Raising EU R&D Intensity Evidences from the Report for the European Commission by an Independent Research Group Ana Paiva Inês Costa Science and Technology Policy 1 17 – 10 – 2003 How to improve the effectiveness of public support mechanisms for private sector R&D

Presentation Structure Historical Background Historical Background What is happening with R&D in Europe? What is happening with R&D in Europe? Problems and comparisons Problems and comparisons What can be done? What can be done? Policies and Mixed Policies Policies and Mixed Policies What can we expect? What can we expect?

Some (recent) historical facts… Lisbon European Council (March 2000) – set the EU target to become the most competitive and dynamic knowledge based economy in the world by 2010 (European Research Area as the central element); Barcelona European Council (March 2002) - investment in European research and development (R&D) must be increased, aiming the goal of 3 % of GDP by 2010; increase of the level of business funding to two- thirds of total R&D investment; Acknowledging the importance of this goal the 2002 Economic Policy Guidelines of the Member States and the Community recommended to improve incentives for firms to invest in R&D while preserving sound fiscal policies.2002 Economic Policy Guidelines

What is happening with R&D in the EU? R&D Intensity R&D Intensity FONTE: OCDE R&D Intensity = GERD in GDP %

What is happening with R&D in the EU? Industry / Government financing FONTE: OCDE

What is happening with R&D in the EU? Industry / Government financing (SME) FONTE: OCDE

What is happening with R&D in the EU? Supply side deficiencies FONTE: OCDE

What is happening with R&D in the EU? PROBLEMS EU will not hit the 3% target in 2010 because… …Europe suffers from weaknesses in the R&D area : Insufficient funding (private sector R&D expenditure); Lack of an environment to stimulate research and exploit results; Fragmented nature of activities and the dispersal of resources; Lack of demand and absorption of innovative goods and services; Supply side deficiencies: Resources, incentives, capabilities and opportunities; Nature and Scale of the Problem: industrial restructuring (SME MNC’s) R&D expenditure levels are dependent on the strength of the Innovation System: many of the EU countries aren’t strong enough to support increased R&D levels (weak demand and weak supply of researchers)

What can be done ? Policies and Mixed Policies HOLISTIC POLICIES AND FRAMEWORK CONDITIONS FOCUSED POLICY SOLUTIONS FINANCIALFISCAL DIRECTINDIRECTCATALYTIC FISCAL FINANCIAL OTHER

Increasing recognition that it is the MIX of policies that is important Excessive emphasis upon one dimension can be wasteful or even counter- productive Example: build-up of S&T infrastructure and spending in a region without complementary measures to build absorptive capacity and entrepreneurship Attracting MNC R&D Capacity Increasing existing R&D Investment Creating R&D Intensive SME Initiating R&D in Low-Tech Sectors FONTE: OCDE

What can we expect ? Questions for the masses… societyWhy not reinforce a knowledge based society ? (establishing bridges of knowledge between EU countries: Greece, Portugal, Finland and Sweden); What will happen when the east European countries enter the EU? The option of only stimulate R&D in the northern European countries? Wouldn’t it create asymmetries within the EU?

Raising EU R&D Intensity Evidences from the Report for the European Commission by an Independent Research Group Ana Paiva Inês Costa Science and Technology Policy 1 17 – 10 – 2003