'Myopic' focus on R&D spending will not achieve Barcelona target, says expert

With the EU still struggling to meet the Barcelona objective of raising investment on research and development (R&D) to three per cent of GDP by 2010, experts and policy makers gathered at a workshop in Brussels on 2 December to hear case studies from the only two EU countries...

With the EU still struggling to meet the Barcelona objective of raising investment on research and development (R&D) to three per cent of GDP by 2010, experts and policy makers gathered at a workshop in Brussels on 2 December to hear case studies from the only two EU countries that have so far achieved the target.

According to the latest OECD figures, the level of research investment as a proportion of GDP in both Finland and Sweden is over four per cent, well above the target agreed by EU Heads of State and Government in 2002. Two experts from the Nordic region were asked to analyse the main drivers behind these apparent success stories, and to see if any conclusions could be drawn to help the EU as a whole achieve its goals.

Professor Lars Bager-Sjögren is from the Swedish institute for growth policy studies (ITPS), and began his case study by reminding participants that public sector R&D investment in Sweden, which accounted for 21 per cent of the 2001 total, was at a similar level to many other EU Member States. The major factor driving the country's high research spending, he said, is private sector investment, particularly from large multinational enterprises (MNEs).

'In 1995, seven large manufacturing groups - Ericsson, Volvo, Saab, Astra, Scania Sandvik and Incentive - accounted for as much as 75 per cent of total R&D expenditure in the Swedish manufacturing sector,' said Professor Bager-Sjögren.

The factors which allowed the private sector, and MNEs in particular, to acquire such a vital role in the Swedish research landscape are several, according to Professor Bager-Sjögren. First, the relatively low cost of skilled labour made Sweden a good location for investment in R&D. Furthermore, Sweden's relatively small domestic economy and 'small language' meant that success in foreign markets was essential in order to achieve economies of scale, which further drove research spending.

A final and decisive factor was the existence of an efficient competition policy framework. 'The intense growth seen in Sweden in the late 1990s can be explained by the early deregulation of the telecoms market and the abolition of state monopolies,' said Professor Bager-Sjögren. He concluded, therefore, that R&D spending levels are just one, albeit important, factor in the perceived lack of growth in the EU, and urged policymakers to lend equal focus to the deregulation of markets and other structural reforms.

This argument was taken up by Professor Uno Lindberg, chair of the European Academies science advisory council (EASAC) that hosted the workshop, in his Finnish case study: 'To achieve the policy goal of three per cent, perhaps even more important [than public spending on R&D] is a consistent, long term focus on national facilitating conditions.'

In the case of Finland, such conditions include a high level of investment in education, a culture that is quick to adopt technological advances, and good public governance, Professor Lindberg said.

A vital component in gaining general support in Finland for high levels of R&D expenditure was the empowerment of science and technology policymaking. Professor Lindberg highlighted the fact that the country's national science and technology policy council is chaired by the Prime Minister, and the chair of the Nokia board is also a member.

Again, the role of large international companies, and in particular Nokia, in boosting Finland's R&D spending cannot be overestimated. A key to laying the foundations for Nokia's success in the late 1990s, however, was the publicly funded 'Finnsoft' technology programme, under which many of the core components of the successful GSM standard were developed.

The vital conditions for achieving the Barcelona target, in Professor Lindberg's opinion, are a well educated workforce, national consensus on the importance of R&D, a well structured and sufficiently empowered institutional framework for science policy, and close collaboration between policymakers and the private sector. 'For European policy, therefore, it is important to avoid a myopic focus on R&D investment only, and focus also on enhancing the general facilitating conditions.'

A final ingredient that could help the EU meet the objectives it has set itself, especially when you consider the fact that Nokia almost went bankrupt during the early 1990s, is a bit of good luck, Professor Lindberg concluded.

Countries

Finland, Sweden