Business R&D investment set to grow by 5 per cent for next three years
Research by the European Union's Joint Research Centre (JRC) suggests that business investment in research and development (R&D) will increase by as much as five per cent per year for the next three years. Increasing R&D investment is a key component of the Lisbon Strategy, and the blueprint for European innovation. The expert group report chaired by former Finnish Prime Minister Esko Aho explicitly refers to the Lisbon goal of increasing investment in research to three per cent of GDP. In 2005, only 1.91 per cent of GDP was spent on R&D in the EU. Should this increase be mirrored across the board, then the figure could rise to almost 2.2 per cent of GDP spent on R&D by 2010 - short of Lisbon targets but still a huge improvement. The European Commission's Seventh Framework Programme (FP7) will see huge increases in its budget compared to previous Framework Programmes. This money will go directly to research, but money also has to come from business. 'If we are to reach our objective of investing 3 per cent of GDP in research and development, we need increased investment by the private sector,' said European Commissioner for Science and Research, Janez Potocnik. 'For this reason the results of this survey are encouraging. We need to maintain and reinforce our efforts at European and national level to make Europe an attractive place for companies to carry out their research. The Commission will be coming forward with some more ideas in this area in autumn 2006,' continued the Commissioner. Perhaps unsurprisingly, companies prefer to invest in their own countries. The largest investors in R&D continue to be the largest economies - Germany, France and the UK. However, the skill of workforce and access to markets were found by the report to be significant factors. Meanwhile, cost of workforce was low. For EU companies, the US is the most attractive non-EU state to invest, followed by India and China. Perhaps more importantly, 'The incentives to increase R&D investment most often cited in the responses are: changes in market demand for new products and services, changes in technological opportunities, and changes in company turnover or profit. Changes in the availability and labour costs of researchers are the least often cited incentives for increasing R&D investment,' reads the report. This shows that companies are pragmatic, and respond to market and economic need. This also demonstrates the importance of developing lead markets for technological innovations, to encourage further research, as cited in the expert group report into innovation. The survey questioned 449 firms in ten sectors: automobiles and parts; chemicals; electronic and electrical equipment; engineering and machinery; food producers and processors; health; IT hardware; pharmaceuticals and biotechnology; steel and other metals; and support services