Raising EU R&D IntensityRaising EU R&D Intensity

Evidences from the Report for the European Evidences from the Report for the European Commission by an Independent Research Commission by an Independent Research

GroupGroup

Ana Paiva

Inês Costa

Science and Technology Policy 1

17 – 10 – 2003

How to improve the effectiveness of public support mechanisms for private sector R&D

Presentation StructurePresentation Structure

Historical BackgroundHistorical Background

What is happening with R&D in What is happening with R&D in Europe?Europe? Problems and comparisonsProblems and comparisons

What can be done?What can be done? Policies and Mixed PoliciesPolicies and Mixed Policies

What can we expect?What can we expect?

Some Some (recent) (recent) historical facts…historical facts…

Lisbon European Council (March 2000) – set the EU target to become the most competitive and dynamic knowledge based economy in the world by 2010 (European Research Area as the central element);

Barcelona European Council (March 2002) - investment in European research and development (R&D) must be increased, aiming the goal of 3 % of GDP by 2010; increase of the level of business funding to two-thirds of total R&D investment;

Acknowledging the importance of this goal the 2002 Economic Policy Guidelines of the Member States and the Community recommended to improve incentives for firms to invest in R&D while preserving sound fiscal policies.

What is happening with R&D in the EU?What is happening with R&D in the EU?

R&D R&D IntensityIntensity

FONTE: OCDE

R&D Intensity = GERD in GDP %

What is happening with R&D in the EU?What is happening with R&D in the EU?

Industry / Government Industry / Government financingfinancing

FONTE: OCDE

What is happening with R&D in the EU?What is happening with R&D in the EU?

Industry / Government financing Industry / Government financing (SME)(SME)

FONTE: OCDE

What is happening with R&D in the EU?What is happening with R&D in the EU?

Supply side Supply side deficienciesdeficiencies

FONTE: OCDE

What is happening with R&D in the EU?What is happening with R&D in the EU?

PROBLEMSPROBLEMSEU will not hit the 3% target in 2010 because…

…Europe suffers from weaknesses in the R&D area : • Insufficient funding (private sector R&D expenditure);• Lack of an environment to stimulate research and exploit results;• Fragmented nature of activities and the dispersal of resources; • Lack of demand and absorption of innovative goods and services;• Supply side deficiencies: Resources, incentives, capabilities and opportunities;

• Nature and Scale of the Problem: industrial restructuring (SME MNC’s)

• R&D expenditure levels are dependent on the strength of the Innovation System: many of the EU countries aren’t strong enough to support increased R&D levels (weak demand and weak supply of researchers)

What can be done ?What can be done ?

Policies and Mixed Policies and Mixed PoliciesPolicies

HOLISTIC POLICIES AND FRAMEWORK CONDITIONS

FOCUSED POLICY SOLUTIONS

FINANCIAL

FISCAL

DIRECT INDIRECT CATALYTIC

FISCAL FINANCIAL

OTHER

Increasing recognition that it is the MIX of policies

that is important

Excessive emphasis upon one dimension can be wasteful or

even counter-productive

Example: build-up of S&T infrastructure and

spending in a region without complementary

measures to build absorptive capacity and

entrepreneurship

Attracting MNC R&D Capacity

Increasing existing R&D Investment

Creating R&D Intensive SME

Initiating R&D in Low-Tech

Sectors

FO

NT

E:

OC

DE

What can we expect ? Questions for the masses…What can we expect ? Questions for the masses…

•Why not reinforce a knowledge based societysociety ? (establishing bridges of knowledge between EU countries: Greece, Portugal, Finland and Sweden);

•What will happen when the east European countries enter the EU?

•The option of only stimulate R&D in the northern European countries? Wouldn’t it create asymmetries within the EU?

Raising EU R&D Raising EU R&D IntensityIntensity

Evidences from the Report for the Evidences from the Report for the European Commission by an European Commission by an Independent Research GroupIndependent Research Group

Ana Paiva

Inês Costa

Science and Technology Policy 1

17 – 10 – 2003