Europe 2020 indicators - R&D and innovation
- Data from June 2017. Most recent data: Further Eurostat information, Main tables. Planned article update: April 2018.
The Europe 2020 strategy is the EU’s agenda for growth and jobs for the current decade. It emphasises smart, sustainable and inclusive growth as a way to strengthen the EU economy and prepare its structure for the challenges of the next decade.
R&D and innovation are key policy components of the Europe 2020 strategy. Innovative products and services not only contribute to the strategy’s smart growth goal but also to its inclusiveness and sustainability objectives. Introducing new ideas to the market promotes industrial competitiveness, job creation, labour productivity and the efficient use of resources. R&D and innovation are also essential for finding solutions to societal challenges such as climate change and clean energy, security and active and healthy ageing.
Europe 2020 strategy target on R&D
The Europe 2020 strategy sets the target of ‘improving the conditions for innovation, research and development’ , in particular with the aim of ‘increasing combined public and private investment in R&D to 3 % of GDP’ by 2020 .
The analysis in this article focuses on the headline indicator 'gross domestic expenditure on R&D', which monitors the strategy’s research and development target. Fundamental enabling factors that drive innovation are also discussed. These are the first links in the innovation chain and include R&D investment in EU Member States and its distribution across regions and the various public and private societal actors. The role of education, in particular tertiary education in science and technology, in providing the necessary human capital for the knowledge-based society is also highlighted. In addition, the economy’s capacity for R&D and innovation in terms of skilled workforce is examined. This is followed by a look at the EU’s performance concerning innovative business frontrunners and the technological output at the end of the innovation chain in terms of commercialisation and internationalisation. These indicators complement the input perspective of the ‘R&D intensity’ headline indicator, which is an input measure, with measures referring to the output and outcome dimensions of innovation.
- Between 2013 and 2015 gross domestic expenditure on R&D as a percentage of GDP in the EU stagnated at 2.03 %. The gap between the current performance and the 3 % target has yet to be closed.
- The business sector remains the main source of financing for R&D activities in the EU. Although the higher education and government sectors have lower R&D shares, they have been more resilient to economic fluctuations.
- R&D expenditure is highest in northern and western European countries, which are also characterised by predominantly business-financed R&D.
- The EU increased its output of tertiary graduates in science and technology by 23 % between 2008 and 2015. Despite this progress women are still underrepresented in this field of study across all Member States.
- Employment in knowledge-intensive activities increased in almost all EU Member States, however, the United States and Japan still outperform the EU in that respect. Countries with large financial and ICT sectors relative to their GDP report the highest employment in knowledge-intensive activities in the EU.
- The share of R&D personnel in the labour force reached 1.2 % of total employment in 2015. The business sector employs more than half of this workforce.
- Almost half of the EU’s enterprises reported some kind of innovation activity in 2014. Member States with a relatively high GDP per capita had the highest number of innovative enterprises.
- A third of the EU’s innovative enterprises were engaged in some form of co-operation with other enterprises or institutions during the period 2012–2014.
- Since 2008, the number of patent applications to the European Patent Office has stabilised at about 57 000.
- High-tech exports to outside the EU doubled between 2007 and 2015.
- 1 Main statistical findings
- 2 See also
- 3 Further Eurostat information
- 4 External links
- 5 Notes
Main statistical findings
Investment in research and development in the EU
After a period of somewhat continuous growth between 2007 and 2014, R&D expenditure in the EU reached 2.04 % of GDP in 2014, up from 1.77 % in 2007. However, progress has been slow and the most recent figures point to a stagnation, with the 2015 R&D expenditure decreasing slightly to 2.03 % of GDP, which has moved the EU further away from its 3 % target. The slow increase since 2007 contrasts with the prolonged stagnation experienced between 2002 and 2007, when EU R&D expenditure remained more or less stable at around 1.77 % of GDP.Overall, R&D intensity emerged stronger from the economic crisis as a result of depressed GDP growth and increased public funding for R&D expenditure in many Member States.
At the global level, the EU’s R&D intensity is still lagging behind other advanced economies, such as the United States, Japan and South Korea, with only the best performing Member States surpassing the United States (see Figure 2). The EU’s relative position in the global R&D landscape has also weakened because of rapid rise of R&D expenditure in China. In 2014, China overtook the EU by spending 2.05 % of its GDP on R&D.
R&D spending has risen in three quarters of Member States since 2008
Across the EU, R&D intensity ranged from 0.46 % to 3.26 % in 2015 (see Figure 2). Northern Member States Finland and Sweden did not only share a pattern of high expenditure, they also had the most ambitious national targets. In 2015, Denmark slightly exceeded its R&D target of 3 %, while Slovakia, Cyprus and Germany came very close to meeting their targets of 1.2 %, 0.5 % and 3 %, respectively.
Lower R&D intensity levels, below 1 %, were mostly recorded in eastern and southern Member States. Patterns in R&D investment, in particular business R&D spending, between countries generally mirror the industrial structure of economies, differences in the knowledge intensity of sectors and their research capabilities .
