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Investment in research: Europe is making progress, but too slowly


Commissioner Philippe Busquin today (17.03.2004) reported the progress made in implementing the action plan of 30 April 2003 to step up public and private spending on research in Europe. The aim is to increase investment in research from its current level of almost 2% of Europe’s gross domestic product to 3% by 2010, in line with the commitment made by the Barcelona European Council in March 2002. The initial results are positive, but still insufficient, given the performance in the Member States’ research budgets in 2003 and 2004, which is being presented today for the first time at European level. For its part, the European Union is mobilising all the financing instruments for research and innovation: proposed doubling of the framework programme of research, greater use of the Structural Funds to step up capacity for research and innovation in the regions, the European Investment Bank’s Innovation 2010 initiative, and planning of major initiatives in the context of the technological platforms and the “Quick Start” projects. The Commission is also improving the framework conditions for investing in research, by modernising the competition rules, promoting better rules and better management for intellectual property and improving the mobility and working conditions of researchers, notably via its proposal for a directive, adopted yesterday, to facilitate entry and stays for researchers from third countries, and other initiatives currently in the pipeline regarding researchers’ careers and recruitment.

“One year on, the ‘3% action plan’ is beginning to bear fruit,” Mr Busquin announced. “On average, public investment in research has increased in 2003 and 2004. However, that increase is still too slow. It is vital that Member States take advantage of the economic upturn to refocus their budgets on research and innovation. Several Member States are currently improving or introducing tax incentives, with a direct impact on businesses. Meanwhile, the Commission is keeping its promises. It is proposing to double the research budget in the next European multiannual programmes. It is also introducing important measures to make the European research area attractive to businesses and researchers, such as its proposal for a directive, adopted on 16 March, to facilitate entry and stays for researchers from third countries, and the notification exemption for aid to SMEs, which enters into force on 19 March.”

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Closing the gap

Europe as a whole invests 40% less in R&D than does the United States. Most of this gap is accounted for by the private sector, which in 2002 spent €100 billion more on research in the United States than in Europe. It has been calculated that if we achieve research spending of 3% by 2010 we would be able to create 2 million extra jobs by then, followed by another 400 000 jobs and 0.5 % economic growth each year thereafter.

The objective set by the Barcelona European Council was to raise investment in European R&D with the aim of approaching 3% of GDP by 2010, with two thirds of this to be financed by the private sector. The vast majority of Member States have set themselves similar targets and have begun introducing national measures to encourage the private sector to invest more in research.

State budgets and tax measures

For all that, public spending is still insufficient. The average growth rate of public research budgets in the enlarged Europe has been estimated at 2% in real terms between 2002 and 2003 and will not be much higher between 2003 and 2004. This is positive, but far from the 6.5% growth rate Europe needs overall in order to achieve the Barcelona objective.

One source of satisfaction, however, is the growth of tax measures to encourage businesses to invest in research. This is now reaching substantial levels, estimated for instance to represent around 12.5% of public spending on research in the Netherlands, 16% in Austria and 42% in Latvia.

These data are today being presented for the first time at European level, in the “Snapshot” of public investment in research. The Commission assembled them recently in collaboration with the Member States in order to provide decision-makers with a comprehensive and fully up-to-date picture of public expenditure on research and innovation in Europe.

A research scoreboard for businesses

To provide a clearer picture of who is investing in Europe and how that investment changes over time and by sector, the Commission has launched a European scoreboard of industrial investment in research. The first of these will be published in October and will list the five hundred European businesses and five hundred foreign businesses investing the most in Europe.

European financing instruments

For its part, the Commission, in its recent draft financial perspective for 2007-2013, proposed to more than double the Community’s funding of research.

In addition to this doubling of the funds specifically set aside for research, in its recent third report on cohesion, the Commission proposed to allocate more structural funds to underpin the competitiveness of the regions, particularly their research and innovation capabilities, in both the convergent and more developed regions.

