New data show great disparity in growth in R&D spending

First estimates from Eurostat – the statistical office of the European Union – show that the EU member countries in 2017 spent in total €320 billion (US$365 billion) on research and development (R&D), and that two-thirds of this was spent by the private sector.

This figure is dwarfed by the amount spent in the United States, €453 billion (US$516 billion), but is significantly more than that spent in China (€203 billion or US$231 billion). Japan spent €129 billion and Russia a mere €13.4 billion.

However, the figures, published on 10 January, show that when measuring R&D intensity as a percentage of gross national product (GNP), EU countries on average compare poorly with key rivals. The EU countries average 2.07%, up from 1.77% a decade ago, but much lower than South Korea (4.2% in 2015), Japan (3.28% in 2015) and the US (2.76% in 2015).

The EU average is similar to the figure for China (2.06% in 2015), although much higher than that of Russia (1.1% in 2015) and Turkey (0.96%).

In order to provide a stimulus to the EU’s competitiveness, an increase by 2020 of the R&D intensity to 3% in the EU is one of the five headline targets of the Europe 2020 strategy.

World becoming more research intensive

In 2016 the European Commission, in a report on science, research and innovation performance in the EU, warned that the world was becoming “more knowledge-intensive, more open and more interconnected”, an evolution which the financial crisis only temporarily checked.

All major world regions are increasing their knowledge investments and this has led to a fundamentally changed global R&D landscape. In 2000 the EU and the US accounted for nearly two-thirds of global R&D expenditure, but their combined share has now dropped below 50%.

China, on the other hand, has more than quadrupled its share in world R&D expenditure over this period, increasing from below 5% in 2000 to about 20% in 2013.

The same evolution is apparent when looking at other dimensions of the knowledge-based economy. The number of tertiary graduates in China has quintupled since 2001, making it now by far the world’s largest producer of tertiary graduates. Its share of total scientific publications increased from 6% in 2000 to nearly 20% in 2013 and it also continues to bridge the gap in terms of scientific excellence and patent applications.

Sweden leading in Europe

The highest R&D intensity in the EU in 2017 was in Sweden (3.33%), Austria (3.16%), Denmark (3.06%) and Germany (3.02%). But eight countries had an R&D intensity below 1% of GNP: Romania, Latvia, Malta, Cyprus, Bulgaria, Croatia, Lithuania and Slovakia.

Measured in proportional investment over the decade 2007 to 2017, China had an astonishing growth of 471%, followed by South Korea (113%), the US (63%) and Denmark (52%), while Japan had a modest growth of 18% and the UK lagged behind with a mere 6.5% growth over the decade, and Finland actually suffered a decline of 1.7%.

The role of universities

In Europe, higher education’s relative contribution to a country’s total R&D expenditure in 2007 was highest in Lithuania (51%), Greece (49%), Cyprus (45%), Latvia (43%), Estonia (43%) and the Netherlands (35%), and lowest in Luxembourg (3%), Bulgaria (10%), Germany (16%), Slovakia (16%) and France (19%).

By 2017 it was highest in Latvia (47%), Portugal (43%), Cyprus (42%), Estonia (40%) and Lithuania and Malta (both 36%) and lowest in Bulgaria (6%), Romania and Slovenia (both 11%), Hungary (13%), Germany (17%) and the Czech Republic (20%).

The greatest increase in universities’ importance for total R&D expenditure from 2007 to 2017 was found in Portugal, up from 30% to 43%, followed by Denmark, up from 26% to 33%, and Finland, up from 19% to 25%.

Declines in the relative importance of the higher education sector share of total research expenditure in 2017 compared to 2007 were observed in Hungary, down from 25% to 13%, the Netherlands, down from 35% to 30%, and the UK, dipping from 26% to 24%.

Strong Nordic growth, except for Finland

In the Nordic countries Denmark, Norway, Sweden and Finland there was a 34% increase in the total R&D investment, with a 52% increase for Denmark, 63% for Norway, 36% for Sweden and -1.7% for Finland.

Total R&D spending in Nordic countries grew from €28.6 billion (US$32.6 billion) in 2007 to €38.4 billion in 2017, bringing these four countries to the same level of spending as the UK (€38.4 billion) and triple the level of spending in Russia (€13.4 billion).

This is remarkable given that the combined population of these four Nordic countries is 27 million people, compared with the UK’s 66 million people and Russia’s 145 million. The UK raised R&D spending by a mere 6.5% over the decade to 2017, not enough to match inflation.

Kaja Wendt, senior adviser in the Nordic Institute for Studies in Innovation, Research and Education in Oslo, said that the growth in research intensity in Sweden is on a level with the average for the Nordic countries between 2006 and 2016, while Norway had the strongest growth, followed by Denmark.

“The reason for the strong growth in Norway is in particular that the private sector has increased its investment in R&D in later years,” she said.

“The decline in Finland in real terms is exceptional and is due to the difficult economic situation in the country.

"The high Danish research performance measured on bibliometric measures is much discussed and does not have simple answers,” she added, referring to an article in Science and Public Policy discussing the ‘Danish success story’.

Wendt also said that the Danish growth has to a large degree been due to merger processes, where research institutes have been merged into existing universities during this period.

Mats Benner, professor of science policy at Lund University School of Economics and Management, told University World News that the Eurostat report provides an “interesting and important overview”.

“As for Sweden, the resource increase is not as spectacular as for Norway, largely, as far as I can tell, due to the volatility of private R&D expenditure, but government spending has spiked during the past decade.”

He said Sweden’s challenge was the very dispersed funding model with uncoordinated resource increases: including everything from individual investigator funding to mission-oriented consortia.

“Universities have had difficulties in transforming these resource inflows into sustainable recruitment profiles and organisational rejuvenation. As a result, there has been a surge in short-term contract-based employment and a consolidation of existing profiles rather than long-term transformative efforts. Sweden's research quality profile has therefore suffered.”

Finnish concern

Professor Jari Niemelä, rector of the University of Helsinki in Finland, told University World News: “We are deeply concerned – public R&D funding as an investment for the future has been decreasing continuously from 2010. Even more alarming has been the even steeper drop of private company investment levels.

“As public and private sectors are interconnected, although with a complex mechanism, we emphasise the crucial role of the universities’ research and education in building the basis for a better future.”

He said the Finnish government has set a new ambitious target for expenditure on R&D of 4% of GNP – so universities are now waiting for the actual measures.

“Some signs are there – this year we have national elections, and practically all parties and top candidates of major parties have highlighted that Finland needs to reverse the descending curve. Finland's future is dependent on this turnaround in national politics. Universities have to be again seen as an investment in our future,” he said.