R&D intensity increased in most Member States between 2008 and 2015. This was mainly due to a slowdown in GDP growth, along with a rise in nominal government spending on R&D in many EU countries. Nevertheless, countries with very high levels of R&D intensity (Sweden and Finland), moderate levels (Luxembourg and Portugal) and very low levels (Croatia and Romania) alike suffered negative trends in R&D expenditure in that period. It is to be noted that Finland was a leader in R&D intensity in 2008, but its spending contracted to below 3.00 % of GDP in 2015. As mentioned in European Commission report Science, Research and Innovation Performance in the EU, the negative trends experienced in both Finland and Sweden could be partly attributed to difficulties in their information and communication technology (ICT) sectors. Growth in R&D expenditure between 2008 and 2015 was most pronounced in some central and eastern European economies that generally have low levels of spending, such as Slovakia and the Czech Republic.
Business enterprise is the largest R&D performing sector
R&D activities are carried out by four main institutional sectors, namely business enterprise, government, higher education and the private non-profit sector. Figure 3 shows how R&D expenditure was distributed between these four sectors in 2015. The business enterprise sector, which accounted for 64.0 % of total R&D expenditure in the EU (EUR 191.2 billion), was the largest R&D performing sector. Next was the higher education sector, which spent almost three times less on R&D activities than the business sector (EUR 69.4 billion).
Although the share of the government sector in total R&D expenditure was more modest at 12.0 % (EUR 35.7 billion), its role remains important, especially for the long-term stability of R&D expenditure. This includes performing ‘far from the market’ research  and research that is of social or environmental importance (for example, health, quality of life, environment and defence). It also includes establishing the basis for R&D activities and compensating for reduced business R&D expenditure during economic downturns to help avoid a decline in the build-up of capital stocks and harm to long-term productivity growth . The smallest sector performing R&D was the private non-profit sector (EUR 2.5 billion), making its share almost negligible at less than 1 %.
All R&D sectors in the EU experienced increases in their R&D expenditure as a percentage of GDP between 2004 and 2015, except for the private non-profit sector (see Figure 4). Business R&D intensity grew the most, by 0.15 percentage points. Apart from stalling in 2007 and 2010, its R&D intensity has been rising slowly since 2005. The higher education sector’s R&D intensity rose at just half the pace over the same period, while R&D performed in the government sector grew marginally by only 0.01 percentage points.
As Table 2 shows, annual changes in total R&D expenditure are mainly influenced by R&D trends in the business sector. This is not surprising as the private sector is the largest in terms of R&D performance. Business R&D expenditure typically follows the cyclical patterns of GDP growth. Indeed, the sharpest drop in total business R&D spending coincided with the slump in GDP growth in 2009, whereas its peaks in 2006 and 2011 occurred during or after economic upturns. Apart from brief interruptions in 2009 and 2013, business R&D spending has increased annually at a relatively high rate. In contrast, public sector R&D expenditure (higher education and government) has been less cyclical and has grown more slowly. However, there have been exceptions. The education sector outpaced business in terms of R&D spending growth over the period 2007 to 2010 and the government sector’s R&D expenditure grew faster from 2008 to 2009 and more recently in 2015. Overall, for all sectors annual growth in R&D expenditure has still not recovered to the levels seen before 2009.
In many Member States, direct government R&D funding has been complemented by indirect support for business R&D in the form of tax incentives. Such incentives have played either an important or a dominant role in addition to direct funding for business R&D in half of the Member States, these countries also increased their use of R&D tax incentives during the crisis years (European Commission, 2016, p.143).
Another important source of R&D finance has come from European funds, in particular through the EU Research Framework Programme and the EU Structural Funds. According to recent estimates, 20 % of the increase in public R&D expenditure between 2007 and 2012 could be attributed to ‘funding from abroad’, mainly from the EU budget (European Commission, 2016, p.28), which was an important addition to the 69 % increase that came from national public spending. Although most funds from EU research programmes flow to large, research-intensive Member States that joined the EU before 2004, they have made substantial contributions to public funding in several small Member States with low R&D capacity that joined more recently (European Commission, 2016, p.145). There has also been an important shift in the use of Structural Funds, with a growing share being channelled into R&D spending (European Commission, 2016, p.160).
To illustrate country differences in gross domestic expenditure on R&D by sector of performance, Figure 5 presents business sector R&D expenditure as a share of GDP on the horizontal axis and public sector (higher education and government) R&D expenditure as a share of GDP on the vertical axis. The business sector is the largest R&D sector of performance in the most research-intensive countries. In the least research-intensive countries, such as the Baltic countries and some southern and eastern Member States, the public sector — higher education and government — tends to account for the most R&D expenditure. There are, however, exceptions to this pattern in the east (Hungary, Bulgaria and Croatia) and the south (Italy and Spain). In general, low business sector R&D intensity in Member States indicates that the broader innovation system and framework conditions for this type of investment are still insufficiently attractive (see Innovation Union Competitiveness Report 2013, p.38). Although the public R&D system drives the generation of knowledge and talent needed by innovative enterprises, it is only through business investment that the full impacts of R&D can be realised. Business R&D integrates and transforms available knowledge into commercially viable technologies and innovation such as greener products, processes and services that enable higher labour productivity, industrial competitiveness, resource efficiency and reduced environmental impacts.
