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A more attractive European Research Area but stagnating EU R&D intensity: no time to take a break!

The 2008 Science, Technology and Competitiveness (ST&C) key figures report published today provides for the first time an overview of progress from 2000 to 2006 in both EU R&D investment and in implementing the European Research Area (ERA).

It shows that Europe's pool of researchers is growing and the EU is becoming more attractive for foreign researchers and for private R&D investments from the US. However, the stagnation of the EU-27's R&D intensity (R&D expenditure as % of GDP) at 1.84% is denting the EU's ambition to become a globally competitive knowledge-based society.

Despite increased investment in research by many Member States and an improved efficiency of their research systems, the EU is still far from reaching its Lisbon target of investing 3% of GDP in R&D. A continued low level of business R&D investment, linked to an EU industrial structure with a smaller high tech sector than in the US, hampers the EU's performance. The 2008 Innovation Scoreboard published in parallel provides detailed results of EU innovation performance. Both reports prove that the EU must change its industrial structure, gear up on innovation and ensure more and better use of R&D

Commenting on these reports, EU Commissioner for Science and Research, Janez Potocnik, and Vice President Günter Verheugen, responsible for enterprise and industry policy, stated: "In a time of crisis, it is not the moment to take a break in research investments and in innovation.They are vital if Europe wants to emerge stronger from the economic crisis and if it wants to address the challenges of climate change and globalisation. The EU does have many assets, notably an increasingly attractive European research area and a continuously improving innovation performance. But there is still work to be done, especially on the relative underinvestment by business. The Commission's initiatives to improve the EU's research efficiency, to stimulate innovation and to develop high tech markets are putting the EU on the right tracks".

The main findings of the ST&C report 2008 show that

1. Research is a key competitive asset in a globalised world.

Major S&T players have emerged, notably in Asia. Knowledge is more and more evenly distributed with the EU now accounting for a share of less than 25%. The ERA must become more attractive, open and competitive on the global scene.

2. The overall EU R&D intensity is stagnating but this hides diversity at the national level.

All EU Member States have increased their expenditure in R&D from 2000 to 2006, which shows their commitment to the Lisbon strategy. However, GDP experienced the same rate of growth over the period, which meant that R&D intensity stayed at around 1.84% since 20051 . Between 2000 and 2006, 17 Member States, mainly those which are catching up, have increased their R&D intensity, but 10, representing 47% of EU GDP, have seen their R&D intensities decrease. Japan has increased its R&D intensity from 3.04% to 3.39%, Korea from 2.39% to 3.23% and China is catching up fast, going from 0.90% to 1.42%.

3. Private Sector Investment intensity still too low.

The main reason for the R&D intensity gap between the EU and its competitors is the difference in business sector R&D financing, which decreased in the EU from 2000 to 2005 while it increased substantially in the US, Japan and China. This is mostly due to the smaller size of the research-intensive high-tech industry in the EU. Building the knowledge intensive economy requires structural changes towards higher R&D intensities within sectors and a greater share of high-tech sectors in the EU economy. This requires framework conditions that favour the development of fast-growing high-tech SMEs, the development of innovation-friendly markets in Europe and cheaper access to EU-wide patenting.

4. Excellence in research: a growing pool of researchers a still lower capacity of knowledge exploitation than competitors.

The number of researchers has grown twice as fast in the EU as in the US and Japan since 2000, even if the share of researchers in the labour force is still lower. As regards impact of research, the EU still ranks as the world’s largest producer of scientific knowledge (measured by publications), but contributes less than the US to high impact publications.

5. An increased attractiveness to foreign investments and S&T professionals .

The EU has been attracting a growing share of private R&D investments from the US despite the rise of Asia as a new R&D location. In 2005, US affiliates made 62.5% of their R&D investments in the EU and only 3.3% in China. It has also been attracting a growing number of S&T professionals from third countries.

Catherine Ray | alfa
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