A key role but persistent weaknesses

The 2008 Commission report A more research-intensive and integrated European Research Area provides a genuine X-ray of the European Research Area (ERA). Packed full of graphs and figures, its 169 pages permit a comparison of the ERA’s performances with those of its principal competitors. It also provides food for thought on its evident weaknesses and how to correct them.

Let us start with a snapshot. What was the ERA’s ranking in the world in 2006, the date of the most recent statistics? A lead ranking: First for the number of scientific publications and second (behind the United States) for the number of patents registered and money invested in R&D. Cause for celebration? Not at all. European publications may be more numerous, but they are not the most cited and that is the criterion that traditionally measures the true impact of scientific research. Of the 10% most cited publications, a clear majority are US publications. The reason for this is the lack of thematic specialisation on the part of European research. While the EU puts in a respectable performance in all fields, it is dominant in none of the most dynamic sectors. The United States dominates in the biomedical field and Japan is the undisputed leader in material sciences; the EU does a little of everything.

It is these NBIC (Nanotechnologies, Biotechnologies, Information and communication technologies, Cognitive science) that are crucial for the future of the knowledge economy. In these fields, applications are close to, indeed often inextricable from, the production of new knowledge. Yet the European private sector invests much less in R&D than its Asian or American counterparts. In the United States, and even more so in Japan, China and South Korea, private sector research accounts for more than 64% of the total, compared with 55% in the EU.

Growing Asian strength

From photography to cinema, a study of the trends over the past decade delivers a clear message. Europe’s position has followed a resolutely downward trajectory, whether in terms of the number of publications and patents or the intensity of the R&D effort - the latter measured in terms of money invested in R&D by a country in relation to the wealth produced, a ratio considered as most representative of the dynamism of a research system.

There is some meagre consolation to find that this is also true of the United States, although to a lesser degree. The Old World and the New are both facing growing competition from Asia. Since 2000 the intensity of the Chinese research effort has increased by almost 50% and it now has a greater annual volume of publications than Japan. This growth is admittedly based on volumes that remain limited. In terms of purchasing power, China invests almost seven times less in research than the EU and its publications are not frequently cited. But there is no mistaking the trend. In the field of science, as at the economic, political or military level, the growing strength of emerging Asia is rapid and dramatic.

A more homogenous ERA, but lacking in dynamism

Adjust the focus and get a closer view and study the parts that make up the ERA. At first glance, everything appears to be fine. Of the 27 Member States, 20 have increased the share of their R&D budget in total government expenditure since 2000. In 17 countries the result has been a sometimes dramatic increase in the intensity of the research effort of more than 10% in 12 of them, some surpassing 50% such as Estonia or in Latvia. Yet the curve for the intensity of the research effort in the ERA as a whole remains desperately flat, stuck since 2000 at around 1.85% of GDP.

How to explain this paradox? Because the 12 countries that have most intensified their research effort account for just 17% of the EU’s GDP. More than half of the GDP is generated by the demographic and economic heavyweights France, Germany, Italy and the United Kingdom. Four countries that have seen their research effort stagnate or even decline. So is the glass half full or half empty? The optimists will stress the scale of the improvement - helped by the R&D Framework Programme and the Structural Funds - on the part of several countries that joined the EU in 2004. The pessimists will point to the principal European powers that are not living up to their role as a driving force.

Still no European patent…

In sum, Europe is still a leading scientific power, but is surpassed by the United States and Japan in the most dynamic fields and threatened by the growing strength of the emerging countries, especially in Asia. Its research effort is stagnating, even if the internal disparities are lessening. How can these persistent difficulties in building a genuine knowledge economy be explained?

Economists stress that one of the obvious reasons for Europe’s difficulties in converting its scientific excellence into economic growth lies in the nature of its system for protecting intellectual property. Registering a patent remains more expensive in Europe than in the rest of the world: much more expensive. To protect an invention, an industrialist spends up to 10 times as much in the EU as in the United States, and 13 times as much as in Japan. The costs of maintaining a patent are even higher, often acting as a deterrent for small businesses that are forced to cede their innovative technologies.

The reason is the complexity of the procedures at the European Patent Office (EPO) in Munich (DE). The EPO does not itself issue a European patent, but simply acts as kind of ‘one-stop shop’ that centralises and examines patents, possibly then issuing a title that has to be converted into national patents. There then follows the considerable translation costs, plus the legal costs arising out of any opposition to the patents that are a matter for the national jurisdictions with their sometimes conflicting jurisprudence.

High-tech: of key importance

This cumbersome system for obtaining intellectual protection is now new, however, and in recent years European leaders have taken a number of steps to correct it. The obligation to translate the invention description into the three official languages has been abolished and the European Patent Litigation Agreement reflects on the legal bases of a future European Patents Court. The situation is therefore improving slowly and the patent issue alone cannot explain the ERA’s slide down the competitiveness rankings and its difficulty in building a knowledge-based economy.

A knowledge-based economy goes along with hi-tech companies. It is high-tech that generates most of the private investment in which the ERA is so sorely lacking. However, the structure of the European economy is changing, with a relative disindustralisation and a switch to the services sector. This is not yet generating much research, less than aeronautics, the motor industry or energy – sectors in which the EU retains a leading place – and above all the biotechnologies and information and communication technologies. It is in these last three fields that the EU is being left behind, particularly by the United States, where a lot of biotechnology start-ups grow into major pharmaceutical companies with huge R&D budgets. In Europe they remain small businesses. The same is true in the Internet sector. The EU is still waiting for its Genentech or its Google.

Economic recovery

The picture is totally bleak, as in recent years have seen increased research in the manufacturing industry and services in Europe. But the decisive battle is being played out in the high-tech industries. The Commission experts have done their maths and estimate that if high-tech European companies could match the research effort of their US counterparts that would represent a 0.1% increase, when over the past 15 years it has grown by just 0.06%. To kick-start such a dynamic these companies must be given the means to grow and multiply. Increased support is therefore the key to the ERA’s improved international competitiveness, and, no doubt, to economic recovery.

Mikhaïl Stein


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