R&D intensity concentrated in regions in Germany, the United Kingdom, Nordic countries, Austria, France and Belgium
When looking at the regional distribution of R&D intensity , it can be seen that most of the EU’s research activity in concentrated in 30 NUTS 2 regions (see Map 1). These regions, located mostly in Germany (10 regions), the United Kingdom (five regions), Sweden and Austria (four regions each), Finland (three regions), Belgium (two regions), Denmark and France (one region each), reported R&D intensity above 3.00 %. Some research-intensive ‘clusters’ also become apparent: in particular, a band of research-intensive regions running from Finland through southern Sweden into Denmark; another band from the United Kingdom, through Belgium into southern Germany; and a final band going from Slovenia, through Austria into southern France and northern Spain. This geographical concentration of R&D activities is a common phenomenon. R&D clusters often develop around academic institutions or specific high-technology industrial activities and knowledge-based services, where they could benefit from a favourable environment and knowledge sharing. Due to clusters many regions attract new start-ups and highly qualified personnel and develop a competitive advantage in specialised activities.
Three regions in the EU appear to have particularly high R&D intensities. In 2013, Germany’s Stuttgart and Braunschweig regions spent 6 % and 7.3 % of their GDP on R&D, respectively. Even more ambitious was Belgian's Brabant Wallon province, where R&D spending peaked at 11.4 % of GDP — almost six times higher than the EU average. However, this figure can partly be explained by the high number of commuters that travel from Brabant Wallon to the Brussels regions, increasing the GDP of Brussels and lowering the GDP of Brabant Wallon.
At the other end of the scale, the 38 regions with R&D intensity below 0.5 % of GDP mainly belong to southern or central EU Member States: Romania (seven regions), Poland (six regions), Bulgaria and Greece (five regions each), Portugal, Spain and the United Kingdom (three regions each), France, Croatia, Italy, the Czech Republic and Finland (one each).
Capital regions recorded the highest levels of R&D intensity in 12 multi-regional Member States. In addition, in 20 countries, the capital regions’ R&D intensity exceeded the national average but was not necessarily the highest in the country. Only Belgium, the Netherlands and Greece went against this trend, with capital regions’ R&D intensity below the national average. Regional disparities in R&D intensity within countries were largest in the United Kingdom, Belgium and Spain and smallest in Slovenia, Hungary, Croatia and the Netherlands.
Changes in R&D intensity over time are presented in Map 2. Of the 269 regions for which data for both years is available, 62 experienced a decline in R&D intensity between 2007 and 2014. This decline was below one percentage point in all regions except for three regions in the United Kingdom, namely Essex, Lancashire, Cheshire and Kent. In the remaining regions, R&D intensity remained stable or increased between 0.01 percentage points and 4.63 percentage points (Belgian Brabant Wallon).
Building the knowledge base for research and innovation
Knowledge and skills are crucial for gaining new scientific and technological expertise and for building an economy’s capacity to absorb and use this knowledge. R&D expenditure is a vital enabling factor for human capital because it supports knowledge generation and skills development. Highly skilled human resources in turn are necessary for the EU’s research and innovation capacity and competitiveness. However, current skill mismatches  pose a challenge for the supply of a highly qualified workforce. According to projections from the European Centre for the Development of Vocational Training, around 16 million more highly qualified people will be needed in the EU by 2025 . To meet this demand and avoid a potential skills gap, the EU would need a high number of tertiary graduades (also see the articles on 'Employment' and ‘Education’).
Number of science and technology graduates in the EU is increasing, but women remain underrepresented
A well-functioning research and innovation system is important to promote excellence in education and skills development and ensure a sufficient supply of (post)graduates in science, technology, engineering and mathematics. Increasing the number of science graduates and jobs in knowledge-intensive activities would help to create a solid base for the EU knowledge economy and contribute to Europe 2020’s objectives by fostering the EU's innovation capacity, economic strength and employment.
Despite some challenges regarding science education — in particular disparities in basic science literacy and quality of science education, as well as gender imbalances across countries and regions — the EU has a good basic education system (see European Commission, 2011, p.11 and p.36). And the number of EU students that graduate from tertiary education in science and technology has been growing.
Figure 6 shows how this trend has developed in recent years. Between 2008 and 2015 the share of tertiary graduates in science and technology grew by 32 %, from 14.5 graduates per 1 000 people aged 20 to 29 to 19.1 graduates per 1 000 in the same age group. However, these figures need to be interpreted with caution because the growth in the number of science and technology graduates might be somewhat overstated by the Bologna effect. This occurs when tertiary graduates who complete a bachelor’s and then a master’s degree are counted twice. As a result, the trend in terms of the absolute number has not been as positive.
