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Science and Technology Indicators

Strengths and weaknesses
of European S&T

Percentage of export market represented
by high technology products

Europe has very strong scientific bases. But compared to the United States and Japan, it produces far fewer results in terms of technological and economic performances. What are the reasons for this relative weakness? Is it the cause of Europe's unemployment problem? And what can be done to correct it?

This article is the second in a series which RTD Info is devoting to the "1997 European Report on S&T Indicators" (ERSTI).


European science is in anything but bad shape. An international comparison of the number of scientific results produced(1) in relation to R&D expenditure shows that the productivity of European researchers is every bit as good as that of their American or Japanese counterparts. On the other hand, when you look at the ability of European researchers to produce patents, you find they are very largely concentrated in certain traditional sectors - chemicals, motor vehicles, aerospace - and lag far behind in the major strategic fields of the new technologies.

"The US has the dominant share of patents at the European Patent Office (EPO) in virtually all key technology fields, and in particular enjoys a substantial lead in key technologies relating to pharmaceuticals and drugs (with 60% of EPO patents versus the EU's 27%) and biotechnology (56% EPO share against 31% for the EU)," underline the authors of the ERSTI report. "Japan remains very focused on electronics, audiovisuals and telecommunications, and performs very well in patenting individual key technologies in these fields, not least in electric vehicles (where it has 40% of EPO patents versus the EU's 20%) and flat screens (51% against Europe's 22%)."

But within this global picture, Europe's scientific and technological landscape is far from uniform. "The paradox is most clearly confirmed for Belgium, Greece, Spain, Sweden and the UK, countries with a high scientific output but below average technological returns on R&D investment. The best performers are Denmark, Finland and the Netherlands, which boast high levels of both patent and publication output."

Negative effect on employment

The most negative point is in the field of employment. "During the first half of the 1990s, in every sector except pharmaceuticals, total sector employment fell by at least 2-4% a year," notes the ERSTI report.

"At this level, we begin to grasp one of the key issues of innovation and its relationship to employment. Multinationals based in the EU tend to be the largest losers of employment in their sectors, in contrast to those based in the US which create more jobs than the industry average. The story for European new technology-based firms is similar, with no clear successes so far in terms of job creation, although such firms do have a significant impact on knowledge creation while providing high quality careers for many PhD's. Meanwhile, the evidence available for innovative SMEs suggests that they may not create more employment on average than non-innovative SMEs, but do tend to be the most dynamic, having the highest and lowest employment growth rates."


Two strategic axes

What new ways forward can be identified by analysing the present situation? The authors of the Indicators Report point to two strategic axes that could stimulate the European Union's S&T performance. One distinguishing feature of European research is that "its strength lies more in its universities and public research institutes than in its enterprises and, consequently, the university-industry interface needs to be better cultivated." They recommend in particular that "policies to develop the bridge between firms and academia need to be adapted to the culture of university research, avoiding an overly commercial approach, and instead integrating the objectives of the company with the long term research theme of the university laboratory."

A second axis is based on the fact that "strategic bridges are increasingly being built between firms in the form of technology-based alliances. Links between large firms and small and medium-sized enterprises are also observed to be significant and complementary, with innovative SMEs frequently transferring and commercialising technologies developed by larger companies, while the latter sometimes bring to market products by new technology-based firms." This dynamic relationship is being stimulated by several measures at EU level but "an important challenge for future policy might be the encouragement of innovation in SMEs through regional support mechanisms and agencies which some argue are often better placed to tailor measures to the specific needs of their local clients."

(1) These are traditionally measured by the number of publications which result in the relevant journals.


Comparison of the origins of patents registered in Europe (EPO), Japan (JPO) and the United States (USPTO - 1995)

Almost absent from the Japanese market, and only very moderately represented on the US market, patents of European origin also represent no more than half of the total patents registered in Europe itself. Apart from this overall picture of the situation in 1995, a more detailed study of performances, carried out during two successive periods from 1986-90 and 1991-1994, reveals a worrying trend for Europe.

  • On the US market, taking as an indicator the number of patents registered compared to the R&D expenditure of companies - and this in eight key sectors of high scientific and technological density: pharmaceuticals, electronics, computers and office equipment, aerospace, chemicals, motor vehicles, electrical machinery and instruments - we find that European companies have an average coefficient of 206 patents registered between 1986 and 1990 and 201 patents between 1991 and 1994. The same measurement carried out for US companies on their own market showed an increase from 305 to 437 patents and for Japanese companies an increase from 460 to 532.

  • On the European market, during the same periods, the EU continued to remain in the lead, with 285 and 333 patents respectively. But over the same period US firms doubled the number of patents they registered in Europe, from 115 to 203, while Japanese industry also recorded an increase, from 247 to 295 patents.

ERSTI Contents

The Second European Report on S&T Indicators (ERSTI), published by the Commission in December 1997, is a unique and massive collection of data and analyses on every imaginable aspect of science and technology in Europe as it compares to the rest of the world.

Part I - European Science and Technology in the World

Part II - From R&D to innovation and competitiveness

An industrial look at R&D: the eight most R&D intensive sectors - Comparative performances of European, American and Japanese Industries - Technological performance by industry - An analysis of the scientific base of industries

Beyond the European paradox - From Science to Technology: interactions and return on investment - From Technology to international trade in high-tech products

Dossier: Innovation and technological competitiveness of European enterprises - The technological activities of the leading Multinationals - New technology-based firms in Europe and the US - Innovative activities of European enterprises

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

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