EU still lagging on R&D spending

EU companies increased their investment in research and development last year but still lag behind their counterparts in the US and Asia, the European commission has said.

The 2006 edition of the EU’s annual R&D scoreboard shows that investment increased by 5.3 per cent compared to the previous year

This was a considerable improvement on the previous two years – investment grew by just 0.7 per cent in 2005 and declined by 2 per cent in 2004.

But despite the good performance, Europe’s leading companies are still failing to close the gap with their competitors elsewhere in the world.

Investment in R&D by the top 1000 non-EU companies was 7.7 per cent in 2005, with a particularly strong improvement by South Korean firms such as Hyundai and Samsung.

On a global scale, 18 of the top 50 R&D investors are from the EU – the same number as from the US – well ahead of either Japan or Korea.

US-based car maker Ford is the biggest investor following an 8 per cent increase to €6.7bn. Compatriots Pfizer with €6.3bn, down 3 per cent, and General Motors with €5.7bn, up 3 per cent, complete the top three positions.

Just three of the top ten investors were from Europe – German car maker Daimler Chrysler was in fourth with €5.6bn, down 0.2 per cent, German telecoms firm Siemens in eighth with €5.2bn, up 1.8 per cent, and UK-based pharmaceutical group GlaxoSmithKline in tenth place with €4.6bn, up 10.5 per cent.

The top Asian firm was Toyota from Japan, in seventh place with €5.4bn.

Five of the top ten fastest-growers were also from the EU – in part reflecting the need to close the gap with the rest of the world.

Aerospace group BAE Systems was the fastest-growing investor in R&D, with a 30.5 per cent increase compared to the year before.

Rival aerospace company Finmeccanica was the second fastest grower, while Swedish telecoms group Ericsson was third. Renault and Alcatel of France were the other two top performers.

But both Ericsson and Alcatel dropped two places compared to the previous year, despite increases in R&D expenditure of over 15 per cent respectively – a reflection of the increasingly large sums being invested by many companies.

Nokia, Volkswagen, SanofiAventis, AstraZeneca and Bayer also saw their positions fall compared to the previous year.

With little more than three years remaining for the EU to reach its goal of investing 3 per cent of GDP in R&D – one of the Lisbon agenda objectives – there is still considerable work to be done.

Overall investment is currently running at just 2 per cent, not only below the EU’s own target but also well behind the US (2.6 per cent) and Japan (3.1 per cent).

The complete R&D investment listing can be found here.

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