Top EU Corporations to Boost R&D Spending by 5% Annually

EU Commissioner for Research, Innovation and Science M?ire Geoghegan-Quinn. Photo from finfacts.ie

Leading innovation corporations based in the EU expect their research and development spending to grow by 5% annually over the next three years, the 6th EU Survey on R&D Investment Business Trends has found.

This is more than double last year's expectations, and represents a significant upturn from the 2.6% R&D cuts in investment implemented by these companies in 2009, the European Commission said in a statement Wednesday, after releasing the R&D investment survey.

The EC further stressed that companies surveyed also revealed that an average of 27% of their annual sales comes from innovative products introduced in the past three years, demonstrating again that innovation is the key to commercial success and to job creation.

The Commission surveyed the R&D investment expectations of the 1000 European companies which invest most in R&D. 205 companies responded, providing a substantial sample.

"The survey provides welcome positive economic news and grounds for cautious medium-term optimism, given that business R&D is a key driver of sustainable growth and jobs," M?ire Geoghegan-Quinn, Commissioner for Research, Innovation and Science, is quoted as saying.

"But 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," she added. "We will also need further increases in the rate of growth of private R&D investment in subsequent years, both by the big companies covered in this survey and by SMEs. And we will need to deliver an Innovation Union in Europe so that investing in R&D here is more attractive than doing so elsewhere."

Companies surveyed expect their R&D investment inside the EU to grow 3% a year over the next three years.

Although this rate is lower than the growth expected for their R&D investment in other world regions, the companies still expect to locate 75% of their investments in the EU. They expect to make the largest percentage increases in R&D investment in China (25%), Japan (17%), other European countries (8%), India (8%) and the US and Canada (5%), the Commission has found.

According to the EC, this trend – the same in three out of four previous surveys – shows that EU-based companies want to benefit from the growth in emerging economies while still retaining a strong overall focus on the EU. This is confirmed by the companies' figures for nominal R&D investment amounts, which are set to increase by EUR 2.2 B over the next three years in the EU and EUR 2.7 B outside the EU.

Top factors indicated as having a positive effect on innovation were the availability of qualified personnel and of public support such as grants and fiscal incentives. Collaboration with other entities, such as higher education institutions, was also seen as important.

Factors perceived as negative for all sectors were enforcement costs of Intellectual Property Rights (IPR) and the time needed to obtain IPR protection. This highlights the importance of fostering an innovation-friendly IPR regime - the proposed unitary EU patent will be a significant step forward in this respect, the EC says.

In October 2011, the European Commission will publish its next EU Industrial R&D Investment Scoreboard, which ranks the biggest 1000 EU and 1000 non-EU companies investing in R&D on the basis of actual investments in 2010.

The EU Survey on R&D Investment Business Trends was carried out by the European Commission's in-house science service, the Joint Research Centre (JRC), and the Directorate General for Research and Innovation.

The survey results are based on 205 responses of mainly larger companies from the 1000 EU-based companies in the 2010 EU Industrial R&D Investment Scoreboard.

Taken together, these 205 companies are responsible for R&D investment worth almost EUR 40 B, constituting around 30% of the total R&D investment by the 1000 EU Scoreboard companies, which is a significant share of European business investment in R&D.

The full report is available at: http://iri.jrc.es/reports.htm

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