Growth in corporate R&D investment down in 2008

However, European companies look to be doing better than their counterparts: the R&D investment growth of EU companies, at 8.1 per cent, outpaced that of US companies - at 5.7 per cent - for a second year, and that of Japanese companies -at 4.4 per cent - for the fourth straight year.

European Science and Research Commissioner Janez Potoçnik warned that the full effects of the crisis, which hit in the second half of 2008, are not reflected in the statistics. “The decisive years will be the two years to come,” Potoçnik said at a press conference in Brussels for the release of this year’s EU industrial R&D investment scoreboard.

Potoçnik was keen to highlight that while growth slowed in 2008, companies across the globe continued to invest more. He also considered the results for growth in Europe to be, “a good message for European companies.” “It is good news that EU companies kept up their R&D investment,” Potoçnik said in a statement. “This is the best strategy to emerge stronger out of the crisis.”

Although the rate of growth in R&D investment by EU companies is higher than the US or Japan, this statistic flatters to deceive. The scoreboard includes data from the top 1,000 EU companies  and the top 1,000 non-EU companies ranked by their investments in R&D, accounting for about 80 per cent of worldwide corporate R&D expenditure. But while the threshold spending level to be among the top 1,000 non-EU companies is €31.51 million, the threshold for entering the EU top 1,000 is €4.34 million.

Another notable statistic is the pace of growth among companies based in emerging economies. Although they account for a small share of the total R&D, the growth rate is much higher than in developed economies. China topped this section of the Scoreboard with 40 per cent growth, India had 27.3 per cent and Taiwan 25.1 per cent. Companies based in Switzerland and South Korea also increased their R&D investments well above the Scoreboard average.

In the US, more than two-thirds of the R&D investment came from high R&D-intensity sectors such as the pharmaceutical, biotechnology and IT sectors. In the EU, only one-third was from these sectors and about half from medium-high R&D-intensity sectors such as the older industries of automobiles and parts, aerospace and defence, and chemicals.

“This confirms a trend seen over the past years, with a strengthening of high R&D-intensity sectors in the US that increased their investments by 35 per cent in the last four years against only 13.6 per cent in the EU companies,” according to the report.

A shortcoming of the Scoreboard is that it does not contain any information about where R&D budgets were spent, so for example, the huge increases in investment in China, India and elsewhere in Asia, by US and European pharmaceutical companies is not reflected.

Within the EU, large differences in R&D growth were seen between member states. Germany, the largest corporate R&D investor in the EU, increased its investment by 8.9 per cent. Other member states to invest more than the EU average were Italy, which saw a 20.4 per cent rise, Sweden 17.4 per cent, Denmark 16.4 per cent, the UK 11.3 per cent and Spain 9.4 per cent.

At the other end of the scale were Belgium where growth in corporate spending on R&D fell by 0.8 per cent, France, where growth was restricted to 0.7 per cent, Finland, 1.6 per cent growth and the Netherlands at 3.7 per cent. “We don’t yet know why,” growth was so low in some countries, Potoçnik said.

The global data was also broken down by company. Microsoft was knocked off the top spot by Japan’s Toyota Motor, although Potoçnik acknowledged that fluctuations in the yen may have played a role. The geographic breakdown of the rest of the top 10 was five from the US - Microsoft, General Motors, Pfizer, Johnson & Johnson and Ford Motor, two from the EU, Volkswagen and Nokia and two from Switzerland, Roche and Novartis.