Impact of the economic crisis on R&D in Greece may not be as bad as feared

Greece’s economic crisis has had multiple impacts on the country’s R&D and its ability to innovate, but the situation is not necessarily as bad as appears at first sight. It is true, however, true that spending on research and innovation is stuck at around 0.5 per cent, and that given most research money in Greece comes from the public purse the current fiscal constraints mean it is impossible to boost spending to over one per cent of GDP. 

The only way to grow R&D spending is for the private sector to step in. But with one or two notable exceptions – the decision by the multinational BIC (perhaps best known for its disposable pens and razors) to expand its global research centre near Athens; some Greek pharma companies intensifying generic drug development – this seems unlikely.

Employment in public and private sector R&D

Between 2005 - 2011 the number of researchers employed in the public sector grew markedly, by 40.7 per cent in government institutes and 12.7 per cent in universities.  Rather than being a sign of strength, this increase can be seen as a factor that contributed to the crisis. 

In contrast, during the same period, the number of researchers employed in the SME sector fell by 29 per cent. Yet at the same time, R&D investment by SMEs increased by 26.5 per cent. 

Taken together, these figures strongly suggest the private sector adapted early to the crisis, choosing to focus in on promising research programmes, whilst cutting staff. This was in contrast to the public sector, where it was business as usual. 

Amongst the reasons for the public sector inertia are a lack of political will to act and an inability to push for - and implement - market-driven competitiveness measures. In hindsight, the government should have followed the example set by the private sector and made targeted cuts. Instead in 2010, there were across-the-board austerity measures.

R&D and innovation restructuring still pending 

As things stand, three years down the crisis road, limited if any progress has been made with a national R&D restructuring plan or changes to innovation policy, despite government proclamations. There are several reasons for this, including resistance from university researchers, the lack of a coherent restructuring strategy and the fact that the General Secretary of Research and Technology (GSRT) changed three times in 17 months.

Impact on R&D metrics

There have of course been some damaging consequences for R&D in Greece. In the case of extramural research funding, which in the most part comes from EU grants, there was a statistically significant decrease of 4 per cent between 2005 to 2011. 

The peer-reviewed publication record has also begun to show signs of a slight decline. Since 2003, Greek researchers had consistently increased their productivity in terms of peer-reviewed journal papers measured as a percentage of total EU publications. According to Eurostat, Greece’s share of published papers exceeded 2.5 per cent in 2009. However, the upward trend ends in 2010, and a small but statistically significant decline is noted. If this decline were to continue, it would indicate the financial crisis has had a negative impact on the Greek research productivity. 

There is a more marked effect on patent filing, with 88 patents with a priority date in 2010 against 104 in 2005, according to the OECD. In truth, the Greek public research system has never been known for its patent protection/IP portfolio performance, which is behind the EU average. And while the experience elsewhere is that economic hardship can be a spur to innovation, it seems that individual researchers who have experienced significant salary cuts are even more reluctant to abandon their comfort zone to engage themselves in entrepreneurship.

At the same time, the government-funded Technology Transfer Units (TTOs) in Greek universities and research centres, have proved to be less effective than anticipated in stimulating and enhancing technology transfer and commercialisation. This structural weakness will make it more difficult to deliver the innovation needed to stimulate economic growth.   

The state of Greek universities

The underperformance of Greek universities has been underlined by the crisis. A study conducted by the network Universitas 21 ranked the Greek University system 31st amongst 50 tertiary education systems in 2013. In total, universities employ 66 per cent of all researchers in Greece and absorb 40 per cent of the national R&D budget, with 72 per cent of this being spent on salaries in 2011. While between 2005 and 2011 the number of academic researchers increased by 12.7 per cent, R&D expenditure grew by only 2.1 per cent, pointing to cuts in public sector salaries.

Compounding – and reflecting – the impact of the cuts, Greek Universities were in turmoil throughout 2013, with the first semester of the new academic year swamped in a series of strikes by academics and administrative staff.

As a result, the gap between the Greek university system and what is happening in the leading countries is widening. Universities, based on all the above, are a weak link in Greece’s R&D and innovation system. It is hoped the current situation will be a spur the restructuring and reforms that have been needed for some years now. If it happens, it will be one major positive outcome of the crisis.

Corporate R&D in Greece may intensify, boosting innovation

Above all, Greece needs to attract large multinational technology companies to carry out manufacturing and R&D in the country. Unlikely as it may seem, the crisis could accelerate such inward investment. This is needed because international experience clearly indicates that the presence of large corporate research centres, rather than the artificial cluster schemes seen in Greece - composed of SMEs and public research organisations put together solely for the purpose of accessing state funding - can ignite real company-inspired cluster formation. 

One sector that likely to experience increased R&D and innovation activity in the coming years, and thus to help overcome the crisis, is Agri-Food. This is traditionally a strong sector of the Greek economy, but has been short on factors that attract foreign direct investment, such as targeted research based on new technologies, innovation, quality assurance and a systematic approach to development. 

Finally, in terms of the environment for innovation, rather than focusing on specific areas such as the Thessaloniki Innovation Zone, the entire country needs to be rapidly transformed to an innovation-friendly environment, by improving its institutional, legal and taxation framework. 

Until that happens, the brain drain will continue and the exodus of Greek scientists is likely to intensify, with a recent study by the University of Macedonia showing a large increase in the number of scientists who left the country in 2012.

While there has been some impact, the overall effect of the financial crisis on the Greek R&D and innovation system has been limited compared to other sectors of economy. The country has never been noted for its technology transfer and commercialisation ability. Rather, Greece has been known for its large number of highly qualified individual researchers, with a considerable number achieving research excellence both in the country and abroad, in world class institutions and established companies, across the globe. 

Dr Iordanis Arzimanoglou, is Strategic Advisor to Genomedica SA and former CEO of the Alexander Innovation Zone, SA , Thessaloniki, Greece and former CEO of the Aarhus biocluster, Aarhus, Denmark

Athina Ikonomidou MBA, is a Business Consultant specialising in the Life Sciences sector