Brussels, 25/08/2011 (Agence Europe) - Major R&D-investing companies based in the EU expect their global research and development (R&D) investments to grow by 5% annually from 2011 to 2013, a European Commission report, published on 10 August, reveals. Although this is still below the pre-crisis level (7% in the 2007 survey), it is nonetheless an encouraging sign which, according to Research, Innovation and Science Commissioner Máire Geoghegan-Quinn, gives “grounds for cautious medium-term optimism, given that business R&D is a key driver of sustainable growth and jobs”. This is all the more so since the companies surveyed in 2009 planned only a modest 2% average increase, the report says.
The importance of innovation in growth is confirmed by the survey which reveals that 27% of the annual sales of the companies surveyed come from innovative products introduced in the past three years. It is not surprising, therefore, that 95% of firms polled say that innovation is the most important aspect of R&D. The study of the R&D investment expectations of the 1,000 European companies which invest most heavily in R&D was conducted in 2010, with 205 companies - a “substantial sample” according to the Commission - responding. This sample accounts for 30% of R&D investment among these 1,000 companies, with an average of 25,800 employees, 1,250 of whom work in R&D.
Of the 5% additional overall investment over the next three years, these companies expect 3% to be within the EU. Thus, although the vast majority of R&D investment (70%) is expected to be located in the EU, and in the United States and Canada (13%), forecasts for 2011-3013 confirm the trend, apparent in previous surveys, for the growing attraction of China (25% increase over the same period) and Japan (17%) as areas of strong innovation potential. For the moment, however, these two countries account for only 3.2% of all investment. Germany and India are also seen by companies as being particularly attractive in this area, though the United States is seen as the place most likely to promote R&D.
Consequently, European companies expect to devote €500 million more to R&D investment outside the EU (€2.7 billion in total), than the €2.2 billion inside Europe. This nominal balance in the geographical spread of investment reflects the differing strategic needs of European companies. The spectacular increase in R&D investment in the emerging economies over the last few years, which is expected to continue, can be explained by companies' desire to position themselves in markets with strong growth potential, and also to use the cheaper resources available, both human and material.
On the other hand, the European market offers incentives of a different kind, such as the availability of highly qualified personnel, easily accessed collaboration with research institutes and various forums of public aid (at national and EU levels). While the EU data protection system is seen as a discouragement to innovation (the time and cost of procedures are the points most frequently alluded to), it remains, despite all its faults, much more effective than the system in China, for example. Commission plans for a unitary patent should also address, at least in part, the criticisms of the business world, though Spain and Italy are hindering its implementation. Companies in sectors of greatest R&D highlight, too, that the whole issue of licences, enforcement and the legal framework is absolutely crucial.
The trends revealed by this report are encouraging, but Commissioner Geoghegan-Quinn remains cautious, stating that “if we are to achieve our EUROPE 2020 targets, including getting R&D investment in the EU up to 3% of GDP, we will need these forecast investments for 2011-13 to be delivered in practice” and to deliver “an Innovation Union in Europe so that investing in R&D here is more attractive than doing so elsewhere”. However, the falls in stock markets in August, further austerity measures announced by governments of EU member states and disappointing growth figures in the United States and Europe could very well make the commissioner's task and that of businesses more complex than expected. (J.K./transl.rt)