Lisbon a long way off as R&D spending stays below 2 per cent

Times are tough, and the recession looks like being a deep one, but the European Commission is urging businesses to dig deeper into their wallets and invest more in R&D.

According to the 2008 Innovation Scoreboard released on 21 January, R&D as a percentage of GDP has remained flat at around 1.84 per cent since 2000, when EU leaders vowed to boost R&D intensity to 3 per cent of GDP by 2010.

Between 2000 and 2006, R&D intensity dropped in ten countries, including the UK and France. And while government R&D intensity crept up slightly, private sector intensity dropped by a similar proportion. The picture is not entirely bleak, and some small new member states, including the Baltic countries, have increased R&D spending sharply.

“EU-27 is lagging behind the US, Japan and South Korea in terms of R&D  intensity, mainly due to a lower level of R&D funded (and performed) by the business sector,” the Commission report states.

The Commission sounded a word of warning. “In a time of crisis, it is not the moment to take a break in research investments and in innovation,” said Janez Potočnik and Gunter Verheugen, the Commissioners for R&D and industry respectively, in a joint statement.

However, while Europe’s, and to a lesser extent the US’s, R&D efforts stagnate, it’s a different story in parts of Asia. Japan has increased its R&D intensity from 3.04 per cent to 3.39 per cent, Korea from 2.39 per cent to 3.23 per cent and China is catching up fast, rising from 0.90 per cent to 1.42 per cent.

Consequently, Europe’s world share of gross expenditure on R&D fell by 12.6 per cent over 10 years to 2006, but more alarming is the fact that the EU’s share of the world’s patent applications declined by nearly twice as much, by 21.4 per cent during the same period.

The report argues that the relatively high cost of a European patent compared with one registered in Japan or the US is a large part of the problem. Obtaining a patent covering 12 EU countries is 20 times as expensive as getting one in either of those two countries, and 60 times as expensive if the applicant wants to cover all 27 EU countries, the report said.

The report also examined progress made since 2000 in creating a single European Research Area. While the results are mixed, the Commission report concludes that it is vital to work together at the EU level.

“Progress towards a more effective European research system is crucial both to stimulate investment in research and to facilitate structural change towards a more knowledge-based economy,” it says.