R & D expenditure

From Statistics Explained

Data from April 2014. Most recent data: Further Eurostat information, Main tables and Database. Planned article update: April 2015.
Figure 1: Gross domestic expenditure on R&D in the Triad and China, 2002–12
(% of GDP) - Source: Eurostat (tsc00001), OECD
Table 1: Gross domestic expenditure on R&D, 2002–12
(% of GDP) - Source: Eurostat (), (t2020_20) and (rd_e_gerdtot), OECD
Table 2: Gross domestic expenditure on R&D by sector, 2007 and 2012
(% of GDP) - Source: Eurostat (tsc00001), OECD
Table 3: Gross domestic expenditure on R&D by source of funds, 2007 and 2011
(% of total gross expenditure on R&D) - Source: Eurostat (tsc00031), OECD

This article presents data on research and development (R & D) expenditures within the European Union (EU), according to the sector of performance and the source of funds. The data are obtained through statistical surveys which are regularly conducted at national level covering R & D performing entities in the private and public sectors.

One of the key objectives of the EU during the last decade has been to encourage increasing levels of investment, in order to provide a stimulus to the EU’s competitiveness. The Lisbon strategy set the EU an objective of devoting 3 % of its gross domestic product (GDP) to R & D activities by 2010. The target was not reached — and subsequently the 3 % target was maintained, forming one of five key targets within the Europe 2020 strategy adopted in 2010.


Main statistical findings

Gross domestic expenditure on R & D (GERD) stood at EUR 266 898 million in the EU-28 in 2012, which was a 2.9 % increase on the year before, and 42.9 % higher than 10 years earlier (in 2002) — note that these rates of change are in current prices and so reflect price changes as well as real changes in the level of expenditure. In 2011, the level of expenditure on R & D in the EU-28 was 87.0 % of that recorded by the United States, 1.8 times as high as expenditure in Japan (in 2010) and still considerably above R & D expenditure levels recorded in some other economies — for example, EU-28 expenditure was 2.7 times as high as in China (2011).

In order to make figures more comparable, GERD is often expressed relative to GDP — see Figure 1 — or in relation to population. The ratio of GERD to GDP, one of five key Europe 2020 strategy indicators, is also known as the R & D intensity. This ratio declined modestly in the EU-28 during the period from 2002 to 2005, falling from 1.87 % to 1.82 %. From 2006 it started to climb, reaching 2.06 % in 2012, despite a small decline in 2010. Nevertheless, the EU-28’s R & D expenditure relative to GDP remained well below the corresponding ratios recorded in Japan (3.25 %, 2010 data) and the United States (2.73 %, 2011 data), as it has for a lengthy period of time.

Between 2002 and 2008 there was a far higher increase in the relative importance of GERD in the Japanese economy, as its ratio to GDP rose by 0.35 percentage points during this period, while Japanese economic growth was relatively subdued. However, in the period between 2008 and 2010 the ratio of GERD to GDP in the Japanese economy fell by 0.22 percentage points. In the United States, the ratio of GERD to GDP was close to 2.5 % between 2002 and 2005, after which it increased 0.32 percentage points through to a peak of 2.81 % in 2009, before falling back 0.14 percentage points to 2.67 % in 2011. In China, the ratio has displayed uninterrupted growth in recent years, rising from 1.07 % in 2002 to reach 1.84 % by 2011, an increase of 0.77 percentage points.

Among the EU Member States, the highest R & D intensities in 2012 were recorded in Finland (3.55 %), Sweden (3.41 %) and Denmark (2.99 %) — see Table 1. There were 10 Member States that reported R & D expenditure accounting for less than 1.00 % of their GDP in 2012. Along with Greece, the Member States with the lowest R & D intensities were ones that joined the EU in 2004 or more recently, although it should be noted that Slovenia (2.8 %) and Estonia (2.18 %) reported R & D intensities above the EU-28 average, while the Czech Republic (1.88 %) and Hungary (1.30 %) also reported intensities above 1.00 %.

Sector of performance

The differences in the relative importance of R & D expenditure between countries are often explained by referring to levels of expenditure within the business enterprise sector. Table 2 shows that the R & D conducted within the business enterprise sector was equivalent to 1.30 % of the EU-28’s GDP in 2012, compared with 2.49 % in Japan (2010 data) and 1.83 % in the United States (2011 data), while the relative importance of R & D expenditure in the government and higher education sector was broadly similar across all three members of the Triad.

An evaluation of the data for the EU Member States also confirms that those countries with relatively high ratios of business enterprise expenditure on R & D to GDP — namely, Finland, Sweden, Slovenia, Denmark, Austria and Germany — also reported relatively high overall R & D intensities (2.80 % or higher). Apart from Slovenia and to a lesser extent Germany, these countries also tended to feature near the top-end of the ranking of expenditure by the higher education sector, where the Netherlands and Estonia also had a relatively high ratio of R & D expenditure to GDP. Government R & D expenditure relative to GDP was highest in Germany, the Czech Republic, Slovenia, Finland, France and Luxembourg.

