The EU is still far from meeting the Lisbon strategy aim of spending 3% of its gross domestic product (GDP) on research and development (R&D). According to recently released EUROSTAT data for 2004, average R&D expenditure across the EU stood at 1.90%, marginally down from 1.92% in 2003. Europe continues to lag behind traditional competitors such as the US (2.59%) and Japan (3.15%), and is not very much ahead of China (1.31%).

However, the European average hides important differences between member states. Sweden (3.74) and Finland (3.51) outperform even Europe's strongest competitors, while new member states like Malta (0.29%), Cyprus (0.37%) and Latvia (0.42%) at the bottom of the table invest very little in R&D. The relatively low European spending is largely due to the corporate sector, whose share of 54% in the EU is smaller than in the US (63%) and Japan (75%) and well behind the Lisbon target of two thirds.