At Member State level, the trend varies considerably (see Figure 6). In 2015, the number of science and technology graduates ranged from about 31.5 per 1 000 inhabitants in Ireland to 8.3 per 1 000 inhabitants in Cyprus and 2.5 per 1 000 inhabitants in Luxembourg (2011 data). The very low ratio of graduates in science and technology in Luxembourg and Cyprus might be the result of a high proportion of students pursuing their studies abroad. Foreign graduates tend to push up the ratio in the country where they studied and pull it down in their home country. In all Member States, except Finland, Portugal, Romania and Luxembourg, the rates of tertiary graduates in science and technology have increased since 2008. Between 2008 and 2015, the tertiary graduate rate in Malta more than doubled, while the rate grew twice in Hungary and almost doubled in Cyprus and Spain.
Empowering women in tertiary education and enhancing their employment opportunities in the R&D sector is also an essential part of the EU’s research and innovation policy. Ensuring gender equality and integrating the gender dimension in research and innovation is one of the European Commission’s main five priorities set out in the 2012 Communication ‘A Reinforced European Research Area Partnership for Excellence and Growth' and a key element of the Horizon 2020 programme. Improving gender equality in science education can promote research, innovation and ultimately long-term growth by increasing the number of scientists and engineers. It is also important for reducing occupational segmentation in the labour force and improving gender equity in the labour market .
Despite the growth of female tertiary graduates in science over the past few years, women still remain under-represented in the science and technology fields in all Member States, especially those with the highest output of graduates in these fields (see Figure 6). This might be explained by the fact that woman still engage in different fields of study than men. For instance, according to the latest ‘She Figures’ publication' by the European Commission, men are more than two times more likely than women to choose a degree in engineering, manufacturing and construction, while women are twice as likely to pursue an education degree. It is generally accepted that, among other factors, differences in educational pathways of women and men may have some impact on the gender segregation in employment. Occupational segregation, understood as under- or over-representation of a given group in occupations or sectors (for example, the female-dominated primary education and care sector and male-dominated technical occupations), may contribute to wage inequalities and threatens to exacerbate labour and skill shortages. The share of women in science and technology fields declines further at the postgraduate level and even more so after they transition to the workplace: in 2012 women accounted for 47 % of PhD graduates (ISCED 6: post-graduate programmes above master’s level ), but made up only 33 % of researchers and 21 % of top-level researchers (grade A) (see ‘She Figures’, 2016, p. 5-6).
More than one third of the EU labour force is employed in knowledge-intensive activities
Pursuit of innovation is not an end in itself. It can have far-reaching impacts because it drives productivity, supports long-term growth and generates high-quality jobs. Innovation can also shift a country’s economic structure towards more knowledge-intensive activities with higher added value . This structural change has important implications for employment as it helps accommodate and stimulate the development of a highly skilled labour force. Therefore, the indicator on employment in knowledge-intensive activities as a percentage of total employment shows how the supply of highly skilled labour feeds into a country’s economic structure.
Employment in knowledge-intensive activities accounts for more than one third of total employment in the EU. Between 2008 and 2015 this share increased slightly, from 34.2 % to 36.0 %.
As Figure 7 shows, countries in eastern and southern Europe, except for Cyprus and Malta, recorded employment shares in knowledge-intensive activities below the EU average. Luxembourg led the ranking, with more than half of workers employed in fields requiring a high level of knowledge and education. This may be explained by the importance of financial services to the economy. A further five countries, most of them in northern Europe and with large financial or ICT sectors relative to their GDP, also recorded rates above 40 %.
Between 2008 and 2015 the employment share in knowledge-intensive activities increased in all Member States, except for Luxembourg and Italy, which experienced a 3.1 and 0.2 percentage point reduction, respectively. The highest increases of more than five percentage points were in Estonia as well as in some small southern Member States (Croatia, Portugal and Malta).
These findings should take into consideration that a growing share of employment in knowledge-intensive activities might not necessarily indicate a country is moving towards a more knowledge-based economy. It could also be the result of employment in non-knowledge-intensive sectors decreasing more than employment in knowledge-intensive activities. In fact, this seems to be the case for countries such as Greece, Spain, Italy and the Netherlands, which experienced reductions in both total employment and in employment in knowledge-intensive activities in absolute values between 2008 and 2015 . On the other hand, increased employment in sectors not considered knowledge-intensive would lead to lower values for the analysed indicator, even if this employment is the result of significant investment in innovation in these sectors .
In 2015, 44.2 % of women employed in the EU were working in knowledge-intensive activities. In contrast, the share was only 29.1 % for men . While half of all men employed in knowledge-intensive activities were working in the business sector, this was the case for only 30 % of women.
Improvement in the EU’s scientific tertiary education output has been complemented, to a varying extent, by national measures intended to attract a highly qualified workforce and human resources, including women, to science and research (see European Research Area, Facts and Figures for 2014, p.22). At the EU level, R&D personnel — researchers and other staff employed directly in R&D — accounted for 1.3 % of the labour force in 2015 . The business enterprise sector was the biggest employer of R&D personnel, providing jobs for more than half of this workforce. The higher education sector was the second most important employer of R&D professionals.
Similar to the evolution of R&D intensity, the share of R&D personnel in the labour force increased marginally between 2002 and 2015 (0.26 percentage points). This trend was mainly driven by the business enterprise sector, where the share of R&D personnel grew by 0.17 percentage points. The higher education and the government sectors showed much smaller increases of 0.08 and 0.02 percentage points, respectively. The private non-profit sector maintained its almost negligible share of 0.01 % between 2002 and 2014.