Source of funds

An analysis of R & D expenditure by source of funds shows that more than half (54.9 %) of the total expenditure in 2011 within the EU-28 was funded by business enterprises, while one third (33.4 %) was funded by government, and a further 9.2 % from abroad (foreign funds). Business-funded R & D accounted for 75.9 % of total R & D expenditure in Japan (2010 data), 73.9 % in China and 60.0 % in the United States. Table 3 confirms the relatively important role played by the business enterprise sector as a source of R & D funding in Finland and Germany, as business-funded R & D accounted for about two thirds of total GERD in 2011. By contrast, a majority of the gross expenditure on R & D made in Cyprus and Poland in 2011 was funded by the government sector. There were also considerable differences in the relative importance of R & D funding from abroad, with relatively high shares (in excess of 15.0 % of total GERD in 2011) reported in Latvia, Bulgaria, Lithuania, Luxembourg, Ireland, the Czech Republic, the United Kingdom, Austria and Malta.

Data sources and availability

Statistics on science, technology and innovation are based on Decision 1608/2003/EC of the European Parliament and of the Council concerning the production and development of Community statistics on science and technology. The Decision was implemented by the European Commission as Regulation 753/2004 on statistics on science and technology which was adopted in 2004 following close cooperation with the EU Member States. In 2012, a new European Commission Regulation 995/2012 concerning the production and development of Community statistics on science and technology was adopted.

Eurostat’s statistics on R & D expenditure are compiled using guidelines laid out in the Frascati manual, published in 2002 by the OECD. R & D expenditure is a basic measure that covers intramural expenditure, in other words, all expenditures for R & D that are performed within a statistical unit or sector of the economy in the EU Member States.

The main analysis of R & D statistics is by four institutional sectors of performance. These four sectors are the business enterprise sector, the government sector, the higher education sector, and the private non-profit sector (the latter is not shown in this article). Gross domestic expenditure on R & D (GERD) is composed of expenditure from each of these four sectors. Expenditure data considers the research spend on the national territory, regardless of the source of funds; data are usually expressed in relation to GDP; this ratio is often referred to as R & D intensity. Additional analysis of R & D expenditure are available by: source of funds; field of science; type of costs; economic activity (NACE); enterprise size class; type of R & D; socioeconomic objectives; and regions (NUTS).

Context

The European Commission has through its innovation union flagship initiative (which forms part of the Europe 2020 strategy) placed renewed emphasis on the conversion of Europe’s scientific expertise into marketable products and services, through seeking to use public sector intervention to stimulate the private sector and to remove bottlenecks which stop such ideas reaching the market. Furthermore, the latest revision of the integrated economic and employment guidelines (revised as part of the Europe 2020 strategy) includes a guideline to optimise support for R & D and innovation, strengthening the knowledge triangle (between research, innovation and education); it is hoped that this will provide a stimulus for a further expansion of the digital economy.

The European Commission compiles three levels of indicators to support research and innovation policymaking. These may be grouped together as: the headline indicator; union scoreboard (or core) indicators; and a comprehensive set of other indicators. The headline indicator is the 3 % target for research intensity to be reached within the EU by 2020; this is one of five Europe 2020 headline indicators being tracked within the Europe 2020 strategy. The scoreboard indicators are designed to monitor research and innovation for the Competitiveness Council, while the comprehensive set of other indicators are for in-depth economic analytical purposes and European Commission services to produce an innovation union competitiveness report.

One area that has received considerable attention in recent years is the structural difference in R & D funding between Europe and its main competitors. Policymakers in Europe have tried to increase R & D business expenditure so that it is more in line with relative contributions observed in Japan or the United States. The European Research Area (ERA) is designed to overcome some of these barriers that are thought to have hampered European research efforts, for example, by addressing geographical, institutional, disciplinary and sectoral boundaries.

In December 2008, the Competitiveness Council adopted a 2020 vision for the ERA. According to the opening statement of this vision, all players should benefit from: the ‘fifth freedom’, introducing the free circulation of researchers, knowledge and technology across the ERA; attractive conditions for carrying out research and investing in R & D intensive sectors; Europe-wide scientific competition, together with the appropriate level of cooperation and coordination. The 2020 vision for the ERA is part of the wider picture of Europe’s 2020 strategy for smart, sustainable and inclusive growth.

In November 2011, the European Commission presented a successor for the 7th framework programme by announcing Horizon 2020, a programme for investing nearly EUR 80 000 million in research and innovation, implementing the innovation union. Horizon 2020 focuses on turning scientific breakthroughs into innovative goods and services that have the potential to provide business opportunities and change people’s lives for the better. Running from 2014 to 2020 this programme is part of the EU’s drive to create new growth and jobs in Europe.

See also

Further Eurostat information

Publications

Main tables

Research and development (t_research)
Statistics on research and development (t_rd)
Research and development expenditure, by sectors of performance (tsc00001)
Gross domestic expenditure on R&D (GERD) by source of funds (tsc00031)

Database

Research and development (research)
Statistics on research and development (rd)
R&D expenditure at national and regional level (rd_e)
R&D personnel at national and regional level (rd_p)
EU Industrial RD Investment scoreboard (source: DG JRC) (rd_scb) (Excel tables)
Government budget appropriations or outlays on R&D (gba)
Total GBAORD by NABS 2007 socio-economic objectives (gba_nabsfin07)
Total GBAORD by NABS 1992 socio-economic objectives (gba_nabsfin92)
Total GBAORD as a % of total general government expenditure (gba_nabste)

Dedicated section

Methodology / Metadata

Source data for tables and figures (MS Excel)

Other information

External links


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