No significant leap in 2005 for the EU investment in research and development (R&D) – this is the image conveyed by a recent study of Eurostat, the Statistical Office of the European Community. Statistics show that in 2005, R&D expenditure of the EU-27 was just over 200 billion Euros – significantly lower than in other major economies. Translated into R&D intensity, i.e. expenditure as a percentage of GDP, this represents 1.8% – the same as in 2004. Yet, if compared across 2001-2005, R&D intensity rose by 1.5%, indicating that the picture is not entirely bleak.

When it comes to investment in R&D, the EU-27 still lags behind the US and Japan, who spent respectively 2.7% and 3.2% of their GDP in 2005. For 2001-2004, the US increased its R&D intensity by 1.7% and Japan by 2.0%. In 2004, the business sector financed 55% of the total EU-27 R&D expenditure, while the corresponding share in Japan was 75%, in China 66%, and in the US 64%.

Not surprisingly, within the EU the best performers are the Nordic countries, Sweden (R&D expenditure 3.9% of GDP) and Finland (3.5% of GDP). They are followed by Germany, Denmark, Austria and France, each with more than 2% R&D intensity. On the lower end are Romania, Cyprus, Bulgaria and Slovakia with less than or around 0.5%.

Some of the new member states are quickly catching up: in the period studied, Latvia, Estonia, Cyprus and Lithuania marked an increase of R&D intensity up to tenfold the European average. The ‘laggards’ are Belgium (-2%) and Slovakia (-1%) while Luxembourg, Finland, Germany and Sweden are on the top in terms of largest shares of R&D financed by business sector.

The Eurostat study reconfirms some of the trends revealed by the Innovation Scoreboard for 2005 (see ACA Newsletter – Education Europe, January 2006). Data on 2006 has yet to be assessed. Eurostat