Europe must increase research spending, September 2002

The European Commission has called for the EU to spend more on research. In a Communication entitled 'More research for Europe', published on 11 September, the Commission highlights Europe's under-investment in science and technology and its harmful consequences for the Union's competitiveness, growth and employment.

The Communication - referred to as a 'roadmap to increase investment in research' - identifies a number of issues which need to be addressed in order to help promote European research, including 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 geared to the needs of research, and - on the financial side - supportive financial markets, macro-economic stability and favourable fiscal conditions.

The Communication is a response to a call by the March 2002 Barcelona European Council to increase research spending from 1.9 % to 3% of EU average Gross Domestic Product (GDP). It must also be seen in the context of EU leaders' desire, expressed at the March 2000 Lisbon European Council, for Europe to become the world's most competitive and dynamic knowledge-based economy by 2010 - a goal which the Commission claims is unlikely to be met if the region's innovative potential is stifled through lack of money.

Unless action is taken to ensure additional research funding, Europe will fall further behind its two main competitors - the USA and Japan (the USA - where investment has been consistently rising since 1995 - achieved 2.69% in 2000; in the same year Japan reached 2.98%).

The figure of 3% of GDP is a target for the EU as a whole. Although investment in research EU-wide has not reached more than 2% of GDP since the early 1990s, there are significant differences between Member States: research spending is above 3% of GDP in Finland and Sweden, above 2.5% in Germany, but below 1% in Greece, Portugal and Spain. Spending is also below 1% in all Candidate Countries except the Czech Republic and Slovenia.

Whilst it is accepted that not all European countries will be able to meet the 3% target by 2010, they are expected to promote research and development in other ways, such as by making investment more attractive and providing financial incentives (e.g. by offering direct support measures, guarantee schemes and public support for risk capital).

Within the overall concern about research funding, there is a specific interest in increasing business funding, which the Commission wants to increase from 55% to 66% of R&D expenditure (a figure already achieved by some Member States and by both the USA and Japan). However, the Commission believes that greater coordination is required at EU, national and regional levels if Europe is to become more attractive to business investment in R&D. According to the FT, because of their importance to the knowledge economy, the Commission was considering exempting small and medium sized enterprises (SMEs) from EU competition rules, thereby allowing them to receive state aid for research.

Announcing that the publication of 'More research for Europe' will be followed by consultations with stakeholders aimed at drawing up 'a focused set of actions' early in 2003, the EU's Commissioner for Research, Philippe Busquin, said:

'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.'

Links:

European Commission:
	12.09.02:	Commission presents roadmap to increase investment in research [IP/02/1291]
European Sources Online: Financial Times:
	11.09.02:	R & D plan for EU small business

European Sources Online:
	Topic Guide: The Research and Development Policy of the European Union

Eric Davies
KnowEurope Researcher
Compiled: Friday, 13 September 2002

In a Communication entitled 'More research for Europe', published on 11 September 2002, the European Commission called for greater investment in scientific and technological research.