Commission presents roadmap to increase investment in research

Brussels, 12 September 2002

The Commission yesterday presented its strategy to respond to the March 2002 Barcelona European Council's call to raise research spending to 3% of EU average Gross Domestic Product (GDP). Today Europe lags at 1.9%. The Communication "More research for Europe" looks into Europe's under-investment in science and technology and its harmful consequences for EU competitiveness, growth and employment. Research and development (R&D) investment (private and public) in the US now exceeds EU expenditure by more than €120 billion every year. Without prompt action, this knowledge gap will hamper Europe's innovative potential and its capacity to become the most competitive and dynamic knowledge-based economy in the world by 2010, a goal set by the Lisbon European Council in March 2000. The main challenge is to increase R&D business funding in Europe, which should be raised to two-thirds of R&D expenditure, a level already attained or exceeded in the USA, Japan and several Member States, instead of 55% on average today. Co-ordinated action at European, national and regional levels is therefore necessary to make Europe more attractive to business investment in R&D. Access to finance, better regulation, human resources, intellectual property rights, fiscal policies and other incentives have to be fine-tuned to R&D needs. The Commission will now launch a broad stakeholder consultation to identify a focused set of actions by early 2003.

"Higher investment in science and technology is key for Europe's future" said EU Research Commissioner Philippe Busquin. "In the current economic downturn, we need even more R&D investment today to seed innovations that will bring about growth and employment tomorrow. In the USA, €288 billion was spent on research and technological development (R&D) in 2000, but only €164 billion in the EU. The gap is widening. We need a general discussion in Europe on how best to make government research budgets give genuine leverage to increase private investment."

Japan has already achieved the 3% level, with R&D expenditure accounting for 2.98% of its GDP in 2000, and the USA is coming closer (with a figure of 2.69% in 2000 which has been constantly rising since 1995). In Europe, on the other hand, R&D intensity, at 1.93% in 2000, has been stagnating at under 2% since the beginning of the last decade.

R&D spending remains below 1% of GDP in Greece, Portugal, Spain and in all Candidate Countries except the Czech Republic and Slovenia. On the contrary, R&D expenditure is already above 3% of GDP in Sweden and Finland and above 2.5% of GDP in Germany. The 3% level is a target for Europe as a whole: not all European countries can be expected to reach the 3% target by 2010, but all of them should take part in efforts to set more attractive framework conditions for R&D investment and to improve their use of financial incentives.

The Communication identifies framework conditions that need to be addressed in a consistent way. These include:

• supply of high quality human resources

• a strong public research base with upgraded links to industry

• a dynamic entrepreneurship culture

• appropriate systems of intellectual property rights

• a competitive environment with research and innovation-friendly regulations and competition rules

• supportive financial markets, macro-economic stability and favourable fiscal conditions.

Financial incentives for private R&D and technology-based innovation could also be used in more consistent and effective ways. In this regard, public authorities can use a range of financing instruments, in particular direct support measures, fiscal incentives, guarantee schemes and public support for risk capital. A better mix of these instruments is required.

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DN: IP/02/1291 Date: 12/09/2002