Introducing innovative ideas to the market: the role of the business sector
A dynamic business environment is essential for the promotion and diffusion of innovation. The challenge is to make use of R&D by fostering entrepreneurship and creativity to trigger innovation and economic competitiveness. Therefore, measures targeting knowledge diffusion and absorption of ideas and innovations, for example, through the creation of technology markets and licensing schemes, are just as important as investment in knowledge generation. The higher the uptake and use of ideas from R&D, the more likely innovative players are to invest in future knowledge generation through increased private R&D expenditure. Innovators also help to create a more dynamic innovation system. In many cases they contribute to the structural and technological changes needed to adapt to new circumstances and challenges. An example is the depletion of fossil fuels and the resulting transition towards more renewable energy sources.
Progress in achieving knowledge diffusion and absorption can be measured through data on the number of innovative companies, patent applications and exports of high-tech products, among others. Other attempts to measure innovation include composite indices such as the 'European Innovation Scoreboard' and the 'Eco-Innovation Index'.
The 'European Innovation Scoreboard' is a policy instrument used by the European Commission to compare Member States’ research and innovation performance. Based on a composite indicator, known as the summary innovation index, it forms a comprehensive benchmarking and monitoring system of research and innovation trends in Europe .
Eco-innovation is any innovation that reduces the use of natural resources and decreases the release of harmful substances across a product’s whole life cycle, bringing both economic and environmental benefits. Environmental benefits include improved resource productivity, in particular better material and energy efficiency, lower greenhouse gas (GHG) emissions and reduced waste generation, which is beneficial for companies and end users. All types of innovation can become eco-innovation as long as they bring environmental benefits. Eco-innovation can, therefore, introduce to the market a new good or service, process, organisational change or marketing method. It can also have implications at the wider economic and societal level (for example, new urban design or new transportation systems).
The Eco-Innovation Scoreboard is a policy tool that helps measure eco-innovation performance and assess whether the EU and its Member States are moving towards smart and sustainable growth, as requested by the Europe 2020 strategy .
Almost half of EU enterprises carry out innovation activities
Almost half (49.1 %) of EU enterprises reported innovation activity between 2012 and 2014 (see Figure 9). The share has remained relatively stable since the previous biennial Community Innovation Survey (CIS) in 2012 (48.9 %) . The share of innovative enterprises is broadly linked with GDP per capita levels. By far, the highest share of innovative enterprises was observed in Germany (67.0 %), but other countries with high GDP per capita and productivity levels such as France, and the Benelux and northern European countries also seemed to provide a favourable environment for innovative business activities (55 % or more innovative enterprises) . These countries also share a high proportion of medium-high and high-tech manufacturing companies or a high proportion of knowledge-intensive services (for example, ICT, finances). The share of innovative enterprises therefore seems to be also linked to economic structures. Similar to R&D intensity, a west-east divide could be observed, with businesses in eastern European countries with below EU-average income per capita recording the lowest innovation activity.
Innovative companies can be distinguished by the type of innovation they pursue. Figure 9 shows how different business strategies lead to different innovation types such as product, process, organisational or marketing innovation. More than a quarter (27.3 %) of EU enterprises reported an organisational innovation that involved implementing a new method in the enterprise's business practices, workplace organisation or external relations. Product innovation related to the launch of new or significantly improved goods or services was the second most common innovation activity reported by enterprises (23.9 %).
Complex innovations with the highest potential for boosting productivity and growth often depend on the ability to draw on diverse sources of information and knowledge, or to collaborate on the development of an innovation. Innovation co-operation, which measures among other things the flow of knowledge between public research institutions and enterprises and between enterprises and other enterprises, provides an important indication of enterprises’ innovation activity.
A third (33.1 %) of EU enterprises that conducted product and process innovation activities were also engaged in innovation co-operation arrangements from 2012 to 2014. The United Kingdom stands out in this context with 61.4 % of innovative enterprises involved in co-operation activities — double the EU average. At the other end of the scale, enterprises in some of the southern European countries were less likely to participate in collaborative knowledge creation. Interestingly, the EU leader in innovative enterprises — Germany — showed a comparatively low share of enterprises engaged in collaboration. In contrast, some Baltic and eastern European countries with a relatively low share of innovative enterprises displayed above average innovation co-operation.
Stagnation in the number of EU patent applications since 2008
The more cutting-edge knowledge is produced, the more likely it is to spill over into new products and private R&D activities. In this regard, patents provide a valuable measure of the exploitation of research results and of the inventiveness of countries, regions and enterprises. Patenting has a strategic role in supporting the Europe 2020 strategy. Introducing innovative ideas to the market through patenting helps improve the EU’s competitiveness and productivity, which underlie economic growth and employment, and brings long-term benefits to the economy at large through the wide diffusion of knowledge.