In addition to Community interventions, the European Investment Bank (EIB) and the European Investment Fund (EIF) offer loans, guarantees and risk capital facilities. The EIB has set itself the objective of investing €50 billion in research and innovation over the period 2000-2010, including €20 billion between 2004 and 2006. The EIF, whose investment capacity was recently increased to €4 billion, is currently supporting more than 1500 high-tech undertakings through 185 risk capital funds. The Commission and the EIF are together examining the possibility of a new type of risk capital facility which could be created jointly by a number of universities.

The Commission and the European Bank for Reconstruction and Development (EBRD) are preparing to sign a cooperation agreement this year to among other things develop support for R&D and innovation in the new Member States.

Improvement of the framework conditions for private investment

The Commission is engaged in modernising the competition rules relating to investment in R&D. The first revised regulation concerns exemption from the obligation to notify aid for SMEs which now includes aid for research. From its entry into force on 19 March, national governments will be able to simplify and speed up the introduction of aid programmes and the granting of individual research aids for SMEs, without now having to notify the Commission in advance.

The regulation on technology transfer agreements is undergoing revision with a view to offering greater flexibility to the parties to such an agreement and simplifying notification procedures. It should enter into force on 1 May and will be accompanied by implementing guidelines. Preparatory work for the modernisation of the framework regulating State aid for R&D will commence shortly. The Commission is preparing a proposal for a harmonised legal structure to avoid double taxation of individual investors and the risk capital funds through which they invest.

Public-Private partnerships

European technology platforms bring together public and private partners from a given sector in order to jointly define a European research strategy. Work is already very advanced in some cases, such as the “hydrogen and fuel cells” platform and should lead to major technological projects which could be supported by the next framework programme. The “Quick Start” projects identified last year in the European growth initiative concerning fields such as space, new generation lasers, nanotechnologies, hydrogen etc. have provoked a rapid response and the EIB is currently examining the most advanced applications for funding.

Intellectual property

On the question of intellectual property, work is continuing on the adoption of the Community trademark and on the question of relations between universities and industry.

On this question, the main European industrial and academic associations, with the support of the Commission, have agreed to draw up this year European guidelines for the management and exploitation of intellectual property rights between universities and industry.

Moreover, the Commission in cooperation with the Member States also intends this year to draw up guidelines for national rules applicable to intellectual property rights in public research bodies, in order to facilitate the creation of spin-off and transfers of technology to industry. Here, too, there is a wealth of national initiatives.

These guidelines will be based on initiatives recently adopted or being prepared in a number of Member States, such as:
  • Germany has abandoned the "professor’s privilege" which granted the property rights to research results to university professors; the universities now own the rights themselves as is the case in most other European countries.

  • The French authorities have recently recommended State higher education and research establishments to adopt a charter to facilitate and promote the management of their intellectual property.

  • A “code of practice” for public establishments is being prepared in Ireland.

Public procurement

On the question of public procurement, initiatives are beginning to emerge in the Member States to develop the impact of public procurement on research and innovation activities in industry. This is the case in particular in the United Kingdom where a series of measures has been announced in the fields of construction and telemedicine. The Commission will examine in the near future the opportunities offered by the new European regulatory framework in this area.

Human resources

Hitherto, Europe has invested too little in human resources in science and technology. The number of researchers per thousand inhabitants is currently 5.7% in Europe, compared with 8.1% in the United States and 9.1% in Japan. The 3% objective requires 700 000 additional researchers to be recruited by 2010. The Commission is contributing to this through an overall strategy to remove obstacles to mobility, upgrade the profession of researcher and improve local information and assistance for researchers and their families.

The year 2004 has already seen the launch of the European portal on the mobility of researchers, the creation of a European network of mobility centres and the adoption by the Commission, on 16 March, of a proposal for a Directive to facilitate entry and stays for non?European researchers ("scientific visa"). The Commission will also propose by the end of the year a "European researchers charter" and a code of conduct for the recruitment of researchers at European level.

Fabio Fabbi | European Commission
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