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This page was published on 20/09/2006
Published: 20/09/2006

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Published: 20 September 2006  
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Private investment in R&D to jump in near future

European companies have adjusted their investment strategies to place greater emphasis on research and development, a Commission survey indicates.

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© FreeFoto.com
The recent survey asks European companies how they see their investment in research and development to progress over the next three years, and respondents indicated that they are planning a much greater increase of R&D investment than in the past.

The report shows that, on average, companies plan to increase their investment in research 5% per year over the next three years. That is in stark contrast to present investment strategies. Current figures contained in the 2005 Scoreboard show that R&D investment increased just 0.7% in 2003-2004.

The survey is the first of its kind giving researchers and policy makers reliable figures of R&D prospects across the EU and across different industry sectors.

The survey, carried out by Seville based JRC think tank The Institute for Prospective Technological Studies as part of the Industrial Research & Innovation Action polled 449 companies from all across Europe operating in ten different industries. The Commission received responses from some of the most important European industry sectors including: automobiles, chemicals, electronics, engineering machinery, food producers, health, IT hardware, pharmaceuticals, biotechnology, among others.

The companies who responded to the survey represent nearly €30 billion worth of investment, a significant portion of privately funded research found in Europe.

“If we are to reach our objective of investing 3% of GDP in research and development, we need increased investment by the private sector,” said Janez Potočnik, European Commissioner for Science and Research, in a statement. “For this reason the results of this survey are encouraging. We need to maintain and reinforce our efforts at European and national level to make Europe an attractive place for companies to carry out their research. The Commission will be coming forward with some more ideas in this area in autumn 2006.”

One significant difference between FP7 and previous programmes is to encourage greater participation by the private sector in investing in European R&D.

The main reasons for increasing R&D investment include changes in market demand for new products and services, changes in technological opportunities, and changes in company turnover or profit.

When deciding where geographically to place their investment money, industry representatives indicated that access to markets proved to be the deciding factor. Other reasons influencing decisions on where to invest were high availability of researchers, access to specialised R&D knowledge and results, macroeconomic and political stability, and R&D cooperation opportunities.

Despite much ink being spilled during the recent EU enlargement phase about the outsourcing of jobs to the east, labour cost for researchers proved to be of lesser importance. In terms of investing in research personnel, companies seem to understand that quality has a price.

The report also shows that companies prefer to keep investment in their home countries. Germany is the most popular hub for European R&D, followed by the United Kingdom and France. When research is outsourced beyond EU borders, the US is by far most popular, with China a distant second and India coming in third.

Clearly some sectors are expecting to invest more than others. According to the report, of the 449 companies responding to the survey, those from the pharmaceuticals/biotechnology and chemicals sectors represent 60% of the total investment, or around €18 billion.

If such rosy figures are to be believed, for the first time in several years European R&D is expected to do at least as well as that in the United States. The report warns against reading too much into the data, however, saying it is possible that only those companies planning large investment may have responded to the survey, skewing results.

The engineering and machinery sector stands to see the largest percentage increase over current investment. The report shows that over the next three years investment there could be augmented by up to 12% p.a.

The EU Survey on R&D Investment Business Trends was carried out by the European Commission as part of the Commission's Industrial Research Investment Monitoring (IRIM) project.

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