In 2012, the total number of patent applications to the European Patent Office (EPO) was 10 % higher compared to the level a decade earlier. Patent applications had been steadily increasing until 2008, but have since stabilised at around 57 000. The largest decrease in patent filings coincided with the slowdown in economic growth in 2008 and later in 2012. This might be explained by the fact that many industries reduce their R&D budgets and expenditure on the application and maintenance of intellectual property rights during an economic downturn .
The most prolific technology fields in terms of EU patents are performing operations and transporting, electricity and human necessities (see Figure 11). These three sectors accounted for half of all EU patent applications in 2012 (54 %). Trends for total patent filings in the individual sectors tended to follow the overall trend. The sectors experiencing the most growth in the number of patent applications between 2002 and 2012 were mechanical engineering, lighting, heating, weapons and blasting (28 %) and fixed constructions (36 %).
High-tech exports to non-EU countries have doubled since 2007
Beyond turning research results into tangible applications, innovative businesses compete globally to sell their high-tech products on the world market. The volume of high-tech trade provides an indication of EU enterprises' ability to commercialise their R&D and innovation outputs globally. It also reflects the specialisation of countries in producing medium and high-tech products that result from innovation and contributes to an economy’s balance of trade and international competitiveness. The creation, exploitation and commercialisation of high-tech products is associated with high value added for the economy and knowledge-intensive and remunerative jobs. Therefore, high-tech trade also contributes to the Europe 2020 strategy’s priorities for smart and inclusive growth.
Between 2007 and 2015 the value of high-tech exports to outside the EU grew by more than 50 % in nominal terms, from EUR 199 billion to EUR 304 billion. This was a result of continuous growth, which was interrupted only briefly during the economic downturn in 2009. The main drivers behind the development of the EU’s high-tech exports since 2007 were the pharmacy and aerospace sectors, which increased by 145 % and 114 %, respectively. In particular, the EUR 45 billion increase in exports of aerospace high-tech accounted for almost half of the growth in total exports to countries outside the EU. Within high-tech exports, aerospace was also the product group with the highest level of exports (EUR 84 billion), followed by pharmacy (EUR 60 billion) and electronics and telecommunications (EUR 59 billion). In terms of destination, the United States and China were the main importers of EU high-tech products in 2015, with shares of 26 % and 10 %, respectively .
Outlook towards 2020
The Europe 2020 strategy tries to overcome the economic crisis and its impacts by addressing the structural weaknesses of the EU economy. It also attempts to create the conditions for smarter growth through more effective investments in education, research and innovation.
However, R&D intensity, the headline indicator for the strategy’s smart growth priority, is expected to remain below the 3 % objective that the EU has set for itself for 2020. In 2015, R&D expenditure as share of GDP was at 2.03 % and had shown only limited progress over time, despite increases in public and private R&D expenditure since 2007. Estimates show that to meet the 2020 target, EU R&D intensity would need to grow three times as fast as it did between 2007 and 2014 — 6.7 % versus 1.9 % annually (European Commission, 2016, p.30) . According to these projections, if the 2007 to 2014 trend continues, investment in R&D is forecast to rise to only 2.28 % by 2020 (European Commission, 2016, p.30). The more recent stagnation in R&D expenditure in 2014 and 2015 means that the likelihood of reaching the target is even lower than described in the projection. Progressing more rapidly towards the 3 % target would require a faster structural shift to more knowledge-based economic activities.
R&D intensity could reach 2.6 % if Member States meet their national targets. However, progress towards these has been uneven. In 2015, Denmark had already met its national targets, while Slovakia, Cyprus and Germany came very close, with a gap of 0.02, 0.04 and 0.13 percentage points, respectively, to be closed by 2020. However, most Member States still need to significantly accelerate their R&D intensity growth to be able to meet their respective national targets (European Commission, 2016, p.36). In terms of building up the necessary human capital, it has been estimated that the EU will need to train and employ at least one million new researchers compared with 2008 levels if it is to reach its 3 % R&D target (see Researchers’ Report, 2014, p.54).
Although factors influencing R&D investment tend to be very context-specific, the European Semester Country Reports, published by the European Commission as part of the Europe 2020 policy cycle, identify some persistent challenges in the European research and innovation system that impede progress towards the Europe 2020 priorities. According to the European Semester Thematic Factsheet, Research and Innovation 2016, these bottlenecks could be grouped into three main categories: low quality of the public research and innovation system in some Member States, mainly a result of their lower public R&D investment; weak knowledge flows and science-business linkages; and insufficiently attractive framework conditions for R&D investment and entrepreneurial activity.
A number of EU policy actions and instruments have been put in place to address these challenges. The European Commission’s ‘Open Innovation, Open Science, Open to the World’ initiative brings together some of the most recent of these and places emphasis on making science and innovation more open, collaborative and global. The Commission has established three pillars of action for its Open Innovation Policy, namely reforming the regulatory environment, boosting private investment and maximising impacts. Some specific actions under the first pillar include: the establishment of the Scientific Advice Mechanism for providing the Commission policy-making activities with independent scientific advice; the ‘Innovation Deals’, which make it possible for innovators to question EU rules posing obstacles to innovation; the Horizon 2020 Policy Support Facility, which provides Member States Horizon 2020 associated countries with practical support in the design, implementation and evaluation of research and innovation policy reforms. Under the second pillar the Commission has planned some of the following policy measures: setting up a European Venture Capital Fund of Funds, which would support businesses as they start up and grow and maximising the use of the European Fund for Strategic Investments for mobilising private funding for strategic investments and for risk finance for small businesses. Under the third pillar, the Commission foresees further implementation of the Seal of Excellence, which identifies promising Horizon 2020 project proposals and recommends them for further funding from alternative sources; establishment of a European Innovation Council, which would help converting knowledge and science into market-creating products and services and a second wave of Horizon 2020 simplification (European Commission, 2016, p.17-30).
