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Second European Report on S&T Indicators (ERSTI)

Nr. 19 - June-July '98

European S&T - the state of play Europe is currently a major scientific power but, to retain its world position, it must promote long-term economic growth by stepping up investment in research, development, education and training. The vicious circle of less investment - less growth could become a big problem as we move into the 21st century The Second European Report on S&T Indicators (ERSTI), published by the Commission in April 1998, is a unique and massive collection of data, analyses and opinions on every imaginable aspect of science and technology in Europe compared to the rest of the world in the mid-1990s. In this issue and the following ones, RTD Info will review the five parts of the report (see box). Entitled European Science and Technology in the World, Part I of the ERSTI report considers the economic performance of all 180 countries in the world in relation to their S&T performance. This approach shows that access to science and technology has emerged as a major factor which separates the 'haves' from the 'have-nots'. It defines a clear "super-group" of 50 countries - composed of nations from all the corners of the globe - that are leading a healthy, almost booming, world economy. The gap between these leaders and the remaining 130 "S&T weak" nations - where a quarter of the world's population lives - is wide. The "top 50": key figures In 1994, the "top 50" accounted for 98% of world R&D and education spending. They employed 95% of the world's scientists and engineers. These, in turn, were responsible for 98% of all publications in journals mentioned in the Science Citation Index and 99% of all patents issued in the US and Europe. Returns on this investment were equally impressive: the "top 50" generated 90% of world Gross Domestic Product (GDP), accounting for 92% of world industrial production. They attracted 99% of direct foreign investment and they were the source of more than 96% of international trade in manufactured products, and virtually 100% of high-technology exports. Between 1986 and 1994, the "top 50" consolidated their position: their long-term economic growth was three times greater than that of the other 130 countries in the world. The average economic wealth per head in these 50 countries grew by 1.1% per year in constant ECU. Their income has fallen over the last decade by 1.5% per year. Whilst the rich have got ever richer, the poor have got poorer (Figure 1). National variations Within the "top 50", most of the indicators show that individual countries which invest more in scientific research, and exploit technology with greater efficiency, are the best economic performers. Several countries at the lower end of the "top 50" are now making substantial increases in their science investment budgets and are currently undergoing a process of catching-up. For example, between 1990 and 1996 the developed Asian countries built on knowledge generated in other parts of the world and invested heavily in science and technology. Just before the current financial turmoil, they had achieved economic growth rates of around 10% per year. Europe's position Europe's economic growth over the last decade has been much lower than Asia's but in line with that of the US and Japan. All countries in the European Union are, of course, within the 'top 50' and, collectively, the EU is currently retaining its position as the world's second scientific power, behind the US but ahead of Japan. It has a strong science base, its trade performance has been improving since 1993 and the EU still holds first place in the world as the source and destination of foreign investment. However, since the economic downturn of the early 1990s, Europe as a whole has cut back on its investment in intangibles such as R&D in science and technology, education and training (Figure 2). This explains, at least in part, the lower economic growth, lower competitiveness and higher unemployment: all factors that are likely to reduce investment still further in the immediate future.` A paradox, not a fate The so-called "European paradox" is still evident: although the EU has a very strong science base and invests well in education, it is generally weak in some aspects of its technological and economic performance compared to other major industrial powers. The rapid investment that Europe made in R&D in the first half of the 1980s is still paying dividends and accounts for the continual improvement in scientific performance that Europe has shown throughout the period from 1980 to 1995. However, during the second half of the 1980s, Europe's technological performance deteriorated significantly relative to the US and Japan. The rate of growth in exports by European high-tech industry remains below that of its two principal competitors, and Europe still shows a high trade deficit in high-tech products. Sectors with a high degree of R&D activity are still contributing little to overall economic growth, and redundancies in industry are still getting worse, despite economic recovery in other parts of the world. The problem of social exclusion Unemployment, job insecurity and social exclusion have become more pervasive problems in Europe during the 1990s (Figure 3). It seems that people who find science and technology inaccessible because of insufficient education and qualifications are profiting less and less from the increase in economic wealth that results from the acceleration in growth of the world economy. To prevent the problem from becoming worse during the next few years, ERSTI concludes that Europe must invest massively in developing its human capital. R&D and innovation capacity needs to be expanded and science results need to be commercialised much more effectively if Europe is to take the place it deserves among the economic, scientific and technological powers of the 21st century.

ERSTI Contents Part I - European Science and Technology in the World Overview of the global economy in the 1990s - Trends of R&D expenditure in the world - Investment in Human Capital - Education and the change in the number of R&D researchers world-wide - Economic performance indicators related to S&T - Technological output indicators - Scientific output indicators Part II - From R&D to innovation and competitiveness Part III - European diversity, convergence and cohesion Part IV - R&D co-operation in Europe Part V - The European Union as world partner Second European Report on Science and Technology Indicators 1997. Published by the European Commission, December 1997. EUR 17639 ISBN 92-828-0271-X ECU 60 (2 volumes + CD ROM) 729 pp; Appendices 198 pp Contact: Office for Official Publications of the European Communities Fax: +352-48.85.73