R & D expenditure
- Data extracted in October 2016. Most recent data: Further Eurostat information, Main tables and Database. Planned article update: October 2017.
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 couple of decades has been to encourage increasing levels of investment, in order to provide a stimulus to the EU’s competitiveness. The Europe 2020 strategy adopted in 2010 maintained a long-standing objective for the EU to devote 3 % of gross domestic product (GDP) to R & D activities; this is one of the five key targets of this strategy.
- 1 Main statistical findings
- 2 Data sources and availability
- 3 Context
- 4 See also
- 5 Further Eurostat information
- 6 External links
Main statistical findings
Gross domestic expenditure on R & D (GERD) stood at EUR 284 billion in the EU-28 in 2014, which was a 3.4 % increase on the year before, and 42.0 % higher than 10 years earlier (in 2004) — 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 2012, the level of expenditure on R & D in the EU-28 was equivalent to 77 % of that recorded by the United States. In 2013, the EU-28’s R & D expenditure was 89 % higher than in China, more than double the expenditure in Japan, and nearly seven times as high as in South Korea.
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 R & D intensity. This ratio increased modestly in the EU-28 during the period from 2004 to 2007, rising from 1.76 % to 1.78 %. Between 2007 and 2012 it increased more rapidly, reaching 2.01 %, despite a small decline in 2010; R & D intensity increased slightly to 2.03 % in 2013 where it stayed in 2014. Despite the increase in recent years, the EU-28’s R & D expenditure relative to GDP remained well below the corresponding ratios recorded in Japan (3.47 %, 2013 data) and the United States (2.81 %, 2012 data), as it has for a lengthy period of time. In 2013, R&D intensity in China surpassed that of the EU-28, with Chinese R & D expenditure equivalent to 2.08 % of GDP.
Between 2004 and 2008 there was an increase in the relative importance of GERD in the Japanese economy, as its ratio to GDP rose by 0.34 percentage points; note that Japanese economic growth was relatively subdued during this period. However, in the period between 2008 and 2010 the ratio of GERD to GDP in the Japanese economy fell by 0.22 percentage points, before bouncing back between 2010 and 2013.
In the United States, the ratio of GERD to GDP grew from 2.49 % in 2004 to a peak of 2.82 % in 2009, a rise of 0.33 percentage points. In 2010, R & D intensity in the United States fell back to 2.74 % before increasing in 2011 and 2012 to reach 2.81 %.
China’s R & D intensity increased rapidly during the period shown in Figure 1, rising from 1.23 % in 2004 to 2.08 % by 2013, an increase of 0.85 percentage points.
Among the EU Member States, the highest R & D intensities in 2014 were recorded in Finland (3.17 %), Sweden (3.16 %), Denmark (3.05 %) and Austria (2.99 %) — see Table 1. There were nine Member States that reported R & D expenditure that was below 1.00 % of their GDP in 2014. 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 (2.39 %) reported an R & D intensity above the EU-28 average, while the Czech Republic (2.00 %), Estonia (1.44 %), Hungary (1.37 %) and Lithuania (1.01 %) also reported intensities above 1.00 %.
Nearly all EU Member States reported a higher R & D intensity in 2014 than in 2004, the exceptions being the two Member States with the highest intensities, Finland and Sweden, as well as Luxembourg and Croatia; there was no change in R & D intensity in Romania during the period under consideration. At the other end of the range, the biggest increases in R & D intensity (in percentage point terms) between 2004 and 2014 were recorded in Slovenia, the Czech Republic and Austria.
Sector of performance
Figure 3 shows how the EU-28’s R & D intensity grew between 2004 and 2014, identifying the share of R & D performed in each of four sectors. Throughout this period the majority of R &D expenditure was in the business enterprise sector, and its R & D intensity rose from 1.12 % of GDP in 2004 to 1.30 % in 2014, an overall increase of 16.1 %. The second largest sector performing R & D was the higher education sector, whose R & D intensity increased 17.5 % between 2004 and 2014, to reach 0.47 % of GDP. The R & D intensities of the two other sectors changed little over the period under consideration, and in 2014 the R & D intensity of the government sector was 0.25 % of GDP, while that of the private non-profit sector was 0.02 %.
The differences in the relative importance of R & D expenditure between countries are often explained in part by levels of expenditure within the business enterprise sector as can be seen in Figure 4. While the R & D conducted within the business enterprise sector was equivalent to 1.30 % of the EU-28’s GDP in 2014, in South Korea this share reached 3.26 % (2013 data), in Japan it was 2.64 % (2013 data), in Switzerland it was 2.05 % (2012 data) and in the United States it was 1.96 % (2012 data). The relative importance of R & D expenditure in the government and higher education sectors was broadly similar in the EU-28 and across all of these non-member countries, except for Switzerland where the government sector’s R & D intensity was close to zero and that of the higher education sector was relatively high.