European initiatives in the area of Open Science include the establishment of Open Science Policy Platform, the creation of European Open Science Cloud, the advancement of open access and data policies, the removal of legal barriers to the use of text and data mining techniques for research and innovation and the fostering of research integrity, to name a few examples (European Commission, 2016, p.33-55).
The European Commission has also put to use all available instruments to maximise the impact of international co-operation on research and innovation, e.g. Horizon 2020, the Strategic Forum for International Science, policy dialogues on science and technology co-operation with key international partners and external policies (European Commission, 2016, p.64-79).
Data sources and availability
Indicators presented in the article:
- Gross domestic expenditure on R&D (t2020_20)
- Gross domestic expenditure on R&D by sectors of performance (rd_e_gerdtot)
- Total R&D personnel by sectors of performance, occupation and sex (rd_p_persocc)
- Gross domestic expenditure on R&D by NUTS 2 regions (rd_e_gerdreg)
- Tertiary graduates in science and technology (tps00188 and educ_uoe_grad04)
- Employment in knowledge-intensive activities by sex (htec_kia_emp2)
- R&D personnel by sectors of performance (rd_p_perslf)
- Enterprises by types of innovation (inn_cis9_type)
- Innovative enterprises engaged in any type of co-operation (inn_cis9_coop)
- Patent applications to the EPO by priority year by international patent classification (IPC) sections and classes (pat_ep_nipc)
- High-tech trade by group of products in EUR million (htec_trd_group4)
R&D and innovation contribute to a well-functioning knowledge-based economy. Most importantly, they are central to providing the scientific and technical solutions needed to meet global societal challenges such as climate change and clean energy, security, and active and healthy ageing. For instance, technological advances in materials science and digitalisation, are driving rapid progress in renewable energy and energy efficiency as well as other sectors important for sustainable development and mitigating climate change such as transport, construction, manufacturing, agriculture and consumer goods . However, development of new technologies alone will not be enough to solve many of the ‘grand’ societal challenges. Fundamental transformations in businesses and manufacturing processes, provision of services, the way society organises itself and other non-technological innovations will be equally important.
The challenges facing society also threaten the well-being of the population and can have dire social, economic and environmental implications inside and outside the EU. Research and innovation can not only help in addressing these challenges, but also in exploiting the new market opportunities they offer.
A number of important EU policy strategies and initiatives address such win-win situations. Horizon 2020 ─ the EU’s research and innovation programme for the period 2014–2020 ─ is helping to bring ideas from the lab to the market by providing nearly EUR 75 billion  of funding for research projects aimed at tackling societal challenges, generating excellence in science, and fostering industrial leadership .
The EU Action Plan for the Circular Economy, included in the Circular Economy package, proposes actions that will contribute to ‘closing the loop’ of product life cycles through greater recycling and re-use, and will bring benefits for both the environment and the economy. Similarly, the Roadmap to a Resource Efficient Europe supports the shift towards a resource-efficient, low-carbon economy, while bringing new economic opportunities, sources of growth and jobs and increased competitiveness through improved efficiency.
As highlighted in the European Commission publication Open Innovation, Open Science and Open to the World, digital technologies are fundamentally transforming the way science operates and businesses innovate — ‘new knowledge is now created through global collaborations involving thousands of people from across the world and from all walks of life’. The ability of the EU to continue transferring knowledge into commercial and social gains would depend on how it adapts to this changing reality. In recognition of this, the European Commissioner for research Carlos Moedas has set three goals for EU research and innovation policy, which aim to make science and innovation more open, collaborative and global. The European Commission is already taking actions in this direction by developing the European Science Cloud, increasing the access to scientific data generated by Horizon 2020 projects and undertaking new international research cooperation agreements with Ukraine, Tunisia, China and South American countries, to name a few examples.
The importance of R&D and innovation for fulfilling Europe 2020 strategy’s ambitions is evident in their close interlinkages with the strategy’s other objectives. The R&D target is closely related to the strategy’s tertiary educational attainment and employment targets (see the articles on 'Employment' and 'Education').
Public investment in R&D generates the knowledge base and talent that higher educational organisations and innovative companies need. Higher public investment in R&D also leverages private investment in research and innovation, providing new jobs in business and academia and ultimately increasing demand for scientists and researchers in the labour market. R&D investment spurs innovation, which contributes to industrial competitiveness and job creation.
