EU Action Plan to boost research efforts in Europe

Brussels, 29 April 2003

The European Commission will present tomorrow a roadmap with detailed measures to encourage public and private players across Europe to upgrade their research effort. The Communication on "Investing in research: an action plan for Europe" (1) sets out initiatives required to increase the level of investment in research in the EU from 1.9% to 3% of GDP, with two-thirds financed by the private sector, as called for by the March 2002 Barcelona European Council. Meeting the 3% objective is expected to create 0.5% additional growth of GDP and 400,000 additional jobs every year after 2010. Key actions include setting up European technology platforms, strengthening links between industry and public research, redirecting public spending towards research and innovation, making research careers more attractive and developing better fiscal incentives for research.

"This blueprint for action marks the start of a process which has the potential to turn around Europe's R&D fortunes and put the Union on track to meet its 3% of GDP objective by 2010", said Research Commissioner Philippe Busquin. "This is Europe's chance to boost its competitive potential and to ensure sustained improvements to people's quality of life. However, this requires the determined and co-ordinated efforts of all interested parties - current and future EU Member States and public and private sector stakeholders. Everybody can and should contribute to making this action plan a success."

Erkki Ormala, Director for Technology Policy at Nokia Group, and a senior expert for the European Round Table of Industrialists, added: "Industry in Europe strongly supports the need to increase research. But the 3% objective will only become a reality if Europe becomes a more attractive environment for research and innovation. We need a much more supportive regulatory environment, with less and better regulation and appropriate incentives, excellent human resources, and a strong public research sector with improved links with industry. Industry is willing to invest more in European research if governments can turn the required actions into reality."

A broad endorsement

The Europe-wide consultation launched in September 2002 with the Communication "More research for Europe towards 3% of GDP" (2) provided a range of responses from public and private sectors, which were instrumental in developing this Action Plan. All were supportive of the 3% objective and its focus on business investment in research.

All current and future EU Member States agreed on the importance of increasing investment in research, with the majority indicating that they had already put in place national policies and measures to improve their performance. Large companies are planning to maintain a significant degree of investment in research despite the current economic downturn. However, more worryingly, they plan to focus their investment in more attractive environments outside of Europe, such as the USA and Asia. Representatives from industry and business have called for major policy changes to restore Europe's attractiveness for research investment to reverse this trend.

Refocusing priorities

The action plan reflects the concerns of all major R&D players, offering a mix of policy tools to:

• - provide more effective public support to research and innovation, to ensure an adequate supply of human resources, strengthen the public research base and its links to industry, and enhance the leverage effect of public funding on private investment;

• - redirect public resources towards research and innovation, through increased attention to public spending quality, adapted state aid rules and better use of public procurement; and

• - improve framework conditions of research and innovation such as intellectual property rights, competition rules, financial markets, and the fiscal environment.

The plan also includes actions to develop a more coherent policy approach to R&D between Member States, as well as more coherence between R&D policy and other policies.

Key actions

The Communication outlines a wide range of new actions for different stakeholders, building on existing activities already in place at European level and in Member States to achieve the 3% objective. They include:

• A process of co-ordination with EU Member States on actions for increasing investment in research, in order to foster a rapid and coherent development of national and European policies;

• Refocusing and increasing public spending for supporting research and innovation;

• Setting up European technology platforms on key technologies, such as rail, aerospace and hydrogen-related ones, plant genomics, road transport, photovoltaics, information and communication technologies, and nanotechnologies, to shape and implement a common vision for the development and deployment of these technologies;

• Developing proposals on the careers of researchers to attract and maintain European excellence and address the growing human resource needs faced by European R&D;

• Developing European guidelines for the management and exploitation of intellectual property rights in public research institutions and public-private partnerships to strengthen public and private sector links;

• Improving the range and effectiveness of fiscal measures to encourage increased investment in R&D;

• Improving access to capital, in particular risk and venture capital, and guarantee schemes, especially for innovative Small and Medium-sized Enterprises (SMEs);

• Improving the co-ordination and effectiveness of research funding at EU level (the EU Research Framework Programme, the EUREKA programme, Structural Funds, European Investment Bank and European Investment Fund support, European Bank for Reconstruction and Development schemes);

• Revising the EU framework on State Aids for R&D and redirecting State aid towards R&D.

The Commission will monitor closely the implementation of the Action Plan and progress towards the 3% objective, publishing a report each year in advance of the Spring European Council.

For further information please visit:

http://europa.eu.int/comm/research/era/3pct

Annex

Background information

Top R&D company performers

In 2000, the combined expenditure of the top 500 global R&D performers in the private sector amounted to €307.4 billion. This amounts to almost twice the total R&D expenditure in the whole of the EU that year. The European share of R&D investment by the top 500 companies is not very large. It amounts approximately to 29% (compared to 44% for US firms). It is important to note, nevertheless, that since 1996, the European share has been increasing more rapidly than its American counterparts.

Nevertheless, Europe's largest companies invest relatively less than their American or Japanese counterparts in sectors such as information technologies hardware and software. Instead, they tend to focus their R&D spending on automobile and parts or chemicals and pharmaceuticals, sectors where Europe benefits from a particularly strong international position.

Source: Third European Report on S&T Indicators, 2003

Source  Third European Report on S&T Indicators, 2003

German, French and British firms account for most of the European share of top 500 R&D investment (9.7%, 5.8% and 5.3% respectively). Firms from these countries also account for the majority share of European large firm R&D investment, 34.7% (Germany), 20.9% (France) and 19.1% (UK).

The 100 largest EU firms in terms of R&D spending are listed below.

Source  Third European Report on S&T Indicators, 2003

Top R&D investment: sectoral breakdown

With .4%, the information and communication technologies (ICT) sector constitutes the most important target of knowledge investment among the 500 top R&D performers. Among top European firms, where ICT ranks second, the share is significantly lower at 16%. Worldwide, automobiles and parts rank second with 17.6%, while pharmaceuticals rank third with 15.5%. In the EU, automobiles and parts rank first, with 24%, followed by pharmaceuticals and ICT, both with 16%.

European enlargement and the 3% objective

The addition of 10 new Member states will lead to an increase of GDP of 3.9% in 1999 and 4.8% in 2002; a decrease in the share of total R&D expenditure in GDP from 1.92 % to 1.87% (2000 data) (a small impact due to the relatively low GDP of future member states); and an increase in the number of researchers by about 10% (a more than proportional increase). Data also shows that R&D expenditures in several future member states (Czech Republic, Estonia, Lithuania, Hungary and Cyprus) have been growing since 1995 at a rate higher than the average rate for the EU-15. Recent information from the research ministries of the future member states show in most cases plans to consolidate or step up R&D efforts.

Increasing & significant foreign financing of national R&D

With the exception of Greece (5.4%), foreign affiliates are financing similar or larger shares of manufacturing R&D in EU Member States - with percentages ranging from 14% in Finland to 64.8% in Ireland - than in the US (16%) or Japan (1.8%).

Source: Third European Report on S&T Indicators, 2003

Note: (1) S, UK, PL, P, FIN: 1999; HU, IRL, EL: 1997; D: 1995, I: 1992.
(1) COM(2003) 226
(2) COM(2002) 499 final

DN: IP/03/584 Date: 29/04/2003