N. 12, Dec.2003 -Jan. 2004 
IP & RTD: Articles 

'2003-2004 Key Figures on Science, Technology and Innovation'
Vincent Duchêne
Scientific Advisor
European Commission, DG Research, Unit K3: Competitiveness, Economic Analysis, Indicators
 
A new publication by the European Commission, the "Key figures 2003-2004 on science, technology and innovation", paints a bleak picture of Europe's position in research, innovation and competitiveness. The March 2000 Lisbon European Council's call to turn Europe into a world-class economic powerhouse, and the subsequent March 2002 Barcelona Council's objective of boosting EU spending on R&D from 1,9 to 3% of GDP by 2010, are far from being met. Progress is too slow and in some areas we are even losing ground. Some of the new findings can be re-grouped under the following headings:

  • The growth rate of investment in the knowledge-based economy is too low and has even declined since 2000 (see composite indicators, p. 9-16 of the publication). As far as R&D expenditure is concerned, the EU-15 is far from closing the large absolute investment gap with the US. On the contrary, the gap has continued to increase in favour of the US (see Figure I-1b below) and the latest data do not show any trend reversal. About 80% of that gap is caused by the difference in business R&D expenditure between the US and the EU-15.

  • For the EU-15 to reduce this investment gap with the US, the annual rate of growth of R&D investment in real terms should be nearly twice as much as it is now: about 8% growth per year instead of 4.5% growth per year between 1997 and 2002. An annual real growth of 8% a year would also make it possible to reach the objective set at the Barcelona Summit (March 2002) to devote 3% of GDP to R&D by 2010 (assuming an average GDP growth of 2% per year). This, however, implies a quick and substantial trend reversal.

  • Therefore, recent progress made by some countries shows that the Barcelona target remains possible for the European Union as a whole. In 2001, Sweden and Finland, for instance, had R&D intensities (R&D expenditure as a % of GDP) of well above 3%, whereas Germany was approaching that threshold (see figure I.1d below). For others, although the 3% objective is not realistic in the short-term, they will contribute to the realisation of this objective by increasing their efforts.

  • The large absolute gap in EU-US business R&D expenditure, as mentioned previously, does not mean that the larger EU-15 companies are lagging behind in R&D investment. These companies even perform rather well compared with very large companies in both the US and Japan (see Table I-2a of the publication). The largest EU-15 firms account for a growing share of R&D expenditure by the top 300 international firms in terms of R&D investment. While between 1998 and 2002, the US share declined from 42.8% to 40.9% and the Japanese one from 22.7% to 21.7%, the European share increased from 28.1% to 31.3%. However, European firms are also investing increasingly in non-European countries, such as Asian countries and the USA, so that Europe receives less and less from the R&D investment of its larger companies. In 2000, the US attracted one third more R&D expenditure from EU-15 companies than US companies allocated to the EU-15 (see fig I-2d of the publication).

  • This year's Key Figures also highlight a deterioration in Europe's scientific and technological performance compared to the US. Europe plays a leading world role in terms of scientific excellence and the provision of highly-skilled human capital. But it largely fails to convert science-based findings and inventions into wealth-generating innovations. The EU-15 is still lagging behind the US in terms of technological performance and does not seem to be catching up.

  • Per capita, the EU-15 generates fewer patents with a high economic value than the US and Japan (these so-called 'Triadic patents' are patents that relate to inventions for which protection has been sought at the three major patent offices: the European Patent Office, the US Patents and Trademarks Office and the Japanese Patent Office. It is thought that such patents are likely to be associated with a higher expected commercial return, since it is costly to patent in three different patent systems) (see fig II-2c below). Moreover, the EU-15 is lagging behind the US in its share of patents in crucial key-technologies such as biotechnology and information and communications technology (see table II-2b of the publication).

Sooner or later, the gap with the US in terms of scientific and technological performance will be reflected in a deterioration of Europe's position on world markets, since research, the ability to transform new knowledge into the production of new goods and services, and especially the ability to sell new products abroad is crucial for Europe's long term competitiveness. This year's Key Figures therefore show the importance and urgency of implementing the decisions taken at the Lisbon and Barcelona summits.

For further info and data, see web-site: www.cordis.lu (a full electronic version of the publication is available for downloading), or contact DG RTD, Unit K3 'Competitiveness, Economic Analysis, Indicators' (Head of Unit: Ugur Muldur; Scientific Advisor: Vincent Duchêne -vincent.duchene@cec.eu.int).

Figure I-1b R&D investment - the gap between the EU-15 (1) and the US in € billion and PPS billion (at 1995 prices), 1990-2001



Key Figures 2003-2004

Source: DG Research

Data: OECD, Eurostat

Note: (1) EU-15 data do not include LU

Figure I-1d R&D intensity (GERD as % of GDP), 2001 (1); in brackets: average annual growth rates of R&D intensity (%), 1997-2002 (2)



Key Figures 2003-2004

Source: DG Research

Data: OECD, Eurostat

Notes: (1) or latest available year: EL: 1999; IT, NL, LU, CH, TR: 2000; DE, FR, AT, PT, FI, UK, IS, US: 2002. EU-15, EU-25 data are estimated by DG Research and do not include MT. (2) or nearest available years: CH: 1996–2000; EL: 1997–1999; IT, NL, TR: 1997–2000; CY, EE: 1998–2001; BG: 1999–2001; BE, DK, ES, FR, IE, SE, EU-15, CZ, HU, LT, LV, PL, SI, SK, EU-25, RO, NO, JP: 1997–2001; FR: 2000-2002. EU-15, EU-25 data are estimated by DG Research and do not include LU and MT.

Figure II-2c Triadic patents (1) per million population, 1998



Key Figures 2003-2004

Source: DG Research

Data: OECD, Eurostat

Note : (1) Data relate to year of priority