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 relative to GDP — namely, Finland, Sweden, Denmark, Austria and Germany — also reported relatively high overall R & D intensities (1.95 % or above). Apart from Germany, these Member States also featured at 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 and Luxembourg, while private non-profit sector R & D expenditure relative to GDP was highest in Cyprus.
Source of funds
An analysis of R & D expenditure by source of funds shows that more than half (55.0 %) of the total expenditure in 2013 within the EU-28 was funded by business enterprises, while one third (32.7 %) was funded by government, and a further 9.9 % from abroad (foreign funds). Funding by the higher education and private non-profit sectors was relatively small, 0.8 % and 1.6 % of the total respectively. These shares were relatively stable over time as can be seen from Figure 5. The main changes over the period 2003 to 2013 were a fall in the share of funding by the government sector and an increase by all other sectors, most notably (in relative terms), funding from abroad.
In the Asian economies of South Korea, Japan and China, business-funded R & D accounted for a larger share of total R & D expenditure (than in the EU-28), close to three quarters of the total in 2013. In Switzerland (60.8 %; 2012 data) and the United States (59.1 %; also 2012 data) the shares of business-funded R & D were closer to the EU-28 average (see Figure 6).
Among the EU Member States, in 2013 business-funded R & D accounted for more than three fifths of total R & D expenditure in Germany, Slovenia, Sweden and Finland. By contrast, a majority of the expenditure on R & D made in Cyprus, Romania and Greece 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 20.0 % in 2013 — reported in Latvia, Bulgaria, Lithuania, Luxembourg, the Czech Republic and Malta. The higher education sector played a relatively small role in funding R & D expenditure in most Member States, exceeding 3.0 % only in the southern Member States of Cyprus, Spain and Portugal. Equally, the role of the private non-profit sector was generally small, exceeding 2.0 % of R & D expenditure in the United Kingdom, Denmark, Sweden, the Netherlands and Italy.
Data sources and availability
Statistics on science, technology and innovation are based on Decision No 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 (EC) No 753/2004 on statistics on science and technology which was adopted in 2004. In 2012, a new European Commission Regulation (EU) No 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. Gross domestic expenditure on R & D (GERD) is composed of expenditure from each of these four sectors. Expenditure data considers the research performed on the national territory, regardless of the source of funds; data are usually expressed in relation to GDP and this ratio is often referred to as R & D intensity. Additional analysis of R & D expenditure are available by: source of funds (for which data are also available from a fifth sector, funding from abroad); field of science; type of costs; economic activity (NACE); enterprise size class; type of R & D; socioeconomic objectives; and regions (NUTS).
Through its innovation union flagship initiative (which forms part of the Europe 2020 strategy) the European Commission has 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; innovation union scoreboard (or core) indicators; and a comprehensive set of other indicators. The headline indicator is the 3.00 % 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 the 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 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 billion 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.
Further Eurostat information
- Science, technology and innovation in Europe (Pocketbook — 2013 edition)
- Science, technology and innovation in Europe (Pocketbook — 2012 edition)
- Science, technology and innovation in Europe (Pocketbook — 2011 edition)
- Science, technology and innovation in Europe (Pocketbook — 2010 edition)
- Science, technology and innovation in Europe (Statistical book — 2010 edition)
- 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)
- Statistics on research and development (t_rd)
- Research and development (research)
- Statistics on research and development (rd)
- R&D expenditure at national and regional level (rd_e)
- 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)
- Statistics on research and development (rd)
Methodology / Metadata
- Government budget appropriations or outlays on R&D (ESMS metadata file — gba_esms)
- Statistics on research and development (ESMS metadata file — rd_esms)
Source data for tables and figures (MS Excel)
- Decision No 1608/2003/EC of 22 July 2003 concerning the production and development of Community statistics on science and technology
- Regulation (EC) No 753/2004 of 22 April 2004 implementing Decision 1608/2003/EC
- Regulation (EU) No 995/2012 of 26 October 2012 implementing Decision 1608/2003/EC
- European Commission — Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs — European innovation scoreboards
- European Commission — Horizon 2020
- European Commission — Innovation union
- European Commission — Joint Research Centre (JRC) — The EU Industrial R&D Investment Scoreboard
- OECD — Innovation