Friday, July 22, 2005

European R&D stagnates. In other news, massive farm subsidies keep hedgerows tidy

This should be especially worrying to Europeans. By not investing in R&D, Europe is giving up its best chance to compete globally. European scientists are exceptionally bright and ambitious. However, they are practically being forced to move to the US if they want any sort of career.

The 2005 key figures show that EU R&D intensity is close to stagnation. Growth of R&D investment as a % of GDP has been slowing down since 2000 and only grew 0.2% between 2002 and 2003. Europe devotes a much lower share of its wealth to R&D than the US and Japan (1.93% of GDP in the EU in 2003, as compared to 2.59% in the US and 3.15% in Japan). While China has lower R&D intensity (1.31% of GDP in 2003) it grew at about 10% per year between 1997 and 2002. If these trends in the EU and China continue, China will be spending the same amount of GDP on research as the EU in 2010 – about 2.2%.

The most worrying conclusion of the key figures is that Europe is becoming a less attractive place to carry out research. Between 1997 and 2002, R&D expenditure by EU companies in the US increased much faster than R&D expenditure by US firms in the EU (by 54% compared to 38%). The net imbalance in favour of the US increased five-fold between 1997 and 2002, from about €300m in 1997 to almost €2b in 2002. Additionally, US investment has been growing at a much greater rate in areas outside the EU – about 8% per year in the EU and 25% per year in China.

These trends are worrying in the context of Europe’s intention to becoming a leading knowledge-based economy. A recent impact assessment by the European Commission showed that investment in R&D at European level has a positive effect on productivity and economic growth. The study also showed that funds spent at European level were successful in mobilising additional business spending. If Europe is to become an integrated research area where the best research can be carried out, able to attract investment from all over the world, there must be a substantial and wide-ranging European level programme, as proposed by the Commission in April 2005. Otherwise, Europe will remain a series of national programmes, with little coherence. Enterprises will keep relocating their research and innovation activities to other continents offering attractive public support and larger research, innovation and commercial markets. A recent public opinion survey showed that EU citizens support spending more on research at both national and European level.

Here we have more evidence for a failing Europe, and Chirac warns that farm subsidies are sacrosanct. Enjoy that 9th circle, Jacques.

Like looking at graphs? Here be numbers and graphs aplenty.