The Europe 2020 target on R&D is also linked to the strategy’s climate change and energy targets (see the article on 'Climate change and energy'). In particular, the transition to a green and low-carbon economy and adaptation to climate change will require significant innovation, from small incremental changes to major technological breakthroughs.
Further Eurostat information
Methodology / Metadata
- Towards robust quality management for European Statistics - Communication from the Commission COM(2011) 211 final
- Regulation (EC) No 223/2009 of 11 March 2009 on European statistics
- European Council conclusions 17 June 2010, EUCO 13/10, Brussels, 2010.
- European Commission, Taking stock of the Europe 2020 strategy for smart, sustainable and inclusive growth, COM(2014) 130 final, Brussels, 2014 (p. 12).
- Research and experimental development (R&D) comprises creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society and the use of this stock of knowledge to devise new applications’ (Frascati Manual: Proposed Standard Practice for Surveys on Research and Experimental Development, 6th edition, p. 63).
- Reinstaller, A., Unterlass, F., 2012. Comparing business R&D across countries over time: a decomposition exercise using data for the EU27. Applied Economics Letter 19, 1143-1148.
- The market does not provide sufficient incentives for this type of research due to the non-appropriable, public good, intangible character of knowledge and the risky nature of research. For more information see: OECD.STI policy profiles. Public research policy
- OECD, Public investment in R&D in reaction to economic crises — A longitudinal study for OECD countries, 2016.
- Skill mismatches occur when the distribution of skills in the labour force does not match with the qualifications required by the labour market. For trends in skill mismatches in the EU see: ILO. 2014. Skills mismatch in Europe, Statistics Brief, Geneva,2014.
- ( See Cedefop)
- OECD, Report on the Gender Initiative: Gender Equality in Education, Employment and Entrepreneurship, Meeting of the OECD Council at Ministerial Level Paris, 25–26 May 2011 (p. 25).
- ISCED 1997 classifications used.
- Knowledge-intensive activities are defined based on the level of tertiary educated persons within sectors. An activity is classified as knowledge-intensive if employed tertiary educated persons (according to ISCED97, levels 5+6) represent more than 33% of the total employment in that activity.
- Source: Eurostat (online data codes: (lfsi_emp_a) and (htec_kia_emp2)).
- Janger, J., Schubert, T., Andries, P., Rammer, C. and Hoskens,M., The EU 2020 innovation indicator: A step forward in measuring innovation outputs and outcomes?, Research Policy 46 (2017) 30–42.
- Source: Eurostat (online data code: (htec_kia_emp2)).
- 2015 data are provisional. Source: Eurostat (online data code: (rd_p_perslf)).
- The European Innovation Scoreboard analyses the innovation system of EU Member States through a set of 25 indicators broken down into eight dimensions looking at human resources, research systems, finance and support, firm investments, linkages and entrepreneurship, intellectual assets, innovators and economic effects. In the resulting summary innovation index, Member States are classified into four groups, based on their average innovation performances: ‘innovation leaders’ have an innovation performance well above the EU average, ‘innovation followers’ group comprises countries whose performance is above or close to the EU average, ‘moderate innovators’ have a performance below that of the EU average, and ‘modest innovators’ whose performance is well below the EU average (see 'European Commission. Innovation Union Scoreboard 2016', 2016 Brussels).
- Eco-innovation Observatory, Introducing eco-innovation: from incremental changes to systemic transformations, 2011.
- The Eco-IS shows how well individual countries perform in different dimensions of eco-innovation compared with the EU average. It is based on 16 indicators grouped in to five thematic areas: eco-innovation inputs, eco-innovation activities, eco-innovation outputs, resource efficiency and socio-economic outcomes. In the index, Member States are ranked in relation to the EU average of 100.
- The Community Innovation Survey (CIS) is a survey of innovation activities of enterprises in EU Member States. The survey collects information about product and process innovation as well as organisational and marketing innovation and other key variables. Most questions cover new or significantly improved goods or services or the implementation of new or significantly improved processes, logistics or distribution methods. It produces a broad set of indicators on innovation activities, innovation expenditure, public funding, sources of information for innovation, innovation co-operation, organisational and marketing innovation and on strategies and obstacles for reaching the enterprises’ goals. For further information, see Statistics Explained article on innovation statistics available on the Eurostat website.
- Eurostat online data code: (inn_cis9_type).
- Benoliel, D. & Gishboliner, M., The Effect of Economic Crisis on Patenting Activity Across Countries, 14 Chi.-Kent J. Intell. Prop.316, 2015, (p. 323).
- Eurostat. Statistics Explained. Production and international trade in high-tech products. Data extracted in December 2016.
- The authors note that one should bear in mind that the growth rate in R&D intensity over the 2007-2014 period was boosted by a depressed GDP.
- The Global Commission on the Economy and Climate, Better Growth Better Climate. Chapter 7, 2014, Washington, (p.3).
- Set in current prices.
- Regulation (EU) 2015/1017 of the European Parliament and the Council of 25 June 2015 on the European Fund for Strategic Investments, the European Investment Advisory Hub and the European Investment Project Portal and amending Regulations (EU) No 1291/2013 and (EU) No 1316/2013 — the European Fund for Strategic Investments.