbers of researchers. In absolute terms, expressed in full-time equivalents, the European Union currently has some 920 000 researchers, compared with 1 220 000 in the USA, i.e. an overall gap of 300 000 to be made up. As a proportion of its workforce, too, the European Union has fewer researchers than the USA or Japan (5.40 researchers per 1000 of the workforce in 2000, compared with 8.08 in the USA and 9.26 in Japan), and this proportion is rising more slowly in Europe (+ 3.03% per annum) than in the USA (+6.21%).

In view of this, the action taken or envisaged at European level to promote scientific research-related professions and to encourage researcher mobility, enabling researchers to move to and between Member States, is fully justified and will need to be supplemented by appropriate measures at the national and regional levels.

For more information:

http://www.cordis.lu/indicators

Figure : Composite indicator of investment in the knowledge-based economy. Investment level in 1999 and investment growth rate 1995-1999.

Source: DG Research Key figures 2002 (Figure A)

Figure : Composite indicator of performance as regards the transition to a knowledge-based economy. Performance level in 1999 and performance growth 1995-1999.

Source: DG Research Key figures 2002 (Figure B)

Figure : Total volume of R&D expenditure in Europe and gap between the USA and the European Union 1994-2000 (in EUR billion, PPS 1995).

    Source: DG Research     Key Figures 2002 (Figure 1.1.1.) [Tables]

    DN: IP/02/1639 Date: 08/11/2002

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